Apr, 17, 2026

CMS Guidance on H.R.1’s Restrictions for Non-Citizen Coverage in Medicaid and CHIP

Elizabeth Dervan and Julian Polaris, Manatt Health

On April 8, 2026, the Centers for Medicare & Medicaid Services (CMS) released a State Health Official (SHO) Letter providing guidance on section 71109 of H.R.1 (P.L 11921), which establishes significant new limits on non-citizen coverage in Medicaid and the Children’s Health Insurance Program (CHIP). Under H.R.1, beginning October 1, 2026, federal financial participation (FFP) for full scope Medicaid and CHIP will only be available for the following narrow groups of non-citizens as a federal baseline:

  • Lawful permanent residents (LPRs);
  • Cuban-Haitian entrants; and
  • Compact of Free Association (COFA) migrants.

 

As a result, full scope Medicaid and CHIP will generally no longer be available to refugees, asylees, victims of human trafficking, humanitarian parolees, and others who have long been eligible for coverage through these programs. Notably, H.R.1 also added parallel restrictions to Marketplace premium tax credits (PTCs) and Medicare (with different effective dates, as discussed further below), which will expand barriers to coverage across the healthcare landscape.

CMS’ SHO clarifies several policy and operational issues as states implement section 71109. For example, the guidance:

  • Addresses H.R.1’s implications for the five-year waiting period for Medicaid and CHIP, noting that the law does not change how this waiting period does (or does not) apply.
  • Directs states to redetermine eligibility for impacted individuals prior to the October 1, 2026, statutory deadline, and to do so consistent with standard Medicaid requirements for redeterminations.
  • Advises states to adjust their managed care arrangements and capitation payments, as needed, in order to account for these new limits on FFP for non-citizen coverage.
  • Provides operational guidance to states on using the Federal Data Services Hub and Systematic Alien Verification for Entitlements (SAVE) program to verify individuals’ immigration status and eligibility.
  • Underscores CMS’ continued focus on program integrity, with CMS noting that it will continue to conduct close oversight of states’ coverage of non-citizens and provision of emergency Medicaid.

 

More broadly, while CMS’ guidance largely conforms with existing expectations, H.R.1’s changes to Medicaid and CHIP for lawfully residing non-citizens will have profound effects on access to coverage and healthcare across the country. The Congressional Budget Office (CBO) estimates that H.R.1’s new restrictions on non-citizen coverage across Medicaid and CHIP, the Affordable Care Act Marketplaces, and Medicare will lead 1.4 million more immigrants to be uninsured over the next 10 years. These changes threaten to impact not only the immigrants directly affected by H.R.1, but also the eligible non-citizens and citizen family members who may forgo coverage or care due to confusion about these complex changes or concerns about how using Medicaid or CHIP may impact their status. States and healthcare providers will also feel the effects, with states navigating these changes on top of other complex eligibility policies from H.R.1, including Medicaid work reporting requirements. Clear communication and engagement with impacted communities will be crucial to helping eligible people maintain coverage going forward.

Importantly, H.R.1 does not change existing pathways for states to extend full scope Medicaid and CHIP to lawfully residing children and pregnant individuals, or for states to provide state-funded coverage to broader groups of non-citizens. These options will be crucial backstops as states consider how to maintain coverage for non-citizens going forward.

Background: Medicaid and CHIP Coverage of Non-Citizens

Under current law, for decades, states have been required to offer full Medicaid and CHIP coverage to “qualified” non-citizens (QNCs)—as defined by the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA)—who meet applicable eligibility requirements.[1] Some of these QNCs are also subject to a five-year waiting period prior to qualifying for Medicaid or CHIP. For other non-citizens, federal law requires states to provide coverage of emergency services.

States have also had the ability to provide coverage to broader groups of non-citizens through certain state options. This includes the Children’s Health Insurance Program Reauthorization Act of 2009 (CHIPRA) 214 state option, which allows full scope Medicaid and CHIP for lawfully residing children and pregnant individuals (including QNCs still within their five-year waiting period). States can also use the From-Conception-to-End-of-Pregnancy (FCEP) state option to provide CHIP coverage for pregnancy-related services, CHIP Health Services Initiatives (HSIs), and their own state funding.[2] 

CMS’ State Health Official Letter on Section 71109

H.R.1 significantly limits the non-citizens who will be eligible for full scope Medicaid and CHIP. As noted above, effective October 1, 2026, federal funding for full scope coverage will be limited to LPRs, Cuban-Haitian entrants, and COFA migrants. These new limits do not affect the state options noted above—CHIPRA 214, FCEP, and CHIP HSIs—or states’ ability to provide coverage through state-funded programs. Individuals who would qualify for Medicaid but for their immigration status will continue to be eligible for emergency Medicaid. However, effective October 1, 2026, under H.R.1, states may only receive their regular federal match for these emergency services.[3] CMS’ guidance reiterates these requirements and addresses certain policy and operational issues, as discussed below.

Key Policy Issues

Application of the Five-Year Bar. Under PRWORA, today, certain non-citizens—including most LPRs—must wait five years from their date of entry into the U.S. with a “qualified” status prior to becoming eligible for Medicaid, CHIP, and certain other federal programs. This waiting period is often referred to as the five-year bar. PRWORA expressly exempts certain immigrants from this waiting period, including COFA migrants, Cuban-Haitian entrants, refugees, asylees, individuals granted withholding of deportation or removal, certain Ukrainian or Afghan parolees, Iraqi or Afghan special immigrant visa holders, Amerasian immigrants, veterans or active-duty service members and their families, certain American Indians born abroad, and others. Under current law, if these exempt individuals become LPRs (e.g., upon admission or after adjusting their status), they can continue to receive Medicaid or CHIP without the five-year bar applying.

Per CMS’ guidance, H.R.1 does not change PRWORA’s application of the five-year bar, including who is subject to or exempt from the requirement. Thus, beginning October 1, 2026:

  • The five-year bar will continue to apply to most LPRs.[4]
  • The five-year bar will continue to not apply to immigrants who are exempt from the waiting period today, including Cuban-Haitian entrants and COFA migrants. This means this exemption also continues for immigrants who are newly excluded from federally-funded coverage but may become LPRs upon admission or by adjusting their status. Thus, if refugees, asylees, and other exempt individuals later become LPRs (and thus eligible for full scope Medicaid or CHIP), they can receive Medicaid or CHIP without the five-year bar applying.

 

No Requirements to Provide State-Only Coverage. CMS’ guidance also addresses section 71109’s potential conflicts with other federal requirements. For example, looking beyond H.R.1, the Medicaid statute elsewhere requires coverage for individuals who receive supplemental security income—a group that includes QNCs, including individuals newly excluded from FFP under Section 71109.[5] Additionally, PRWORA specifies the QNCs who are “eligible” for Medicaid or CHIP, which includes refugees, asylees, and others; H.R.1 did not change PRWORA’s definitions or requirements. In light of these other provisions, questions had arisen regarding whether states might be required to continue providing state-funded coverage to QNCs who would be newly excluded from FFP by H.R.1. In response, CMS notes that states will not be required to provide state-only funded health coverage to QNCs newly excluded from full scope Medicaid/CHIP under H.R.1. For this conclusion, CMS points to H.R.1’s legislative history and constitutional case law, noting that the availability of federal funding for Medicaid covered services is a fundamental aspect of the Medicaid program. States may continue to use their own dollars to fund coverage for non-citizens, but are not obligated to do so under federal law.

Implementation and Operational Considerations

Timing of Redeterminations. CMS’ guidance directs states to comply with H.R.1’s changes by October 1, 2026. Following that date, FFP will no longer be available for individuals newly excluded from full scope Medicaid and CHIP. This means states must implement all systems changes and redetermine eligibility for impacted non-citizens before this deadline, regardless of when they were otherwise due for a redetermination or if this occurs midway through a period of continuous eligibility.[6] As redetermining individuals’ eligibility can take several months, states will need to start notifying affected individuals and initiating redeterminations in order to make this deadline. CMS notes that states must comply with underlying Medicaid requirements in conducting these redeterminations. To this end, states must:

  • Conduct ex parte redeterminations by verifying information against data sources available to the state [e.g., the Department of Homeland Security’s (DHS’) SAVE program];
  • If the state requires additional information from the individual, provide the individual a reasonable opportunity to respond; and
  • If the individual responds with additional information about their current immigration status and the state is unable to verify that status, provide a 90-day reasonable opportunity period prior to taking an adverse action.

 

Notably, the guidance does not address whether FFP will continue to be available during a reasonable opportunity period that extends past October 1, 2026; further clarification from CMS may be coming on this issue.

CMS directs states to notify individuals whose status is verified as still eligible. For those who no longer have a satisfactory immigration status under section 71109,[7] states must consider all bases of eligibility and provide advance notice prior to terminating coverage. Importantly, for states that have elected the CHIPRA 214 state option, this means that states must preserve coverage for lawfully residing children or pregnant individuals who qualify for the CHIPRA 214 pathway—including refugees, asylees, victims of trafficking, and individuals with other statuses that no longer qualify for baseline coverage under section 71109.

Considerations for Managed Care. CMS directs states to ensure their Medicaid managed care programs comply with section 71109 of H.R.1. To this end, states and their actuaries should evaluate whether adjustments will be needed to Medicaid capitation rates and Medicaid managed care contracts.

CMS also reminds states that, per a State Medicaid Director Letter issued in September 2025, states must ensure emergency Medicaid services are pulled out of managed care contracts and paid for through fee-for-service (FFS) delivery systems[8] for rating periods beginning after September 30, 2026. State-only funded services for non-citizens who are not FFP-eligible non-citizens may not be included in a state’s contracts and payments to Medicaid managed care plans. With more individuals becoming only eligible for emergency Medicaid following H.R.1, this means more individuals may have their coverage paid for through FFS or carved out delivery systems.  

Using the SAVE Database. CMS’ guidance provides detailed information on how to access SAVE and use the data to verify individuals’ statuses. States may access SAVE through the Federal Data Services Hub, which CMS notes has been updated to provide information on whether individuals have an FFP-eligible non-citizen status for full scope Medicaid or CHIP. The Hub will continue to indicate whether the five-year bar applies. States may also connect directly with the SAVE database.

Applications, Renewal Forms, and Other Materials. States may need to make changes to their Medicaid and CHIP applications and renewal forms to align with H.R.1—for example, to reflect changes to the immigration statuses eligible for full scope Medicaid and CHIP. These changes would be more limited for states that have elected the CHIPRA 214 option and cover lawfully residing children and pregnant individuals. As CMS notes in its guidance, states are generally not required to submit a state plan amendment (SPA) to make these changes. CMS is continuing to evaluate whether changes will be made to the single, streamlined application on HealthCare.gov. States will also need to make changes to their policy manuals, eligibility worker training materials, call center scripts, and website language.

Medicaid and CHIP Information Technology (IT) Systems. CMS reminds states that enhanced funding is available to support necessary systems changes, with a 90% federal match available for design, development, and installation activities and a 75% match available for ongoing operations of CMS approved systems.

SPA Submission. States must submit SPAs to adopt the changes required by section 71109 no later than December 31, 2026, for an effective date of October 1, 2026. States with a separate CHIP program will be required to submit a SPA according to a timeline that depends on whether they have elected the CHIPRA 214 option for all covered populations.[9]

Oversight and Program Integrity. CMS’ guidance also emphasizes the administration’s continued focus on program integrity, with CMS noting that it intends to continue conducting close oversight of states’ claims for FFP for emergency Medicaid services. The guidance also reminds states of their obligations under the Payment Error Rate Measurement program, pointing to changes enacted in H.R.1 which, effective fiscal year 2030, will make federal penalties mandatory for states with certain levels of erroneous payments.

Outstanding Issues

Data Reporting. States will need to update how they submit Medicaid and CHIP data to the Transformed Medicaid Statistical Information System to reflect these changes—for example, to ensure that information is reported only for individuals eligible for FFP and individuals receiving emergency Medicaid services. States do not need to report information to CMS on individuals who have received state-only funded coverage. For the past year, data reporting for Medicaid and non-citizens has been a closely scrutinized issue following media reports revealing that CMS had shared, for the first time, Medicaid data with DHS for immigration enforcement purposes. CMS’ guidance does not address this issue or how states specifically will be required to amend their data reports; CMS plans to provide additional information in forthcoming guidance.

Dually Eligible Individuals. In addition to changes to Medicaid and CHIP, H.R.1 applied similar restrictions to Medicare as well as to PTCs for Marketplace coverage. However, there are different effective dates for these various changes, which creates complexity for individuals dually eligible for Medicaid and Medicare.[10] On the Medicare side, these changes took effect immediately for individuals newly eligible for Medicare after July 4, 2025, and take effect January 4, 2027 (18 months after H.R.1’s enactment) for individuals already entitled to Medicare as of July 4, 2025. Further guidance will be coming on this issue. Once the policy is clear, trainings for staff conducting eligibility determinations and outreach will be crucial to help dually eligible individuals navigate this change. 

Looking Ahead: What This Means for Non-Citizens, States, and Providers

H.R.1’s major changes to non-citizens’ access to Medicaid and CHIP will have significant consequences for immigrants across the country who will lose access to federally funded health coverage. As noted above, in addition to the direct impacts for those newly excluded from federally funded coverage, section 71109 threatens to contribute to chilling effects that will lead eligible immigrants and their citizen family members to forgo coverage and care. In addition to undermining the health of non-citizen communities, the result will be higher medical costs for healthcare providers and states as people forgo primary and preventive care and turn to the emergency room for treatment. For healthcare providers, this will also mean absorbing more uncompensated care.

Section 71109 also has significant operational burdens for states. CMS’ guidance means states must implement these changes now in order to make the law’s October 1, 2026, deadline—and states must do so alongside other major eligibility policies in H.R.1, such as Medicaid work reporting requirements and six-month renewals.[11] These overlapping changes will continue to stretch state resources and lead to more complexity for state eligibility workers, state systems, and people navigating Medicaid applications and renewals. Importantly, states can take concrete steps to protect coverage for certain immigrants by leveraging the CHIPRA 214 option, FCEP option, and CHIP HSIs, as well as establishing or expanding state-funded programs. In the meantime, clear communication and engagement with impacted communities will be crucial to help individuals navigate the changes ahead.

[1] Under PRWORA, federal public benefits, including Medicaid and CHIP, are available only to “qualified” non-citizens, defined as including LPRs, asylees, refugees, individuals paroled into the United States for at least one year, individuals granted withholding of deportation or removal, individuals granted conditional entry, Cuban-Haitian entrants, COFA migrants, certain humanitarian parolees, and certain survivors of domestic violence or trafficking. See 8 U.S.C. § 1641. Nonqualified immigrants include many individuals lawfully residing in the U.S. (such as persons granted Temporary Protected Status, deferred action, applicants for adjustment of status, persons with valid work authorization, student and work visa holders), as well as individuals without lawful status.

[2] See Kaiser Family Foundation, Key Facts on Health Coverage of Immigrants.

[3] CMS’ guidance notes that states claiming federal matching funds for a portion of supplemental payments at the enhanced Medicaid expansion rate will need to update their supplemental payment allocation methodology to account for this change to emergency Medicaid.

[4] States may continue to provide Medicaid and CHIP to LPRs who are children or pregnant or postpartum during this waiting period through the CHIPRA 214 state option.

[5] States are required to provide medical assistance that includes at least the care and services described in sections 1905(a)(1)-(5), (13)(B), (17), (21), (28), (29), and (30) of the Act to individuals listed at Section 1902(a)(10)(A) of the Social Security Act.

[6] CMS expressly addresses how these changes interact with continuous eligibility requirements for children and, in some states, other populations. With respect to Medicaid, FFP will no longer be available for individuals who no longer have a satisfactory immigration status as of October 1, 2026, though their continuous eligibility period will continue (consistent with prior CMS guidance). For individuals enrolled in CHIP, states must terminate coverage for individuals who lose their satisfactory immigration status.

[7] CMS notes that beginning October 1, 2026, a non-citizen must be an FFP-eligible non-citizen or meet a statutory exception (e.g., qualify for emergency Medicaid or through CHIPRA 214) to have “satisfactory immigration status” for full Medicaid benefits (including for purposes of section 1137(d) of the Social Security Act).

[8] Or by contracting with prepaid inpatient health plans and prepaid ambulatory health plans on a non-risk basis.

[9] States that have not elected CHIPRA 214 for all covered populations must submit CHIP SPAs to CMS no later than November 30, 2026, after sufficient public notice. For states with a separate CHIP that have elected the CHIPRA 214 option for all populations within their separate CHIP, the state will need to submit the SPA within the state fiscal year in which October 1, 2026 falls.

[10] With respect to Marketplace subsidies, as of 2026, non-citizens with incomes below 100% of the federal poverty level (FPL) can no longer receive PTCs to enroll in coverage. Beginning January 1, 2027, PTCs for non-citizens with incomes at or above 100% FPL will be limited to LPRs, Cuban-Haitian entrants, and COFA migrants.

[11] For more information, see SHVS’ Expert Perspective, New CMS Guidance on Six-Month Renewals in Medicaid.