Federal Funding for Full Medicaid Ended Oct. 1 for Refugees, Asylees and Other Lawfully Present Noncitizens. Check Your Denials.
Under CMS guidance, federal matching funds for full Medicaid and CHIP now go to a narrower group of noncitizens, and emergency Medicaid is matched at each state's regular rate. Whether a patient keeps coverage now depends heavily on the state.
Since Oct. 1, federal Medicaid and Children's Health Insurance Program (CHIP) matching funds for full benefits have been limited to a narrower group of noncitizens. Refugees, asylees, people with Temporary Protected Status, parolees and other lawfully present noncitizens are no longer in the federally funded group, according to an Oct. 8 summary from the American Medical Association.
The change comes from section 71109 of the 2025 budget law that the Centers for Medicare and Medicaid Services (CMS) calls the Working Families Tax Cut legislation (Public Law 119-21). For practices, the effect shows up as patients whose coverage changes or ends, and as a different payer mix for emergency care.
Who stays in full Medicaid
In its April 8 State Health Official letter (SHO #26-001), CMS says federal funding for full Medicaid and CHIP benefits is generally limited to U.S. citizens and nationals, lawful permanent residents, Cuban and Haitian entrants and Compact of Free Association migrants. A state can still cover lawfully residing children and pregnant women under what CMS calls the CHIPRA 214 option. As of the letter, 39 states, the District of Columbia and three territories had elected it.
CMS also says it will not require states to cover the excluded group with state-only funds. Whether a given patient keeps coverage therefore depends on the state. The AMA notes that some states may continue coverage with their own money.
How states have to act
CMS told states to treat the change as a change in circumstances for current enrollees. States must first try to reverify immigration status through electronic data sources, then ask the beneficiary for information, and, if status cannot be verified after a response, give a 90-day reasonable opportunity period. Terminations carry the standard notice and fair hearing rights; the letter cites a minimum of ten days' advance notice for Medicaid.
For people in a continuous eligibility or continuous postpartum coverage period, the letter says federal funding is limited to emergency coverage for the rest of that period. Medicare is changing too. Section 71201 of the same law added section 1899C to the Social Security Act, which limits Medicare eligibility to the same noncitizen groups. Per the letter, it has applied since the law's July 4, 2025, enactment to new Medicare entitlement or enrollment, and it reaches people already enrolled 18 months after enactment. That matters for noncitizens who are dually eligible, and CMS says more guidance is coming.
The coverage rules differ by state, so the practical question is not what the federal law says but what your patient's state plan now covers.
Emergency Medicaid pays less federally
Emergency Medicaid remains available for people who are otherwise eligible apart from immigration status. What changed is the federal match. Under section 71110 of the same law, the federal share for emergency Medicaid services to noncitizens is capped at each state's regular federal medical assistance percentage, rather than the 90 percent expansion match that applied to adult-group enrollees. CMS says states may see emergency-only spending rise because fewer people will have full benefits.
The AMA expects the change to shift costs to states and add financial pressure on hospitals and the safety net. CMS also told states to update how they allocate supplemental payments for emergency Medicaid, so a larger part is claimed at the regular rate. Hospitals and groups that depend on those payments should ask their state Medicaid agency what that means for them.
What practices should do now
Ask your billing office to flag eligibility denials and coverage terminations for Medicaid patients since Oct. 1, and to confirm how your state is handling the 90-day verification window. Update front-desk scripts so staff can refer patients to the state Medicaid agency and to the AMA's patient guide on coverage changes for noncitizens. Review your charity care and self-pay policies for patients who lose full benefits mid-treatment. Our earlier piece on Medicaid churn and your panel covers how to track panel changes.
Reported, fact-checked and edited by The Script Pad's editorial staff.
This article is for professional education and does not replace clinical judgment. Treatment decisions should be based on the individual patient and current guidelines.
