Guidance issued by the Centers for Medicare and Medicaid Services (CMS) on April 8, 2026 details implementation of section 71109 of HR 1 (also known as the Working Families Tax Cut legislation), which limits federal matching funds for certain noncitizen aliens previously covered by Medicaid.

CMS’ letter to state health officials (SHO) explains “potential impacts on eligibility and availability of coverage, the implications for current beneficiaries, and the changes states may need to make to their systems and processes prior to October 1, 2026, to comply with the statutory changes.”

Effective October 1, 2026, states will no longer be able to claim federal matching Medicaid funds for non-citizens that no longer fall into “federal financial participation (FFP)-eligible non-citizen categories.” This will limit access to Medicaid for some non-citizens if states decide to fully terminate the availability of coverage for this population.

States will have the option to continue covering these individuals with state-only funds; CMS does not consider this coverage to be Medicaid since the federal government is not covering any costs.

The depth to which this change will affect members is unclear. Some non-citizen staff, residents in affordable housing, or even nursing home residents without eligible immigration status could lose access to health insurance through Medicaid.

Additional CMS action is anticipated as, per HR 1, the same previously eligible categories of immigrants (refugees and people granted asylum, people granted humanitarian parole, and people granted Temporary Protected Status (TPS), among others) will also have their Medicare coverage terminated on January 4, 2027, if they became eligible for Medicare on or after July 4, 2025.