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(2025-11-18)CMCS Informational Bulletin, November 18, 2025#

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DEPARTMENT OF HEALTH & HUMAN SERVICES Centers for Medicare & Medicaid Services

7500 Security Boulevard, Mail Stop S2-26-12 Baltimore, Maryland 21244-1850 CMCS Informational Bulletin DATE: November 18, 2025 FROM: Dan Brillman Deputy Administrator, CMS Director, Center for Medicaid and CHIP Services (CMCS) SUBJECT: “Working Families Tax Cut” Legislation, Public Law 119-21: Summary of Medicaid and Children's Health Insurance Program (CHIP) Related Provisions Introduction On July 4, 2025, President Trump signed Public Law 119-21, also known as the “One Big Beautiful Bill Act,” which the Centers for Medicare & Medicaid Services (CMS) refers to as the “Working Families Tax Cut” (WFTC) legislation, into law. This landmark legislation includes significant eligibility and financing reforms in Medicaid and the Children’s Health Insurance Program (CHIP) and focuses on the connection of health to work through community engagement. Specific eligibility reforms aim to ensure lawful enrollment in Medicaid and CHIP. The financing reforms in the law focus on ensuring that states contribute their full commitments to finance Medicaid and reducing financing loopholes. Community engagement requirements have the potential to empower Medicaid beneficiaries through employment, education, or volunteer service so they can escape isolation, build confidence, and achieve prosperity. These provisions reflect a commitment to safeguarding Medicaid and CHIP for the most vulnerable Americans now and in the future. These reforms also impact program operations, enhance oversight capabilities, and establish new accountability measures for Medicaid and CHIP. Taken together with other CMS priorities, the reforms lay the groundwork for a stronger state-federal partnership that improves health outcomes among beneficiaries. This CMCS Informational Bulletin (CIB) provides general information to states, stakeholders, and others on the Medicaid and CHIP provisions contained in the WFTC legislation. This CIB represents part of a series of guidance documents that CMCS expects to issue to support the implementation of the WFTC legislation provisions. CMCS expects to provide additional detailed guidance in the coming months addressing specific provisions and implementation requirements. We also plan to undertake rulemaking as required under the law or as otherwise warranted. CMCS is committed to supporting successful implementation of these transformative

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Page 2 – CMCS Informational Bulletin changes through detailed guidance, technical assistance, and ongoing partnership with state agencies. Table of Contents Summary of Working Families Tax Cut Legislation Provisions .................................................... 4 Subchapter A – Reducing Fraud and Improving Enrollment Processes ..................................... 4 Section 71101. Moratorium on Implementation of Rule Relating to Eligibility and Enrollment in Medicare Savings Programs ............................................................................ 4 Section 71102. Moratorium on Implementation of Rule Relating to Eligibility and Enrollment for Medicaid, CHIP, and the Basic Health Program ........................................... 4 Section 71103. Reducing Duplicate Enrollment under the Medicaid and CHIP Programs... 5 Section 71104. Ensuring Deceased Individuals Do Not Remain Enrolled ............................. 6 Section 71105. Ensuring Deceased Providers Do Not Remain Enrolled ............................... 7 Section 71106. Payment Reduction Related to Certain Erroneous Excess Payments under Medicaid ................................................................................................................................. 7 Section 71107. Eligibility Redeterminations........................................................................... 7 Section 71108. Revising Home Equity Limit for Determining Eligibility for Long-Term Care Services under the Medicaid Program.................................................................................... 8 Section 71109. Alien Medicaid Eligibility............................................................................. 10 Section 71110. Expansion FMAP for Emergency Medicaid ................................................. 11 Subchapter B – Preventing Wasteful Spending ........................................................................ 12 Section 71111. Moratorium on Implementation of Rule Relating to Staffing Standards for Long-Term Care Facilities under the Medicare and Medicaid Programs............................ 12 Section 71112. Reducing State Medicaid Costs .................................................................... 12 Section 71113. Federal Payments to Prohibited Entities...................................................... 13 Subchapter C – Stopping Abusive Financing Practices............................................................ 14 Section 71114. Sunsetting Increased FMAP Incentive.......................................................... 14 Section 71115. Provider Taxes .............................................................................................. 14 Section 71116. State Directed Payments ............................................................................... 15 Section 71117. Requirements Regarding Waiver of Uniform Tax Requirement for Medicaid Provider Tax.......................................................................................................................... 16 Section 71118. Requiring Budget Neutrality for Medicaid Demonstration Projects under Section 1115 .......................................................................................................................... 17

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Page 3 – CMCS Informational Bulletin Subchapter D – Increasing Personal Accountability................................................................. 18 Section 71119. Requirement for States to Establish Medicaid Community Engagement Requirements for Certain Individuals................................................................................... 18 Section 71120. Modifying Cost Sharing Requirements for Certain Expansion Individuals under the Medicaid Program................................................................................................ 20 Subchapter E – Expanding Access to Care ............................................................................... 21 Section 71121. Making Certain Adjustments to Coverage of Home or Community-Based Services under Medicaid....................................................................................................... 21 Chapter 4 – Protecting Rural Hospitals and Providers ............................................................. 22 Section 71401. Rural Health Transformation Program........................................................ 22 Tax-Related Provisions ............................................................................................................. 23 Closing .......................................................................................................................................... 24 Appendix A. Key Dates ............................................................................................................ 26 Appendix B. Opportunities for Additional Financial Support for States.................................. 28 Appendix C. Applicability to the Territories............................................................................. 30 Appendix D. Applicability to American Indians and Alaska Natives....................................... 32 Appendix E. Moratorium on Implementation of Rule Relating to Eligibility and Enrollment in Medicare Savings Programs ..................................................................................................... 33 Appendix F. Moratorium on Implementation of Rule Relating to Eligibility and Enrollment for Medicaid, CHIP, and the Basic Health Program....................................................................... 35

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Page 4 – CMCS Informational Bulletin Summary of Working Families Tax Cut Legislation Provisions Subchapter A1 – Reducing Fraud and Improving Enrollment Processes Section 71101. Moratorium on Implementation of Rule Relating to Eligibility and Enrollment in Medicare Savings Programs On September 21, 2023, CMS published a final rule entitled “Streamlining Medicaid; Medicare Savings Program Eligibility Determination and Enrollment,” (known as the MSP final rule), that instituted new requirements for states to expand eligibility and streamline enrollment processes for the Medicare Savings Programs (MSPs).2 The MSP final rule went into effect on November 17, 2023, and CMS outlined a phased-in approach for states to come into compliance with each provision between 2024 and 2026. Section 71101 temporarily prohibits CMS from implementing, administering, or enforcing certain amendments made by the provisions of the MSP final rule that had a compliance date after July 4, 2025, the date the WFTC legislation was enacted. The moratorium on these amendments ends on September 30, 2034. While the moratorium is in effect, CMS will, in general, revert to the regulations in place as of November 16, 2023, for sections of the regulation subject to the moratorium.3 CMS continues to analyze the impact of the moratorium on MSP eligibility and enrollment processes and expects to provide additional information to states in future guidance. See Appendix E for the complete list of provisions in the MSP final rule and their status under the moratorium. Section 71101 affects regulations applicable to all states and the District of Columbia; the regulations impacted by the MSP final rule do not impact the territories because they have not adopted the MSPs.4 Section 71102. Moratorium on Implementation of Rule Relating to Eligibility and Enrollment for Medicaid, CHIP, and the Basic Health Program On April 2, 2024, CMS published a final rule entitled “Medicaid Program; Streamlining the Medicaid, Children’s Health Insurance Program, and Basic Health Program Application, Eligibility Determination, Enrollment, and Renewal Processes,” (known as the Eligibility and Enrollment final rule), that outlined changes to processes for eligible people to enroll in and 1 The references to “Subchapters” in the headings are to Subchapters of Chapter 1 of Subtitle B of Title VII of Public Law 119-21. 2 https://www.federalregister.gov/documents/2023/09/21/2023-20382/streamlining-medicaid-medicare-savings- program-eligibility-determination-and-enrollment 3 https://www.ecfr.gov/on/2023-11-16/title-42/chapter-IV 4 The MSPs are mandatory Medicaid eligibility groups for the 50 states and the District of Columbia, but optional for territories per section 1905(p)(4)(A) of the Social Security Act.

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Page 5 – CMCS Informational Bulletin retain Medicaid, CHIP, and Basic Health Program (BHP) coverage.5 The Eligibility and Enrollment final rule went into effect on June 3, 2024, and CMS outlined a phased-in approach for states to come into compliance with each provision between 2024 and 2027. Section 71102 temporarily prohibits CMS from implementing, administering, or enforcing certain amendments made by the provisions of the Eligibility and Enrollment final rule that had a compliance date after July 4, 2025, the date the WFTC legislation was enacted. The moratorium on these amendments ends on September 30, 2034. While the moratorium is in effect, CMS will, in general, revert to the regulations in place as of June 2, 2024, for sections of the regulation subject to the moratorium.6 CMS continues to analyze the impact of the moratorium on eligibility and enrollment processes and expects to provide additional information to states in future guidance. See Appendix F for the complete list of provisions in the Eligibility and Enrollment final rule and their status under the moratorium. Section 71102 affects regulations applicable to all states, the District of Columbia, and the territories. Section 71103. Reducing Duplicate Enrollment under the Medicaid and CHIP Programs Section 71103 creates two new state plan requirements related to address verification for states at new paragraph (88) under section 1902(a) of the Social Security Act (the Act) for Medicaid, with corresponding amendments to section 2107(e)(1) of the Act to apply these requirements to separate CHIPs. Beginning no later than January 1, 2027, each of the 50 states and the District of Columbia will need to have a process to regularly obtain address information from the following “reliable data sources”: mail returned by the U.S. Postal Service with a forwarding address; the U.S. Postal Service National Change of Address Database; certain managed care entities (i.e., managed care organizations (MCOs); prepaid inpatient health plans (PIHPs); prepaid ambulatory health plans (PAHPs); primary care case manager (PCCM)); and other data sources as identified by the state and approved by the Secretary. Based on this information, states must take such actions as the Secretary specifies with respect to any address changes for individuals enrolled under the state plan (or a waiver of such plan). Beginning January 1, 2027, this provision also requires that each contract under a state plan that a state has with certain entities or plans (MCOs, PIHPs, PAHPs and PCCMs) require that such entity or plan promptly transmit to the state any address information received directly from enrollees or verified by the entity or plan directly with the enrollee. This provision builds on processes many states established during the COVID-19 Public Health Emergency (PHE), since 5 https://www.federalregister.gov/documents/2024/04/02/2024-06566/medicaid-program-streamlining-the-medicaid- childrens-health-insurance-program-and-basic-health 6 https://www.ecfr.gov/on/2024-06-02/title-42/chapter-IV/subchapter-C

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Page 6 – CMCS Informational Bulletin these contracted plans and entities often have the most up-to-date beneficiary address information. Section 71103 also requires CMS to establish, by October 1, 2029, a system that CMS and states will use to prevent an individual from being simultaneously enrolled under the state plans (or waivers of such plans) of multiple states. States will be required to submit data to the system at least monthly and during each determination or redetermination of eligibility of an individual for medical assistance under a state plan (or waiver of such plan). Information that states will be required to submit to the system will include an individual’s social security number (if an individual has a social security number and is required to provide such number to enroll under such plan or waiver), and other applicant and beneficiary information that the Secretary determines is necessary to prevent individuals from being inappropriately enrolled in Medicaid or CHIP in multiple states (unless such individual meets such an exception as the Secretary may specify). In addition, section 71103 requires that, at least once each month, the system described above transmits information to the states identifying whether individuals enrolled or seeking to enroll in their respective state are identified as also being enrolled under another state’s state plan (or waiver thereof). Should the system identify such an individual, the state will be required to take appropriate action as determined by the Secretary to determine whether that individual is a resident of the state and, if not, disenroll the individual (unless such individual meets such an exception as the Secretary may specify). This new provision does not eliminate the existing requirement under section 1903(r)(3) of the Act that states must have in operation an eligibility determination system which provides for data matching through the Public Assistance Reporting Information System (PARIS). However, it does provide that, beginning October 1, 2029, the Secretary may determine that a state is not required to have in operation such an eligibility determination system to comply with this requirement. Except as noted above with respect to section 1902(a)(88)(A) of the Act, section 71103 is applicable to all states, the District of Columbia, and the territories. Section 71104. Ensuring Deceased Individuals Do Not Remain Enrolled Section 71104 adds a new paragraph (89) to section 1902(a) of the Act by which a state plan must provide that a state, beginning on January 1, 2027, check the Social Security Administration’s (SSA) Death Master File (DMF) or a successor system on at least a quarterly basis to determine whether Medicaid enrollees are deceased. States will be required to treat such information as factual and, following the provision of notice and fair hearing rights consistent with 42 CFR part 431 subpart E, disenroll such individuals from Medicaid without requesting additional information from the household or authorized representative. If a state determines that the DMF misidentified an individual as deceased, such individual must be immediately reenrolled in Medicaid retroactive to the date of disenrollment. This section also provides that

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Page 7 – CMCS Informational Bulletin states are permitted to use other electronic data sources in addition to the DMF, such as vital statistics data on deaths available through State Health Departments and State Vital Statistics Offices, to timely identify potentially deceased beneficiaries, as long as the state also complies with requirements of this section and other Medicaid eligibility determination and redetermination requirements. Section 1902(a)(89) of the Act, as added by section 71104, is applicable to all states and the District of Columbia; it does not apply to the territories. Section 71105. Ensuring Deceased Providers Do Not Remain Enrolled Under current regulations, states are required to check the DMF when enrolling, reenrolling, or revalidating enrollment of a provider in their state Medicaid program or separate CHIP.7 Section 71105 amends section 1902(kk)(1) of the Act to, in addition to current requirements, also require states, beginning January 1, 2028, to check the DMF no less frequently than quarterly to determine whether a provider is deceased. This requirement is applicable to separate CHIPs through an existing cross-reference at section 2107(e)(1)(G) of the Act. Section 1902(kk)(1), as amended by section 71105, is applicable to all states, the District of Columbia, and the territories. Section 71106. Payment Reduction Related to Certain Erroneous Excess Payments under Medicaid Currently, the Secretary is required to disallow federal monies if a state Medicaid program has an eligibility-related error rate greater than 3 percent. However, the Secretary may waive, in certain limited cases, all or part of such a disallowance with respect to any state if such state is unable to reach the allowable error rate for a period or fiscal year despite a good faith effort by such state (described in regulation as a “good faith waiver”). Section 71106 amends section 1903(u)(1) of the Act to specify, beginning in Fiscal Year 2030, when the Secretary must issue eligibility-related disallowances and establishes new restrictions on the Secretary’s authority to issue good faith waivers for states with Medicaid eligibility- related error rates exceeding 3 percent. CMS expects to provide additional guidance to states on implementation of this provision. Section 1903(u)(1) of the Act, as amended by section 71106, is applicable to all states and the District of Columbia; it does not apply to the territories. Section 71107. Eligibility Redeterminations Federal regulations currently in effect require states to redetermine eligibility once every 12 months, and no more frequently than once every 12 months, for Medicaid beneficiaries whose 7 See 42 CFR § 455.436; 42 CFR § 457.990(b).

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Page 8 – CMCS Informational Bulletin financial eligibility is determined using modified adjusted gross income (MAGI), including beneficiaries in the adult group under section 1902(a)(10)(A)(i)(VIII) of the Act.8 Section 71107 amends section 1902(e)(14) of the Act to add a new subparagraph (L) that requires more frequent eligibility redeterminations for the population enrolled in the Medicaid adult group under section 1902(a)(10)(A)(i)(VIII) of the Act. Additionally, these requirements apply to individuals who are described in section 1902(a)(10)(A)(i)(VIII) who are otherwise enrolled in coverage under a waiver of the state plan (including through a section 1115 demonstration) that provides coverage that is equivalent to minimum essential coverage (MEC)9 to all individuals described in section 1902(a)(10)(A)(i)(VIII) of the Act. Beginning with renewals scheduled on or after January 1, 2027, states and the District of Columbia will be required to conduct renewals once every 6 months for these individuals, rather than once every 12 months. The new requirements of this section do not apply to certain American Indians and Alaska Natives described in section 1902(xx)(9)(A)(ii)(II)10 of the Act who otherwise would be subject to the new 6-month renewal requirement. The new requirements of this section do not change renewal requirements for individuals enrolled in all other eligibility groups, whether MAGI- based or non-MAGI based. CMS is required to issue guidance related to section 71107 by December 31, 2025. Section 1902(e)(14)(L) of the Act, as added by section 71107, is applicable to all states and the District of Columbia that provide coverage to the affected populations as noted above; it does not apply to the territories. Section 71108. Revising Home Equity Limit for Determining Eligibility for Long-Term Care Services under the Medicaid Program Section 1917(f)(1) of the Act prohibits states, subject to certain exceptions, from providing Medicaid coverage of nursing facility services and other long-term services and supports to individuals whose home equity exceeds certain dollar limits.11 This rule applies to both MAGI- 8 CMS refers to the renewal requirements at 42 CFR § 435.916 in effect as of 2023. Amendments to renewal requirements were made by the 2024 Eligibility & Enrollment Final Rule. Although states were originally required to comply with these amendments by June 2027, the moratorium at Section 71102 temporarily prohibits CMS from implementing, administering, or enforcing these amendments until September 30, 2034. 9 MEC is defined in the statute as follows: “as described in section 5000A(f)(1)(A) of the Internal Revenue Code of 1986 and determined in accordance with standards prescribed by the Secretary in regulations.” 10 This exemption specifically applies to: an Indian or Urban Indian (as such terms are defined in paragraphs (13) and (28) of section 4 of the Indian Health Care Improvement Act); a California Indian described in section 809(a) of such Act; or those who have otherwise been determined eligible as an Indian for the Indian Health Service under regulations promulgated by the Secretary. 11 CMS has instructed states that they should follow the basic policies of the supplemental security income (SSI) program in determining home equity value. CMS State Medicaid Director Letter #06-018, Enclosure, “Section 6011 and 6016,” page 23, available at https://downloads.cms.gov/cmsgov/archived-downloads/SMDL/downloads/toaenclosure.pdf.

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Page 9 – CMCS Informational Bulletin based and non-MAGI-based Medicaid beneficiaries.12 Section 1917(f)(1) of the Act currently sets the minimum and maximum home equity limits at $500,000 and $750,000, respectively, and, per section 1917(f)(1)(C) of the Act, these figures have increased since 2011, from year to year, based on the percentage increase in the consumer price index for all urban consumers (CPI-U).13 In 2025, the minimum and maximum home equity limits are, respectively, $730,000 and $1,097,000.14 A state may elect to set its home equity limit between these minimum and maximum thresholds.15 Section 71108 amends section 1917(f)(1) of the Act, beginning January 1, 2028, to cap the maximum home equity limit at $1,000,000, except that this limit will not apply to homes on land zoned for agricultural use.16 States will continue to have the option to impose a limit between the applicable minimum and maximum amounts, and this option will apply to both homes that are on land zoned for agricultural use and homes that are not. For non-agricultural homes, the minimum and maximum limits will be, respectively, the amount described in section 1917(f)(1)(A) of the Act, adjusted by CPI-U increases per section 1917(f)(1)(C) of the Act (which, as described above, equals $730,000 in 2025) and $1,000,000. The minimum home equity limit will continue to increase based on CPI-U increases until it reaches $1,000,000. For homes on land zoned for agricultural use, the same minimum limit imposed for non agricultural homes and described in section 1917(f)(1)(A) of the Act will apply and will continue to increase based on CPI-U increases until it reaches $1,000,000. However, states will be permitted to elect a maximum limit for homes on land zoned for agricultural use that is effectively the current maximum limit ($1,097,000 for 2025, as described above, and subject to CPI-U increases year to year), and this maximum limit will continue to increase based on CPI-U increases in lieu of the $1,000,000 cap that will apply to non-agricultural homes. Section 71108 also amends sections 1902(e)(14)(D)(iv) and 1902(r)(2) of the Act to prohibit states from using a methodology to determine home equity value that effectively raises the limits above those mandated by section 1917(f)(1). Section 1917(f)(1) of the Act, as amended by section 71108, is applicable to all states, the District of Columbia, and the territories. 12 CMS State Medicaid Director Letter #14-001, “Application of Liens, Adjustments and Recoveries, Transfer of Asset Rules and Post-Eligibility Income Rules to MAGI Individuals,” page 5, available at https://www.medicaid.gov/federal-policy-guidance/downloads/SMD-14-001.pdf 13 See U.S. Bureau of Labor Statistics, available at https://www.bls.gov/cpi/ 14 CMCS Informational Bulletin, November 15, 2024, “2025 SSI, Spousal Impoverishment, and Medicare Savings Program Resource Standards,” available at https://www.medicaid.gov/federal-policy-guidance/downloads/cib11152024.pdf 15 Section 1917(f)(1)(B) of the Act. 16 Note that Section 71108 creates new and different home equity-related treatment for homes on land zoned for agricultural use and homes that are not.

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Page 10 – CMCS Informational Bulletin Section 71109. Alien Medicaid Eligibility Under the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA) (Public Law 104-193), certain “qualified aliens,” also referred to as “qualified noncitizens,”17 (e.g., lawful permanent residents (LPRs)/“green card holders,” refugees, and asylees) are eligible for federal public benefits, including full Medicaid and CHIP coverage, if they meet all other eligibility requirements in the state (e.g., residency, income). Other federal statutes require other categories of individuals – including certain victims of human trafficking18 and certain Afghan19 and Ukrainian20 parolees – to be treated as “refugees” and therefore they are considered eligible for full Medicaid or CHIP coverage, if they meet all other eligibility requirements in the state. In accordance with PRWORA, many qualified noncitizens are subject to a five-year waiting period before becoming eligible for full Medicaid benefits or CHIP coverage, but some noncitizens are exempted from the five-year waiting period in Medicaid and CHIP (e.g., refugees and asylees).21 The Children’s Health Insurance Program Reauthorization Act of 2009 (CHIPRA) (Public Law 111-3) authorized an option for states to provide full Medicaid and CHIP coverage to children up to age 21 (up to age 19 for CHIP) and pregnant women who are lawfully residing in the U.S., without having to meet the five-year waiting period if otherwise applicable (often referred to as the “CHIPRA 214 option”). Section 71109 amends sections 1903(v) and 2107(e)(1) of the Act to restrict, with limited exceptions, federal financial participation (FFP) for medical assistance (Medicaid) and child or pregnancy-related health assistance (CHIP) to the following groups beginning October 1, 2026: 17 “Qualified noncitizen” is defined at 42 CFR § 435.4 for Medicaid and cross referenced at 42 CFR § 457.320(c) for CHIP, and includes: 1) noncitizens who are considered “qualified aliens” under 8 U.S.C. § 1641(b) and (c); and 2) noncitizens who are treated as refugees under other Federal statutes. 18 22 U.S.C. § 7105(b)(1)(C), or who are classified as nonimmigrants under § 101(a)(15)(T)(ii) of the Immigration and Nationality Act (8 U.S.C. § 1101(a)(15)(T)(ii)), pursuant to 22 U.S.C. § 7105(b)(1)(A). See also 8 U.S.C. § 1641(c)(4). 19 Section 2502 of the Extending Government Funding and Delivering Emergency Assistance Act (Public Law 117- 43 as amended, enacted September 30, 2021) and Section 1501 of the Consolidated Appropriations Act, 2023, Public Law 117-328. 20 Section 401 of the Additional Ukraine Supplemental Appropriations Act (Public Law 117-128 as amended, enacted May 21, 2022; Title III, Section 301 of Public Law 118-50, which amends Section 401(a)(1)(A) of the Additional Ukraine Supplemental Appropriations Act, 2022. 21 8 U.S.C. § 1613(b).

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Page 11 – CMCS Informational Bulletin 1) U.S. citizens and nationals, 2) LPRs,22 3) Cuban and Haitian entrants,23 and 4) Compacts of Free Association (COFA) migrants.24 We note that section 71109 does not amend PRWORA. The FFP limitations described in section 71109 do not apply to expenditures for: 1) care and services necessary for the treatment of an emergency medical condition as described in section 1903(v)(3) of the Act, authorized under section 1903(v)(2) of the Act (often referred to as “emergency Medicaid”);25 2) medical assistance to lawfully residing children and pregnant women under the CHIPRA 214 option authorized by section 1903(v)(4) of the Act;26 and 3) any state-designed Health Services Initiatives (HSIs) to improve the health of low-income children authorized under section 2105(a)(1)(D)(ii) of the Act.27 CMS is continuing to assess the implications of section 71109 on Medicaid and CHIP and expects to address any additional information in forthcoming guidance. Sections 1903(v)(5) and 2107(e)(1)(R) of the Act, as added by section 71109, are applicable to all states, the District of Columbia, and the territories. Section 71110. Expansion FMAP for Emergency Medicaid FFP is authorized for care and services necessary to treat an emergency medical condition (as described in section 1903(v)(3) of the Act) for certain noncitizens who do not have satisfactory immigration status for full Medicaid benefits, provided they otherwise meet a state’s Medicaid eligibility criteria (e.g., income, state residence),28 generally at the state’s regular Federal medical assistance percentage (FMAP) under section 1905(b) of the Act. Currently, if such a noncitizen meets the criteria in section 1902(a)(10)(A)(i)(VIII) of the Act for the Medicaid adult group, and the criteria in section 1905(y) or 1905(z) are met, a state can claim the associated 90 percent FMAP for its expenditures on services for an emergency medical condition for that noncitizen. Section 71110 adds a new subsection (kk) to section 1905 of the Act. Beginning October 1, 2026, new subsection 1905(kk) limits the FMAP for emergency Medicaid services provided to noncitizens to no greater than the FMAP determined under section 1905(b) of the Act for such 22 Section 1903(v)(5)(B)(ii) as added by section 71109(a) of the WFTC legislation, section 101(a)(15) and 101(a)(20) of the Immigration and Nationality Act (INA); an individual who is lawfully admitted for permanent residence under the INA (8 U.S.C. § 1101 et seq.); 8 U.S.C. § 1641(b)(1)). 23 Section 1903(v)(5)(B)(iii) as added by section 71109(a) of the WFTC legislation, section 501(e) of Refugee Education Assistance Act of 1980. See 8 U.S.C. §§ 1612(b)(2)(A)(iv), 1613(b)(1)(D), and 1641(b)(7). 24 Section 1903(v)(5)(B)(iv) as added by section 71109(a) of the WFTC legislation; see also Section 2107(e)(1)(R) (applying the same limitation to CHIP). See 8 U.S.C. §§ 1612(b)(2)(G), 1613(b)(3), and 1641(b)(8)). Coverage of COFA migrants under Medicaid is optional for territories. 25 Section 1903(v)(5) of the Act, added by section 71109(a) of the WFTC legislation; 8 U.S.C. 1611(b)(1)(A). 26 Section 1903(v)(5) of the Act, added by section 71109(a) of the WFTC legislation. The CHIPRA 214 option is applicable to CHIP through a cross-reference at section 2107(e)(1)(Q) of the Act to section 1903(v)(4) of the Act. 27 Section 2107(e)(1)(R) of the Act, added by section 71109(b) of the WFTC legislation. 28 8 U.S.C. § 1611(b)(1)(A) and sections 1903(v)(2) and (3) of the Act. See also section 1903(v)(5) of the Act, added by section 71109(a) of the WFTC legislation, which will apply beginning October 1, 2026, as discussed above.

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Page 12 – CMCS Informational Bulletin state, notwithstanding subsections 1905(y) and (z) of the Act.29 That means that the 90 percent FMAP described above will no longer be available for emergency Medicaid services for individuals who meet the eligibility requirements under the Medicaid adult group. Section 1905(kk) of the Act, as added by section 71110, is applicable to all states, the District of Columbia, and the territories. Subchapter B – Preventing Wasteful Spending Section 71111. Moratorium on Implementation of Rule Relating to Staffing Standards for Long-Term Care Facilities under the Medicare and Medicaid Programs On May 10, 2024, CMS published a final rule, “Medicare and Medicaid Programs; Minimum Staffing Standards for Long-Term Care Facilities and Medicaid Institutional Payment Transparency Reporting,” which establishes certain minimum nurse staffing and enhanced facility assessment requirements for nursing homes, and requires states to report on the percentage of Medicaid payments that are spent on compensation for direct care workers and support staff in nursing facilities and intermediate care facilities for individuals with intellectual disabilities.30 Section 71111 temporarily prohibits CMS from implementing, administering, or enforcing certain nursing home staffing provisions of the nursing home minimum staffing final rule through September 30, 2034. Specifically, the moratorium applies to revised provisions found at 42 CFR §§ 483.5 and 483.35. The rules in effect before May 10, 2024 will continue to be enforced. This moratorium does not apply to the enhanced facility assessment requirements set out at new 42 CFR § 483.71 or the Medicaid Institutional Payment Transparency Reporting provisions set out at new 42 CFR § 442.43. Section 71111 affects regulations implemented by all states, the District of Columbia, and the territories. Section 71112. Reducing State Medicaid Costs Currently, states are required to provide applicants retroactive eligibility in Medicaid for up to three months prior to the month of application if the individual has received Medicaid services covered under the state plan during that period and such individual would have been eligible at 29 To the extent a state was able to claim the increased FMAP for emergency services to noncitizens (including for services through a section 1115 demonstration), the FMAP will now be no greater than the FMAP determined under section 1905(b) of the Act for such state. 30 https://www.federalregister.gov/documents/2024/05/10/2024-08273/medicare-and-medicaid-programs-minimum- staffing-standards-for-long-term-care-facilities-and-medicaid

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Page 13 – CMCS Informational Bulletin the time services were received had they applied. For separate CHIPs, any period of retroactive eligibility is optional. Section 71112 amends sections 1902(a)(34) and 1905(a) of the Act to shorten the retroactive eligibility period in Medicaid. Effective for applications made on or after January 1, 2027, the retroactive eligibility period for individuals enrolled in the Medicaid adult group under section 1902(a)(10)(A)(i)(VIII) of the Act will be limited to one month prior to the month of application. For all other individuals, that is, those not enrolled in the Medicaid adult group under section 1902(a)(10)(A)(i)(VIII) of the Act, the retroactive eligibility period will be limited to two months prior to the month of application. This provision also makes similar amendments to CHIP at section 2102(b)(1)(B) of the Act by adding a new paragraph (vi), where states retain the option to provide retroactive eligibility, but cannot begin the coverage any earlier than two months prior to the month of application. The CHIP amendments will also be effective for applications made on or after January 1, 2027. Sections 1902(a)(34), 1905(a), and 2102(b)(1)(B) of the Act, as amended by section 71112, are applicable to all states, the District of Columbia, and the territories. Section 71113. Federal Payments to Prohibited Entities Section 71113 prohibits federal Medicaid funding for items and services furnished during the 1- year period beginning July 4, 2025, by a “prohibited entity,” defined as an entity that meets the below four conditions as of October 1, 2025, along with such an entity’s affiliates, subsidiaries, successors, and clinics. The four conditions are as follows: 1) The entity is a nonprofit organization described in section 501(c)(3) of the Internal Revenue Code of 1986 and exempt from tax under section 501(a) of that Code. 2) The entity is an essential community provider31 primarily engaged in family planning services, reproductive health, and related medical care. 3) The entity provides for abortions other than an abortion if the pregnancy is the result of an act of rape or incest, or in the case where a woman suffers from a physical disorder, physical injury, or physical illness, including a life-endangering physical condition caused by or arising from the pregnancy itself, that would, as certified by a physician, place the woman in danger of death unless an abortion is performed. 4) The total amount of federal and state32 Medicaid expenditures for medical assistance furnished in fiscal year 2023 made directly or by a “covered organization”33 to the entity 31 As described in regulations at 45 CFR § 156.235, as in effect on July 4, 2025, the date of enactment of the WFTC legislation. 32 “State” includes the states, the District of Columbia, and the territories (American Samoa, Guam, the Northern Mariana Islands, Puerto Rico, and the U.S. Virgin Islands). See section 71113(b)(4) of the WFTC legislation (referencing section 1101 of the Act). 33 A “covered organization” is a managed care organization, primary care case manager, prepaid inpatient health plan or a prepaid ambulatory health plan as defined in 42 CFR § 438.2.

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Page 14 – CMCS Informational Bulletin or to any affiliates, subsidiaries, successors, or clinics of the entity, or made to the entity or to any affiliates, subsidiaries, successors, or clinics of the entity as part of a nationwide health care provider network, exceeded $800,000. The federal funding prohibition applies to “any payments made directly to the prohibited entity or under a contract or other arrangement between a [s]tate and a covered organization.” Consistent with existing processes on quarterly expenditure reporting, states should expect to provide assurances that claims for FFP are only for Medicaid expenditures permitted by law. Subchapter C – Stopping Abusive Financing Practices Section 71114. Sunsetting Increased FMAP Incentive Section 1905(ii) of Act as added by section 9814 of the American Rescue Plan Act of 2021 (Public Law 117-2) provided a temporary (8 calendar quarters) 5-percentage-point FMAP increase to a state’s regular FMAP determined under section 1905(b) of the Act for states that newly expand eligibility to all individuals in the Medicaid adult group described in section 1902(a)(10)(A)(i)(VIII) under the state plan or waiver of such plan. As of November 2025, 4 states received this increase. Section 71114 amends section 1905(ii)(3) of the Act to end the availability of the 5-percentage- point FMAP increase incentive for states that adopt the Medicaid adult group expansion on or after January 1, 2026. Section 1905(ii)(3) of the Act, as amended by section 71114, is applicable to all states and the District of Columbia; it does not apply to the territories.34 Section 71115. Provider Taxes Under current law, states may use revenue generated through certain health care-related taxes to fund the non-federal share of Medicaid expenditures. Health care-related taxes must meet requirements in section 1903(w) of the Act and implementing regulations at 42 CFR Part 433. These requirements include that taxes must be imposed on a permissible class of providers and must be broad-based and uniform (unless a waiver is approved). The statute also prohibits multiple types of hold harmless arrangements, including those that guarantee taxpayers receive their tax cost back through Medicaid or other payments. Regulations at 42 CFR § 433.68(f) specify two specific types of hold harmless arrangements that involve guarantees: direct and indirect. An indirect hold harmless arrangement generally occurs when the state taxes health care providers at a high rate relative to their revenue, historically set to 6 percent of net patient 34 Territories are eligible for the expansion state enhanced FMAP for adults without dependent children, which states were eligible to receive for expansions prior to the Affordable Care Act under section 1905(z) of the Act (although we note neither American Samoa nor the Commonwealth of the Northern Mariana Islands have claimed any expenditures under this FMAP). As such, territories were not eligible for the increase under section 9814 of American Rescue Plan Act, and this sunset provision does not apply to them.

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Page 15 – CMCS Informational Bulletin revenue, resulting in a presumption that the tax costs will be repaid to the taxpayer through increased Medicaid payments, after the state draws down federal financial participation. Generally, the 6 percent indirect hold harmless threshold limits the amount each state can collect in provider taxes on a per-class basis.35 Section 71115 amends section 1903(w)(4) of the Act by modifying the indirect hold harmless threshold, beginning on October 1, 2026. Effectively, this provision prohibits states from increasing the revenue a health care-related tax can generate in almost all instances and generally prohibits states from establishing new provider taxes. This effect is achieved by setting the indirect hold harmless threshold equal to the percent of net patient revenue attributable to such permissible class as of July 4, 2025. Beginning October 1, 2027, the indirect hold harmless threshold for Medicaid expansion states36 is reduced to the lower of July 4, 2025, levels or 5.5 percent, which decreases annually by 0.5 percentage points until reaching 3.5 percent in FY 2032. This phase-down is not applicable to non-expansion states or to health care-related taxes imposed on the nursing facility or Intermediate Care Facility for Individuals with Intellectual Disabilities (ICF/IID) permissible classes. On November 14, 2025, CMS sent a letter37 to states outlining preliminary guidance on section 71115 (and section 71117). Under section 71115(b), the amendments made to section 1903(w)(4) of the Act are applicable to all states and the District of Columbia; they do not apply to the territories. Section 71116. State Directed Payments Generally, states may not direct MCO, PIHP, or PAHP expenditures, except in limited circumstances. One such circumstance is when states obtain approval for a state directed payment (SDP), which permits states to direct specific payments made by MCOs, PIHPs, or PAHPs to providers under certain circumstances. The regulation finalized in 2024 at 42 CFR § 438.6(c)(2)(iii) requires that the total payment rate for SDPs for inpatient and outpatient hospital services, nursing facility services, and qualified practitioner services at an academic medical center not exceed the average commercial rate (ACR). Section 71116 directs the Secretary to revise 42 CFR § 438.6(c)(2)(iii) to reduce the total payment rate limit for SDPs for these services to 100 percent of the total published Medicare payment rates for expansion states38 and 110 percent of the total published Medicare payment 35 A tax that generates revenue more than 6 percent of net patient revenue for the class may be permissible where 75 percent or more of providers do not receive at least 75 percent of their tax cost back, but in practice, this secondary test is virtually never satisfied. 36 Section 71115(a)(2) of the WFTC legislation defines an expansion state as “a State that, beginning on January 1, 2014, or on any date thereafter, elects to provide medical assistance to all individuals described in section 1902(a)(10)(A)(i)(VIII) under the State plan under this title or under a waiver of such plan.” 37 https://www.medicaid.gov/medicaid/downloads/providertax_dcl_11142025.pdf 38 Section 71116(a)(1) defines an expansion states as “a State that provides coverage to all individuals described in section 1902(a)(10)(A)(i)(VIII) of the Social Security Act (42 U.S.C. 1396(a)(10)(A)(i)(VIII)) that is equivalent to minimum essential coverage (as described in section 5000A(f)(1)(A) of the Internal Revenue Code of 1986 and

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Page 16 – CMCS Informational Bulletin rates for non-expansion states for rating periods beginning on or after July 4, 2025. In the absence of a total published Medicare payment rate, section 71116 directs CMS to utilize the payment rate under the Medicaid state plan (or under a waiver of such plan) as the limit. Section 71116(b) also includes a temporary grandfathering period for certain SDPs until the rating period beginning on or after January 1, 2028, at which point such SDPs must comply with specified phase down requirements. On September 9, 2025,39 CMS sent a letter to states outlining preliminary guidance on section 71116 to aid state planning until a final rule is promulgated. CMS acknowledges that this letter is preliminary in nature, and final policies will depend on the contents of a final rule. Under section 71116(d)(3), this provision is applicable to all states and the District of Columbia; it does not apply to the territories. Section 71117. Requirements Regarding Waiver of Uniform Tax Requirement for Medicaid Provider Tax As discussed earlier in this CIB, states are currently allowed to fund the non-federal share of Medicaid through certain health care-related taxes. Health care-related taxes must meet requirements in section 1903(w) of the Act and implementing regulations at 42 CFR Part 433. These requirements include that taxes must be imposed on a permissible class of providers, the taxes must be broad-based and uniform (unless a waiver is approved), and that taxpayers are not held harmless. Broad-based and uniform requirements may be waived as long as the tax is generally redistributive in nature and the amount of the tax is not directly correlated to Medicaid payments for items or services with respect to which the tax is imposed. The regulations establish two statistical tests for determining whether a proposed tax would be generally redistributive in nature, with the applicable test depending on whether a waiver of the uniformity requirement is requested. An unintended loophole in the statistical test used to determine if a health care-related tax is generally redistributive where a waiver of the uniformity requirement is requested has enabled some states to shift the financial burden of financing the Medicaid program to the federal government without the state bearing the requisite non-federal share. CMS issued a proposed rule on May 15, 2025, to close this loophole.40 Section 71117 amends section 1903(w) of the Act to codify the proposed rule’s provisions that a health care-related tax would not be considered generally redistributive if, within a permissible class, the tax rate imposed on the taxpayer or tax rate group explicitly defined by its relatively lower volume or percentage of Medicaid taxable units is lower than the tax rate imposed on any determined in accordance with standards prescribed by the Secretary in regulations) under the State plan (or waiver of such plan) of such State under title XIX of such Act. 39 https://www.medicaid.gov/medicaid/managed-care/downloads/sdp-ltr-09092025.pdf 40 Federal Register: Medicaid Program; Preserving Medicaid Funding for Vulnerable Populations-Closing a Health Care-Related Tax Loophole Proposed Rule

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Page 17 – CMCS Informational Bulletin other taxpayer or tax rate group explicitly defined by its relatively higher volume or percentage of Medicaid taxable units. The tax would also not be considered generally redistributive if, within a permissible class, the tax rate imposed on any taxpayer or tax rate group based upon its Medicaid taxable units is higher than the tax rate imposed on any taxpayer or tax rate group based upon its non-Medicaid taxable units. Finally, a tax is not considered generally redistributive if it accomplishes the same effect as the first two provisions by identifying a taxpayer or tax rate group based on or defined by any description, including without explicitly naming Medicaid. Section 71117(c) provides authority to the Secretary to grant a transition period for states to come into compliance with section 71117, not to exceed 3 years. On November 14, 2025, CMS sent a letter41 to states outlining preliminary guidance on section 71117 (and section 71115, discussed previously), specifically the transition periods CMS is providing in accordance with section 71117(c). In the letter, we note these are the minimum transition periods that may be available; final policies will depend on the contents of notice and comment rulemaking. Under section 71117(b), the amendments made by this section are applicable to all states and the District of Columbia; they do not apply to the territories. Section 71118. Requiring Budget Neutrality for Medicaid Demonstration Projects under Section 1115 Under long-standing practice, CMS will not approve a demonstration project under section 1115 of the Act unless the project is expected to be budget neutral to the federal government. Currently, the CMS Office of the Actuary (OACT) does not play a role in determining whether a project is expected to be budget neutral; CMS determines budget neutrality for each project. Section 71118 adds budget neutrality as a new statutory requirement in subsection (g) of section 1115 of the Act. New subsection 1115(g) states that, beginning January 1, 2027, the Secretary may not approve an application for (or an amendment or renewal of) a Medicaid section 1115 demonstration project unless the CMS Chief Actuary certifies that such project is not expected to result in an increase in the amount of federal expenditures compared to the amount that such expenditures would otherwise be in the absence of such project. CMS expects to provide additional guidance to states on implementation of this provision. Section 1115(g) of the Act, as added by section 71118, is applicable to all states, the District of Columbia, and the territories. 41 https://www.medicaid.gov/medicaid/downloads/providertax_dcl_11142025.pdf

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Page 18 – CMCS Informational Bulletin Subchapter D – Increasing Personal Accountability Section 71119. Requirement for States to Establish Medicaid Community Engagement Requirements for Certain Individuals Section 71119 amends section 1902 of the Act by adding a new subsection (xx) under which, beginning January 1, 2027, states must condition Medicaid eligibility for “applicable individuals” on their demonstration of community engagement. Unless an exception or exclusion applies (see below), applicable individuals are 1) individuals eligible for or enrolled under the state plan in the Medicaid adult group under section 1902(a)(10)(A)(i)(VIII) of the Act; or 2) individuals who are eligible for or enrolled under a waiver of the state plan (including a section 1115 demonstration) that provides coverage that is equivalent to MEC42 and who have attained the age of 19 and are under 65 years of age, are not pregnant, are not entitled to, or enrolled for, benefits under Medicare Part A or Part B, and are not otherwise eligible to enroll under the state plan.43 States may elect an earlier implementation date and should contact CMS for more details. Certain individuals (“specified excluded individuals”) are excluded from the definition of “applicable individuals” and are therefore not subject to community engagement requirements. These individuals are: former foster care children;44 certain American Indians and Alaska Natives;45 parents, guardians, caretaker relatives, or family caregivers (as defined in section 2 of the RAISE Family Caregivers Act (Public Law 115-119)) of a dependent child under the age of 14 or a disabled individual; veterans with a total disability rating; individuals who are medically frail or who otherwise have special medical needs (as defined by the Secretary); 46 individuals who are already compliant with Temporary Assistance for Needy Families (TANF) work requirements; members of households that receive Supplemental Nutrition Assistance Program (SNAP) benefits who are not exempt from a SNAP work requirement; individuals who are participants in certain substance use disorder treatment and rehabilitation programs; inmates of a public institution; and pregnant women or individuals entitled to postpartum medical assistance.47 42 MEC is defined in the statute as follows: “as described in section 5000A(f)(1)(A) of the Internal Revenue Code of 1986 and determined in accordance with standards prescribed by the Secretary in regulations.” 43 Notably, this definition for purposes of section 1902(xx) of the Act will capture states that provide coverage through a section 1115 demonstration to all individuals, or only to some individuals, who are described in section 1902(a)(10)(A)(i)(VIII) of the Act. 44 Described in section 1902(a)(10)(A)(i)(IX) of the Act. 45 Specifically, the exclusion applies to an Indian or Urban Indian (as such terms are defined in paragraphs (13) and (28) of section 4 of the Indian Health Care Improvement Act); a California Indian described in section 809(a) of such Act; or those who have otherwise been determined eligible as an Indian for the Indian Health Service under regulations promulgated by the Secretary. 46 Including an individual: who is blind or disabled (as defined in section 1614 of the Act); with a substance use disorder; with a disabling mental disorder; with a physical, intellectual or developmental disability that significantly impairs their ability to perform one or more activities of daily living; or with a serious or complex medical condition. 47 Postpartum medical assistance is available under section 1902(e)(5) or (16) of the Act.

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Page 19 – CMCS Informational Bulletin In addition to an individual who is a specified excluded individual for part or all of a month in which they would otherwise be required to demonstrate community engagement, other individuals are excepted from demonstrating community engagement and are similarly not subject to community engagement requirements for that month. These individuals include those who for part or all of a month in which they would otherwise be required to demonstrate community engagement are: under the age of 19; entitled to, or enrolled for, benefits under Medicare Part A, or enrolled for benefits under Medicare Part B; or described in any of the mandatory eligibility groups listed in subclauses (I) through (VII) of section 1902(a)(10)(A)(i) of the Act. Additionally, individuals are excepted for a month in which they are otherwise required to demonstrate community engagement, if, at any point during the three-month period ending on the first day of that month, they were an inmate of a public institution. States also have the option to implement an exception for persons who experience one of the following short-term hardship events: receiving inpatient hospital services or certain other types of medical care; residing in a locality where there is a Presidential declaration of a disaster or emergency; residing in a locality with an unemployment rate over certain thresholds; or needing to travel outside of their community for an extended period of time, for themselves or their dependents, to receive treatment of a serious or complex medical condition where such treatment is not available within the individual’s community of residence. There are several ways an applicable individual can demonstrate community engagement for a month, including through a combined minimum of 80 hours of work, community service, and/or participation in a work program, or enrollment in an educational program at least half-time, among others. States must require that applicable individuals seeking Medicaid coverage meet community engagement requirements for at least one month but not more than three consecutive months immediately preceding the month during which the individual applies. States must require current beneficiaries to meet the requirements for one or more months (consecutive or not) during the period between the individual’s most recent eligibility determination and their next regularly scheduled redetermination. A state may opt to conduct more frequent verifications of compliance with community engagement requirements. Generally, to verify compliance with, or an exception to, or exclusion from community engagement requirements, states must establish processes and use reliable information available to the state, without requiring individuals to submit additional information, where possible. If a state cannot verify an applicable individual’s compliance with the community engagement requirements, it must provide notice of noncompliance and allow the applicant or beneficiary (as applicable) 30 calendar days to demonstrate compliance or show that the requirement does not apply to them. If no satisfactory showing of compliance or inapplicability of the requirement is made, the state must determine whether the individual has any other basis for eligibility for Medicaid or another insurance affordability program. The state must then provide written notice and fair hearing rights in accordance with 42 C.F.R. part 431 subpart E (including advance notice in the case of an eligibility termination or other adverse action) and, if there is no other basis for

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Page 20 – CMCS Informational Bulletin Medicaid eligibility, deny the application or terminate eligibility by the end of the month following the end of the 30-day period. States must provide outreach about the requirements to enrolled applicable individuals several months prior to December 31, 2026, or, if the state selected an earlier implementation date, several months prior to that date. The specific deadline for the required outreach will be based on the specific number of months for which a state opts to require applicants to have demonstrated community engagement before they apply for Medicaid plus three months. States are also required to provide outreach on a periodic basis thereafter. States are prohibited from using MCOs, PIHPs, or PAHPs, or other contractors with direct or indirect financial relationships to MCOs, PIHPs, or PAHPs to determine beneficiary compliance with community engagement requirements. The Secretary may exempt a state from implementing community engagement requirements if it submits an exemption request and demonstrates good faith efforts to comply. Any such exemptions will expire no later than December 31, 2028. CMS will award $200 million to states in Government Efficiency Grants for fiscal year 2026 for states to establish systems necessary to carry out the community engagement requirement and other sections of the same chapter of the WFTC legislation that relate to conducting eligibility determinations and redeterminations. States are also reminded that enhanced federal matching funds for certain eligible administrative expenditures also continue to be available.48 The community engagement requirements cannot be waived under section 1115 demonstration authority. CMS must issue an interim final rule implementing section 71119 by June 1, 2026. Additional guidance from CMS on this provision is forthcoming. Section 1902(xx) of the Act, as added by section 71119, is applicable to all states and the District of Columbia that provide coverage to “applicable individuals” as described above; it does not apply to the territories. Section 71120. Modifying Cost Sharing Requirements for Certain Expansion Individuals under the Medicaid Program Currently, states have the option to charge premiums and cost sharing for certain Medicaid enrollees and certain services. Cost sharing is generally limited to nominal amounts but may be higher for those with income above 100 percent of the federal poverty level (FPL). Aggregate out-of-pocket costs cannot exceed 5 percent of family income. Section 71120 amends section 1916 of the Act to require states to impose cost sharing on certain care, items, or services as determined by the state, provided to individuals whose family income exceeds 100 percent of the FPL and are enrolled in the Medicaid adult group under section 1902(a)(10)(A)(i)(VIII) of the Act. Additionally, these requirements apply to individuals whose 48 See 42 CFR § 433.15

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Page 21 – CMCS Informational Bulletin family income exceeds 100 percent of the FPL, who are described in section 1902(a)(10)(A)(i)(VIII) of the Act, and who are enrolled in coverage under a waiver of the state plan (including a section 1115 demonstration) that provides coverage that is equivalent to MEC49 to all individuals described in section 1902(a)(10)(A)(i)(VIII) of the Act. Under new section 1916(k) of the Act, states must impose such cost sharing beginning October 1, 2028. Cost sharing imposed under this section cannot exceed $35 for any care, item, or service. Cost sharing amounts for prescription drugs remain subject to cost sharing rules and limitations established by section 1916A of the Act. The provision also prohibits states from imposing premiums or enrollment fees on this population. The new section 1916(k) exempts primary care, behavioral health, federally qualified heath center (FQHC), rural health clinic, and certified community behavioral health clinic (CCBHC) services from cost sharing for this population, in addition to the previously existing exemptions.50 Existing cost sharing exemptions for American Indians and Alaska Natives are not changed by this section and still apply.51 Aggregate out-of-pocket costs for all individuals in the family cannot exceed 5 percent of the income of the family. Section 1916(k) of the Act, as added by section 71120, is applicable to all states and the District of Columbia that provide coverage to the individuals noted above; it does not apply to the territories. Subchapter E – Expanding Access to Care Section 71121. Making Certain Adjustments to Coverage of Home or Community-Based Services under Medicaid Section 1915(c) of the Act authorizes home and community-based services (HCBS) waivers. These waivers permit states to waive certain Medicaid state plan requirements, such as statewideness and comparability requirements, and to limit the number of individuals who may receive HCBS under the waiver. Under Section 1915(c)(1) of the Act, eligible individuals must meet an institutional level of care (ILOC) requirement (e.g., in the absence of HCBS, they would require hospital, nursing facility, or intermediate care facility care). States with approved 1915(c) waivers must meet numerous requirements, including cost neutrality and health and welfare protections.52 Section 71121 amends section 1915(c) of the Act to create a new waiver option for states that will be available beginning on July 1, 2028. Under this new waiver option, states may cover 49 MEC is defined in the statute as follows: “as described in section 5000A(f)(1)(A) of the Internal Revenue Code of 1986 and determined in accordance with standards prescribed by the Secretary in regulations.” 50 Sections 1916(a)(2), (b)(2) and Section 1916A(b)(3)(B) of the Act. 51 Section 1916(j) of the Act. 52 Section 1915(c)(2)(A) and Section 1915(c)(2)(D) & (E) of the Act.

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Page 22 – CMCS Informational Bulletin HCBS for individuals without requiring an ILOC determination. Section 71121 establishes several conditions for approval, such as that states must: 1) use needs-based criteria, subject to Secretary approval, to determine eligibility for HCBS under the new waiver option; 2) demonstrate that approval of the waiver will not result in a material increase in the average time individuals who meet ILOC criteria will need to wait to receive HCBS under any other approved 1915(c) waiver; 3) attest that the state’s average per capita Medicaid expenditures for individuals covered by the waiver will not exceed the state’s average per capita Medicaid expenditures for individuals receiving institutional care under the state plan (or waiver of such plan); and 4) agree to provide to the Secretary at least annually certain cost and utilization data, as specified under section 1915(c)(11)(B)(vii) of the Act. Under new section 1915(c)(11)(C) of the Act, states are prohibited from using Medicaid payments under this new waiver authority to pay third parties on behalf of an individual practitioner for benefits such as health insurance or skills training, if the practitioner belongs to a practitioner class for which Medicaid is the primary source of revenue. Section 71121 also appropriates $100 million in FY 2027 for payments to states to support state systems to deliver HCBS under section 1915(c) waivers or section 1115 demonstrations. The FY 2027 funds will be allotted based on the proportion of the state’s population receiving HCBS under section 1915(c) or section 1115 of the Act, as compared to all states. Section 1915(c)(11) of the Act, as added by section 71121, is applicable to all states, the District of Columbia, and the territories. Chapter 453 – Protecting Rural Hospitals and Providers Section 71401. Rural Health Transformation Program Section 71401 establishes a Rural Health Transformation (RHT) Program within Title XXI of the Act and appropriates $10 billion annually for allotments to states for fiscal years 2026 through 2030.54 The program, added as new subsection (h) in section 2105 of the Act, is administered by the CMS Administrator and provides funding to states (excluding DC and territories) with approved applications to improve rural health care access and outcomes. The total annual appropriation of $10 billion will be distributed in two ways. Half of the funds ($5 billion) will be distributed equally across all approved states. The remaining half ($5 billion) is allocated to at least 25 percent of approved states based on factors specified in the Act and by the Administrator, such as the percentage of the state’s population living in rural areas and the 53 Specifically, Chapter 4 of Subtitle B of Title VII of Public Law 119-21. 54 For more information of the RHT Program, visit https://www.cms.gov/priorities/rural-health-transformation-rht- program/rural-health-transformation-rht-program.

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Page 23 – CMCS Informational Bulletin proportion of rural health care facilities compared to the number of such providers nationwide, and the quality of the state’s rural health transformation plan. The Administrator must approve or deny a state’s application by December 31, 2025, as described in statute. This is a one-time application and cannot be amended. Applications must include a detailed rural health transformation plan addressing multiple objectives, such as: 1) improved health care access and outcomes for rural residents; 2) new and strengthened local and regional strategic partnerships between rural hospitals and other health care providers; 3) prioritization of data and technology-driven solutions for rural health care delivery; and 4) long-term financial solvency and operating models of rural hospitals. States have two years to expend funds provided for each fiscal year (e.g., FY 2027 funds are available through FY 2028). If a state does not spend all funds CMS awarded to it by the end of the subsequent fiscal year with respect to each budget period start date, these funds will be redistributed by the Administrator in the nearest following fiscal year possible. Funds cannot be used to finance the non-federal share of any expenditures or to pay for services reimbursable through other funding streams. All unexpended and unobligated funds as of October 1, 2032, return to the United States Treasury. States must submit annual reports on the use of their allotments. The Administrator has authority to withhold, reduce, or recover payments if states have not expended funds consistent with their approved applications. States are required to demonstrate compliance with their approved rural health transformation plans through these reporting mechanisms. Section 2105(h) of the Act, as added by section 71401, is applicable to the 50 states. It does not apply to the District of Columbia or the territories. Tax-Related Provisions The WFTC legislation contains several provisions related to federal tax law, which may impact the household income of some individuals, thereby affecting their financial eligibility for Medicaid or CHIP. Under MAGI-based methodologies, the MAGI of a tax dependent or child is generally counted in determining household income only if the dependent’s or child’s gross income exceeds certain tax-filing thresholds.55 CMS described filing thresholds and income counting in State Health 55 The exception is that a child’s income is always counted when the child is the only person in his/her MAGI-based household (or is living with his/her sibling(s)), regardless of whether the child’s income exceeds the filing threshold. See 42 CFR § 435.603(d)(1).

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Page 24 – CMCS Informational Bulletin Official Letter #19-003.56 Under section 70102, the single filing threshold (under age 65 and not blind) is $15,750 for tax year 2025, increased from $14,600 in 2024.57 This may result in an increase to the filing threshold of a dependent, which could affect whether the dependent’s MAGI is included in household income. Starting with tax year 2026, the Internal Revenue Service (IRS) will resume adjusting the filing thresholds for inflation. Certain changes in the law make earlier time-limited tax law changes permanent, with minor modifications. In particular, section 70113 makes permanent the elimination of the qualified moving expenses deduction. Active-duty members of the U.S. Armed Forces are already excepted from the elimination of the qualified moving expense deduction, and section 70113 adds, starting in 2026, members of the intelligence community to those who are excepted from the elimination. Additionally, section 70119 permanently extends the income exclusion for student debt discharged on account of the death or total disability of the student. (The moving expense and student debt-related changes, when first made temporary, were described by CMS in State Health Official Letter #19-003.) The WFTC legislation also makes significant changes to federal tax law for individual taxpayers that do not affect MAGI-based methodologies for Medicaid and CHIP. In particular, section 70201, related to a deduction for qualified tips; section 70202, related to deduction for overtime premium pay; and section 70203, related to a deduction for loan interest on certain passenger vehicles each are deductions that occur after the calculation of adjusted gross income. As a result, these deductions are not part of the MAGI calculation and do not impact an individual’s household MAGI. CMS continues to analyze other changes made to the federal tax law in WFTC legislation and is available to provide technical assistance to states. These changes to federal tax law as they affect MAGI-based methodologies are applicable to all states, the District of Columbia, and the territories. Closing Medicaid and CHIP are critical components of our nation’s health care safety net, serving as essential state-federal partnerships that provide coverage to millions of Americans. The successful implementation of the WFTC legislation will require coordinated efforts between CMS, state Medicaid and CHIP agencies, and other key stakeholders to ensure these programs continue to effectively serve our most vulnerable populations while implementing necessary reforms to eliminate waste, fraud, and abuse. CMS recognizes that the provisions of this law represent significant programmatic changes that will require substantial planning, coordination, and resources at both the federal and state levels. CMS is fully committed to providing comprehensive support to states throughout the 56 CMS State Health Official Letter #19-003, “Changes to Modified Adjusted Gross Income (MAGI)-based Income Methodologies,” pages 2-3, available at https://www.medicaid.gov/federal-policy-guidance/downloads/sho19003.pdf. 57 IRS Publication 501 discusses tax filing requirements in more detail. https://www.irs.gov/pub/irs-pdf/p501.pdf.

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Page 25 – CMCS Informational Bulletin implementation process and will serve as a dedicated partner in navigating these changes. States will have access to ongoing technical assistance, detailed implementation guidance, and practical tools, including State Plan Amendment templates and systems change assistance. CMS intends to issue additional detailed guidance in the coming months addressing specific provisions of the WFTC legislation. The agency stands ready to provide the technical assistance and support that states need during this implementation period. States requiring technical assistance or having questions regarding implementation should send an email to MedicaidReforms@cms.hhs.gov.

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Page 26 – CMCS Informational Bulletin Appendix A. Key Dates Section Provision Key Date(s) Subchapter A – Reducing Fraud and Improving Enrollment Processes Section 71101 Moratorium on Implementation of Rule Relating to Eligibility and Enrollment in Medicare Savings Programs Effective July 4, 2025 Ends: September 30, 2034 Section 71102 Moratorium on Implementation of Rule Relating to Eligibility and Enrollment for Medicaid, CHIP, and the Basic Health Program Effective: July 4, 2025 Ends: September 30, 2034 Section 71103 Reducing Duplicate Enrollment under the Medicaid and CHIP Programs January 1, 2027: Process established by states to obtain address information. January 1, 2027: State managed care contracts to include the requirement that covered entities and plans transmit enrollee address information. October 1, 2029: CMS to establish system to send applicant and enrollee data submissions. States to provide and utilize national enrollment data to prevent simultaneous enrollment in multiple states. Section 71104 Ensuring Deceased Individuals Do Not Remain Enrolled Applies beginning January 1, 2027 Section 71105 Ensuring Deceased Providers Do Not Remain Enrolled Applies beginning January 1, 2028 Section 71106 Payment Reduction Related to Certain Erroneous Excess Payments under Medicaid Applies beginning October 1, 2029 Section 71107 Eligibility Redeterminations Applies beginning January 1, 2027 Section 71108 Revising Home Equity Limit for Determining Eligibility for Long-Term Care Services under the Medicaid Program Applies beginning January 1, 2028 Section 71109 Alien Medicaid Eligibility Applies beginning October 1, 2026 Section 71110 Expansion FMAP for Emergency Medicaid Applies beginning October 1, 2026 Subchapter B – Preventing Wasteful Spending Section 71111 Moratorium on Implementation of Rule Relating to Staffing Standards for Long- Term Care Facilities under the Medicare and Medicaid Programs Effective: July 4, 2025 Ends: September 30, 2034 Section 71112 Reducing State Medicaid Costs Applies to applications made on or after January 1, 2027. Section 71113 Federal Payments to Prohibited Entities Effective July 4, 2025 Ends: July 3, 2026

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Page 27 – CMCS Informational Bulletin Section Provision Key Date(s) Subchapter C – Stopping Abusive Financing Practices Section 71114 Sunsetting Increased FMAP Incentive Applies to states adopting the Medicaid adult group under section 1902(a)(10)(A)(i)(VIII) of the Act on or after January 1, 2026. Section 71115 Provider Taxes October 1, 2026: Restriction on new or increased provider taxes. October 1, 2027: Expansion state hold harmless reduction begins. Section 71116 State Directed Payments Applies to rating periods beginning on or after July 4, 2025. For grandfathered SDPs, applies to rating periods beginning on or after January 1, 2028. Section 71117 Requirements Regarding Waiver of Uniform Tax Requirement for Medicaid Provider Tax Effective July 4, 2025, subject to any transition period determined by the Secretary (not to exceed 3 fiscal years). Section 71118 Requiring Budget Neutrality for Medicaid Demonstration Projects under Section 1115 Applies beginning January 1, 2027 Subchapter D – Increasing Personal Accountability Section 71119 Requirement for States to Establish Medicaid Community Engagement Requirements for Certain Individuals Applies beginning January 1, 2027, or earlier at state option; outreach requirements will apply several months before implementation; state good-faith temporary exemption expires no later than December 31, 2028 Section 71120 Modifying Cost Sharing Requirements for Certain Expansion Individuals under The Medicaid Program Applies beginning October 1, 2028 Subchapter E – Expanding Access to Care Section 71121 Making Certain Adjustments to Coverage of Home or Community-Based Services under Medicaid (new section 1915(c) option) New waiver option available beginning July 1, 2028 Chapter 4 – Protecting Rural Hospitals and Providers Section 71401 Rural Health Transformation Program Effective July 4, 2025 Administrator must approve or deny applications by December 31, 2025

(2025-11-18)(page-28)Page 28#

Page 28 – CMCS Informational Bulletin Appendix B. Opportunities for Additional Financial Support for States Section Provision Description of Financial Support Section 71119 Requirement for States to Establish Medicaid Community Engagement Requirements for Certain Individuals What is Available? • Government Efficiency Grants to states • Grant funding is to be used for state implementation of this provision and others in same chapter of the WFTC legislation related to eligibility determinations or redeterminations. How Much is Available? • $200 million When Are Grants Available? • Beginning Fiscal Year 2026 and available until expended. How Will Grants be Disbursed? • $100 million to be distributed equally across states. • $100 million in an amount for each state reflecting the ratio of individuals subject to the community engagement requirement to the total number of such individuals residing in all states as of March 31, 2025. Section 71121 Making Certain Adjustments to Coverage of Home or Community-Based Services under Medicaid What is Available? • Payments to states to support state systems to deliver HCBS under section 1915(c) waivers or section 1115 demonstrations. How Much is Available? • $100 million When Are Payments Available? • Beginning Fiscal Year 2027, and available until expended. How Will Payments be Disbursed? • Payments will be made to a state based on the proportion of the state’s population that is receiving section 1915(c) or section 1115 HCBS, as compared to all states. Section 71401 Rural Health Transformation Program What is Available? • Allotments to states to be used for specified rural health-related activities, subject to approval and terms of state applications. How Much is Available? • $10 billion for each fiscal year 2026 through 2030. When Will Allotments be Available? • Fiscal Years 2026 through 2030. • States have two years to expend funds provided for a fiscal year (e.g., FY 2027 funds are available for FY 2027 and FY 2028). • Unexpended or unobligated funds may be redistributed. • The Administrator has the authority to withhold, reduce, or recover payments if a state has not expended funds consistent with its approved application. • Unexpended or unobligated funds as of October 1, 2032 return to the Treasury. How Will Allotments be Disbursed? • States except DC and territories can apply. • The Administrator must approve applications by December 31, 2025.

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Page 29 – CMCS Informational Bulletin • Half of the funds ($5 billion) are to be distributed equally across all approved states. • The other half of the funds ($5 billion) are to be distributed to at least a quarter of approved states based on factors established by Section 71401 and the Administrator.

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Page 30 – CMCS Informational Bulletin Appendix C. Applicability to the Territories Section Provision Applicable to Territories? Subchapter A – Reducing Fraud and Improving Enrollment Processes Section 71101 Moratorium on Implementation of Rule Relating to Eligibility and Enrollment in Medicare Savings Programs Does not impact regulations that apply to the territories Section 71102 Moratorium on Implementation of Rule Relating to Eligibility and Enrollment for Medicaid, CHIP, and the Basic Health Program Affects regulations that apply to the territories Section 71103 Reducing Duplicate Enrollment under the Medicaid and CHIP Programs Requirement to establish process to obtain address information by January 1, 2027 does not apply to territories; otherwise applies Section 71104 Ensuring Deceased Individuals Do Not Remain Enrolled Does not apply Section 71105 Ensuring Deceased Providers Do Not Remain Enrolled Applies Section 71106 Payment Reduction Related to Certain Erroneous Excess Payments under Medicaid Does not apply Section 71107 Eligibility Redeterminations Does not apply Section 71108 Revising Home Equity Limit for Determining Eligibility for Long-Term Care Services under the Medicaid Program Applies Section 71109 Alien Medicaid Eligibility Applies Section 71110 Expansion FMAP for Emergency Medicaid Applies Subchapter B – Preventing Wasteful Spending Section 71111 Moratorium on Implementation of Rule Relating to Staffing Standards for Long-Term Care Facilities under the Medicare and Medicaid Programs Affects regulations that apply to the territories Section 71112 Reducing State Medicaid Costs Applies

(2025-11-18)(page-31)Page 31#

Page 31 – CMCS Informational Bulletin Section 71113 Federal Payments to Prohibited Entities Applies Subchapter C – Stopping Abusive Financing Practices Section 71114 Sunsetting Increased FMAP Incentive Does not apply Section 71115 Provider Taxes Does not apply Section 71116 State Directed Payments Does not apply Section 71117 Requirements Regarding Waiver of Uniform Tax Requirement for Medicaid Provider Tax Does not apply Section 71118 Requiring Budget Neutrality for Medicaid Demonstration Projects under Section 1115 Applies Subchapter D – Increasing Personal Accountability Section 71119 Requirement for States to Establish Medicaid Community Engagement Requirements for Certain Individuals Does not apply Section 71120 Modifying Cost Sharing Requirements for Certain Expansion Individuals under The Medicaid Program Does not apply Subchapter E – Expanding Access to Care Section 71121 Making Certain Adjustments to Coverage of Home or Community-Based Services under Medicaid Applies Chapter 4 – Protecting Rural Hospitals and Providers Section 71401 Rural Health Transformation Program Does not apply

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Page 32 – CMCS Informational Bulletin Appendix D. Applicability to American Indians and Alaska Natives This is a summary of the Tribal exceptions in the WFTC legislation. CMS is still analyzing the impacts of the provisions on American Indian and Alaska Native (AI/AN) Medicaid beneficiaries and is committed to continuing to work with Tribes on future guidance. Section Provision Applicable to American Indians and Alaska Natives? Section 71107 Eligibility Redeterminations Does not apply to AI/ANs described in subsection (xx)(9)(A)(ii)(II)58 Section 71119 Requirement for States to Establish Medicaid Community Engagement Requirements for Certain Individuals Does not apply to AI/ANs described in subsection (xx)(9)(A)(ii)(II)59 Section 71120 Modifying Cost Sharing Requirements for Certain Expansion Individuals under The Medicaid Program Does not apply because existing cost sharing exemptions for certain American Indians and Alaska Natives are not changed by this section and still apply60 58 Specifically, the exemption applies to: an Indian or Urban Indian (as such terms are defined in paragraphs (13) and (28) of section 4 of the Indian Health Care Improvement Act); a California Indian described in section 809(a) of such Act; or those who have otherwise been determined eligible as an Indian for the Indian Health Service under regulations promulgated by the Secretary. 59 See footnote 45. 60 See section 1916(j) of the Act.

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Page 33 – CMCS Informational Bulletin Appendix E. Moratorium on Implementation of Rule Relating to Eligibility and Enrollment in Medicare Savings Programs MSP Final Rule Provisions Subject to Moratorium (Do Not Apply During Moratorium) CMS is prohibited from implementing, administering, or enforcing the policies described below until the moratorium ends on September 30, 2034. States should refer to the Code of Federal Regulations in effect as of November 16, 2023, for requirements under the below-listed rules while the moratorium is in effect. Regulation Description of Provision as Amended by the Medicare Savings Programs (MSP) Final Rule 42 CFR § 406.21(c)(5) Requires group payer states to start Qualified Medicare Beneficiary (QMB) eligibility group coverage for certain individuals as early as the month of Medicare Part A entitlement. 42 CFR § 435.4 Defines Medicare Part D Low Income Subsidy (LIS) Application data (“leads data”) as data the Social Security Administration (SSA) electronically transmits to state Medicaid agencies in accordance with section 1144(c) of the Act. NOTE: The statutory requirements described in section 1144(c) of the Act remain in effect. 42 CFR § 435.601(e) Requires states to include at the least the individuals described in the Medicare Part D LIS definition of family size at 42 CFR 423.772 when determining the “family of the size involved” for MSP income eligibility. 42 CFR § 435.911(e) Codifies in regulation statutory requirements described in section 1935(a)(4) of the Act for states to receive LIS leads data from SSA and to treat such receipt as an application for the MSP eligibility groups and establishes new requirements for states to make MSP eligibility determinations without re-verification when possible. NOTE: The statutory requirements described in section 1935(a)(4) of the Act remain in effect for states. 42 CFR § 435.952(e) Requires states to reduce documentation individuals must provide to verify the value of certain income and resources (i.e., dividend and interest income, non-liquid resources, burial funds and life insurance) when making MSP eligibility determinations. MSP Final Rule Provisions Excluded from Moratorium (Current Rules Apply) CMS is not prohibited from implementing, administering, or enforcing the policies described below. States should refer to the current Code of Federal Regulations for requirements, including while the moratorium is in effect. Regulation Description of Provision as Amended by the Medicare Savings Programs (MSP) Final Rule 42 CFR § 435.909(a) Moves pre-existing requirements for auto enrollment of certain individuals into Medicaid in states that have agreements with the Social Security Administration under 1634 of the Act from paragraph (b) of 435.909 to paragraph (a). 42 CFR § 435.909(b)(1) Requires states to automatically enroll most Medicare-eligible supplemental security income (SSI) recipients into the QMB eligibility group, effective October 1, 2024. 42 CFR § 435.909(b)(2) Created an option for group payer states to automatically enroll SSI recipients who lack premium-free Medicare Part A into the QMB eligibility group, effective November 17, 2023.

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Page 34 – CMCS Informational Bulletin 42 CFR § 435.909(b)(3) Specifies the effective date of QMB coverage for SSI recipients automatically enrolled into the QMB eligibility group.

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Page 35 – CMCS Informational Bulletin Appendix F. Moratorium on Implementation of Rule Relating to Eligibility and Enrollment for Medicaid, CHIP, and the Basic Health Program Eligibility and Enrollment Final Rule Provisions Subject to Moratorium (Do Not Apply During Moratorium) CMS is prohibited from implementing, administering or enforcing the policies described below until the moratorium ends on September 30, 2034. States should refer to the Code of Federal Regulations in effect as of June 2, 2024, for requirements under the below listed rules while the moratorium is in effect. Regulation Description of Provision as Amended by 2024 Eligibility and Enrollment Final Rule 42 CFR § 435.407 Allows verification of citizenship with a state vital statistics agency or the Systematic Alien Verification for Entitlements (SAVE) Program without separate identity verification. 42 CFR § 435.907 Requires states to provide beneficiaries with a minimum of 15 days to respond to a request for information, allow applicants to provide requested information through all modalities, accept non-MAGI applications and supplemental forms through all modalities, and provide a minimum 90-day reconsideration period after the date of denial due to failure to return information needed to determine eligibility. 42 CFR § 435.912 Establishes requirements, standards, and timeframes for states to complete redeterminations at renewal and when acting on changes in circumstances. 42 CFR § 435.916 Aligns renewal requirements for MAGI and non-MAGI beneficiaries. 42 CFR § 435.919 (see 42 CFR § 435.916 for requirements as of June 2, 2024) Establishes a new 42 CFR § 435.919 that codifies steps for states to act on changes in circumstances and outlines processes to update address information and process returned mail in Medicaid. Technical edits were made to regulations at 42 CFR § 431.213(d) (notices when a beneficiary’s whereabouts become unknown) and § 435.911(c) (eligibility determinations) to cross reference the new § 435.919. Please note that, because the only amendments to these provisions are technical in nature, there are no substantive changes to the policies described in 42 CFR §§ 431.213(d) and 435.911(c). 42 CFR §§ 435.1200(b)(3)(i)-(v), 435.1200(e)(1)(ii) and 435.1200(h)(1) Requires Medicaid and CHIP agencies to issue combined notices and transfer accounts to the Marketplace when a beneficiary is procedurally disenrolled from Medicaid or CHIP. 42 CFR § 447.56(a)(1)(v) Permits states to exempt from premiums and cost sharing individuals eligible for Medicaid under the newly codified optional eligibility group at 42 CFR § 435.223. NOTE: The statutory requirements described in sections 1916 and 1916(a) of the Act remain in effect for states. 42 CFR § 457.344 (see 42 CFR § 457.343 and 457.960 for requirements as of June 2, 2024) Codifies steps for states to act on changes in circumstances and outlines processes to update address information and process returned mail in CHIP. 42 CFR § 457.960 (removal) Removes this section of the regulation regarding changes in circumstances and relocated to updated § 457.344 (see above).

(2025-11-18)(page-36)Page 36#

Page 36 – CMCS Informational Bulletin Eligibility and Enrollment Final Rule Provisions Subject to Moratorium (Do Not Apply During Moratorium) CMS is prohibited from implementing, administering or enforcing the policies described below until the moratorium ends on September 30, 2034. States should refer to the Code of Federal Regulations in effect as of June 2, 2024, for requirements under the below listed rules while the moratorium is in effect. Regulation Description of Provision as Amended by 2024 Eligibility and Enrollment Final Rule 42 CFR §§ 457.1140(d)(4), 457.1170 Specifies that states must also provide beneficiaries with the opportunity to continue CHIP benefits when the state fails to make a timely eligibility determination. Technical edits were also made to regulations at 42 CFR § 457.1140(d)(4) to cross reference changes made to § 457.1170, and this technical change is also subject to the moratorium. 42 CFR § 457.1180 Clarifies that notice of an action that is subject to review must also include an explanation of the circumstances under which benefits may continue pending the review. Eligibility and Enrollment Final Rule Provisions Excluded from Moratorium (Current Rules Apply) CMS is not prohibited from implementing, administering or enforcing the policies described below. States should refer to the current Code of Federal Regulations for requirements, including while the moratorium is in effect. Regulation Description of Provision as Amended by 2024 Eligibility and Enrollment Final Rule 42 CFR § 431.10 Includes separate CHIPs and Basic Health Programs (BHPs) on list of entities to which Medicaid agencies may delegate authority to make eligibility determinations. 42 CFR § 431.17 Specifies the type of information and length of time states must maintain eligibility determination records. 42 CFR § 431.231(d) (removal) Removes 42 CFR § 431.231(d) and relocates requirements regarding reinstatement of coverage when a beneficiary’s whereabouts become known to new 42 CFR § 435.919. 42 CFR § 435.223 Creates an optional eligibility group for all or a reasonable classification of individuals under age 21 whose eligibility is excepted from use of the MAGI-based methodology (e.g., those living with a disability). A technical edit was also made to the regulation at 42 CFR § 435.222 to rename the eligibility group that the provision (42 CFR § 435.222) describes and distinguish it from this newly codified group under 42 CFR § 435.223. 42 CFR § 435.601 Updates income counting methodology to account for new optional eligibility group described at 42 CFR § 435.223. 42 CFR § 435.608 and 436.608 (removal) Removes the requirement for applicants and beneficiaries in states and territories to apply for other cash benefits as a condition of Medicaid eligibility. 42 CFR § 435.831 and 436.831 Provides states and territories the option to determine non-institutionalized applicants meet their required “spenddown” for medically needy coverage by adding up their projected predictable expenses instead of requiring individuals to first incur such expenses. 42 CFR § 435.914 Clarifies recordkeeping requirements for Medicaid. 42 CFR § 435.940 Clarifies to which provisions the “Basis and scope” paragraph applies. 42 CFR § 435.952 Clarifies that verification regulations regarding use of electronic data and reasonable compatibility apply to asset verification as well as income.

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Page 37 – CMCS Informational Bulletin Eligibility and Enrollment Final Rule Provisions Excluded from Moratorium (Current Rules Apply) CMS is not prohibited from implementing, administering or enforcing the policies described below. States should refer to the current Code of Federal Regulations for requirements, including while the moratorium is in effect. Regulation Description of Provision as Amended by 2024 Eligibility and Enrollment Final Rule 42 CFR § 435.956 Removes state option to limit the number of reasonable opportunity periods (ROPs) during which otherwise eligible applicants receive Medicaid while they complete verification of their U.S. citizenship or satisfactory immigration status. 42 CFR § 435.1200 except for §§ 435.1200(b)(3)(i)-(v), 435.1200(e)(1)(ii), and 435.1200(h)(1). Requires Medicaid agency to make eligibility determinations on behalf of, and accept MAGI determinations from, the CHIP agency and transition beneficiaries between Medicaid and CHIP. 42 CFR § 457.65 Prohibits waiting periods in CHIP. 42 CFR § 457.340 Establishes requirements for making timely eligibility determinations and requires that Medicaid and CHIP send combined notices. Note that this provision cross-references 42 CFR § 435.912 (timely determination of eligibility). Because the amendments made to 42 CFR § 435.912 are subject to the moratorium, states should refer to the timeliness requirements in effect as of June 2, 2024. 42 CFR § 457.348 Requires CHIP agencies accept eligibility determinations made by Medicaid and establish procedures to transition children between programs as appropriate. 42 CFR § 457.350 Requires CHIP agencies to make MAGI-based eligibility determinations on behalf of Medicaid and establish procedures to transition children between programs as appropriate. 42 CFR § 457.480 Prohibits annual and/or lifetime limits on benefits in CHIP. 42 CFR § 457.570 Prohibits states from disenrolling or locking-out CHIP beneficiaries for failure to pay premiums. 42 CFR § 457.805 Requires states to establish a substitution monitoring strategy to use in place of a waiting period. 42 CFR § 457.810 Prohibits waiting periods prior to CHIP enrollment. 42 CFR § 457.965 Clarifies CHIP recordkeeping requirements. 42 CFR § 600.330 Clarifies requirements related to coordination between BHPs with other insurance affordability programs (Marketplace, Medicaid and CHIP). 42 CFR § 600.525 Prohibits premium lock-out periods in BHPs.

(2025-12-08)CMCS Informational Bulletin, December 8, 2025#

(2025-12-08)(page-1)Page 1#

DEPARTMENT OF HEALTH & HUMAN SERVICES Centers for Medicare & Medicaid Services 7500 Security Boulevard, Mail Stop S2-26-12 Baltimore, Maryland 21244-1850 CMCS Informational Bulletin DATE: December 8, 2025 FROM: Dan Brillman Deputy Administrator, CMS Director, Center for Medicaid and CHIP Services SUBJECT: Section 71119 of the “Working Families Tax Cut” Legislation, Public Law 119- 21: Requirements for States to Establish Medicaid Community Engagement Requirements for Certain Individuals I. Introduction On July 4, 2025, President Trump signed Public Law No. 119-21, which the Centers for Medicare & Medicaid Services (CMS) refers to as the “Working Families Tax Cut” (WFTC) legislation, into law. The WFTC legislation included changes to the Medicaid program to be implemented in the coming years, including the introduction of community engagement requirements for certain adults enrolled in Medicaid. Community engagement has potential to empower Medicaid beneficiaries through employment, education, or volunteer service so they can escape isolation and dependency, build confidence, and achieve self-sufficiency. II. Table of Contents CMCS Informational Bulletin......................................................................................................... 1 I. Introduction ...................................................................................................................... 1 II. Table of Contents ............................................................................................................. 1 III. Overview .......................................................................................................................... 2 IV. Applicable Individuals (section 1902(xx)(9)(A)(i)) of the Act) ...................................... 3 V. Community Engagement (section 1902(xx)(2) of the Act) ............................................. 4 Exclusions from and Exceptions to Community Engagement Requirements .......... 5 Exclusions (section 1902(xx)(9)(A)(ii) of the Act) ............................................ 5 Exceptions (section 1902(xx)(3) of the Act) ...................................................... 6 VI. Demonstrating and Verifying Community Engagement .................................................. 7 Demonstrating Community Engagement at Application (section 1902(xx)(1)(A) of the Act)....................................................................................................................... 7

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Page 2 – CMCS Informational Bulletin

Demonstrating Community Engagement at Renewal (section 1902(xx)(1)(B) and (4) of the Act)............................................................................................................. 7 Using Reliable Information (section 1902(xx)(5) of the Act) ................................... 8 VII. Procedures in the Case of Non-Compliance (section 1902(xx)(6) of the Act) ................ 9 How Non-Compliance Affects Certain FMAP Increases and Premium Tax Credit Eligibility (section 1902(xx)(7) of the Act) ............................................................... 9 Certain FMAP Increases (section 1902(xx)(7)(A) of the Act) ........................... 9 Premium Tax Credit Eligibility (section 1902(xx)(7)(B) of the Act) ................ 9 VIII. Outreach to Applicable Individuals (section 1902(xx)(8) of the Act) ............................. 9 IX. Managed Care Plan Role (WFTC legislation Section 71119(c)) ................................... 10 X. Timeline for Implementation, and Temporary Exemption for Good Faith Effort (Section 1902(xx)(1) and (11) of the Act) ................................................................................... 10 XI. Financial Resources for States ....................................................................................... 11 Government Efficiency Grants to States (WFTC legislation Section 71119(e)) ..... 11 Medicaid Information Technology (IT) System Costs ............................................ 11 XII. Closing ........................................................................................................................... 12 Appendix: State Options for Initial Community Engagement Beneficiary Outreach and Compliance Review Periods at Application .............................................................................. 13 III. Overview The purpose of this Center for Medicaid and CHIP Services (CMCS) Informational Bulletin (CIB) is to provide an overview of the Medicaid-related “community engagement” requirement mandated by section 71119 of subchapter D of chapter 1 of subtitle B of title VII of the WFTC legislation (“section 71119”). Implementation of community engagement requirements will necessitate system, policy, and operational changes to state programs in the coming years. CMS is committed to supporting states in this effort and anticipates that ongoing partnership and engagement with states and other stakeholders will inform areas of need for additional guidance, including rulemaking by June 2026. However, we recognize that planning must begin now, as states enter budget and legislative sessions and begin procurement of new systems and services to support implementation of the Medicaid provisions in the WFTC legislation. It is important to note that community engagement is not new to the Medicaid program. Multiple states submitted new section 1115 demonstration requests, prior to the passage of the WFTC legislation, to implement a community engagement program.

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Page 3 – CMCS Informational Bulletin Section 71119 (“Requirement for States to Establish Medicaid Community Engagement Requirements for Certain Individuals”) amended section 1902 of the Social Security Act (the Act) to add subsection (xx). Section 1902(xx) of the Act requires that “applicable individuals” demonstrate, as a condition of their Medicaid eligibility, “community engagement” (generally, that they work, are enrolled in an educational program, complete community service, participate in a work program, or any combination thereof) for a minimum period of time preceding their application and during their enrollment. “Applicable individuals” are, generally, those eligible to enroll or who are enrolled under the state plan in the adult group described at section 1902(a)(10)(A)(i)(VIII) of the Act (“adult group”) or those who generally fit the description of a person eligible under section 1902(a)(10)(A)(i)(VIII) but who are eligible under or enrolled in a section 1115 demonstration that provides minimum essential coverage (MEC) to such a population (rather than under the state plan). Section 1902(xx) of the Act excepts discrete populations from these requirements and excludes members of certain populations from the definition of an “applicable individual.” Section 1902(xx) of the Act applies in any state and the District of Columbia that elects to provide coverage to the adult group under the state plan or to certain individuals through certain section 1115 demonstrations as described further in the next section of this CIB. The community engagement provision is not applicable to the U.S. territories, regardless of whether they elect to cover the adult group. The requirement under section 1902(xx) of the Act to condition Medicaid eligibility on demonstrating community engagement begins January 1, 2027, unless a state opts to implement it sooner through a section 1115 demonstration or the state plan. Before effectuating the community engagement requirement, states must engage in outreach to applicable individuals to inform them of the requirement, and this notice must include an explanation of the exceptions and how an “applicable individual” is defined. The provisions of section 1902(xx) of the Act cannot be waived under section 1115 demonstration authority. Section 71119 of the WFTC legislation requires the Department of Health and Human Services (HHS) to issue grants to states to support implementation of section 1902(xx) of the Act and other WFTC legislation provisions relating to eligibility determinations and redeterminations, and it requires the Secretary of HHS to promulgate an interim final rule to implement section 71119 not later than June 1, 2026. IV. Applicable Individuals (section 1902(xx)(9)(A)(i)) of the Act) The Medicaid applicants and beneficiaries who must demonstrate community engagement as a condition of their Medicaid eligibility are those who reside in one of the 50 states or the District of Columbia1 and who meet the definition of an “applicable individual.” An “applicable 1 Section 1902(xx)(9)(C) of the Act defines “State” for purposes of 1902(xx) to mean one of the 50 states or the District of Columbia. This means that section 1902(xx) of the Act does not apply to the U.S. territories of the Northern Mariana Islands, American Samoa, Guam, Puerto Rico, or the Virgin Islands.

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Page 4 – CMCS Informational Bulletin individual” is someone in one of two groups, subject to certain exclusions discussed further below. The first group is individuals who are eligible for or enrolled under the state plan in the adult group described in section 1902(a)(10)(A)(i)(VIII) of the Act. The second group is individuals who are otherwise eligible to enroll or are enrolled “under a waiver of [the] plan” (which would generally be, in this case, a section 1115 demonstration) that provides coverage that meets MEC2 requirements, and who are: at least 19 and under 65 years of age, not pregnant, not entitled to or enrolled for benefits under Medicare Part A or Part B, and not otherwise eligible to enroll under the state Medicaid plan. This means that the community engagement requirements in section 1902(xx) do not apply in states that: a) have not adopted the adult group under the state plan; and b) do not have a section 1115 demonstration that offers MEC to individuals who are at least 19 and under 65 years of age, not pregnant, not entitled to or enrolled in Medicare Part A or B, and not otherwise eligible under the state’s Medicaid state plan. For example, the community engagement requirements would not apply to an individual in a state that has not implemented the adult group under the state plan and in which the only section 1115 demonstration-based coverage available to a non-pregnant adult who is at least 19 and under 65 years of age who does not have Medicare is through a limited- benefit family planning demonstration (as family planning-only services are not MEC). In some states that have not adopted the adult group under the state plan, community engagement requirements would apply to certain individuals in a section 1115 demonstration. For example, in a state that provides MEC under a section 1115 demonstration to non-pregnant individuals who are at least 19 and under 65 years of age, not entitled to or enrolled in Medicare, and not otherwise eligible to enroll under the state plan, such individuals would need to meet the new requirements, unless an exclusion or exception applies, in order to be eligible for the coverage provided under the demonstration. CMS continues to evaluate which existing state section 1115 demonstration populations meet the definition of an “applicable individual.” V. Community Engagement (section 1902(xx)(2) of the Act) To meet community engagement requirements in a given month, applicable individuals must do one or more of the following: (A) Work at least 80 hours. (B) Complete at least 80 hours of community service. (C) Participate in a work program (in accordance with the meaning given such term in section 6(o)(1) of the Food and Nutrition Act of 2008) for at least 80 hours. 2 MEC is defined in section 1902(xx)(9)(A)(i)(II)(aa) of the Act as follows: “as described in section 5000A(f)(1)(A) of the Internal Revenue Code of 1986 and as determined in accordance with standards prescribed by the Secretary in regulations.”

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(D) Be enrolled in an educational program, including an institution of higher education (as defined in section 101 of the Higher Education Act of 1965) and a program of career and technical education (as defined in section 3 of the Carl D. Perkins Career and Technical Education Act of 2006), at least half-time. (E) Engage in any combination of the activities described in (A) through (D) for a total of at least 80 hours. (F) Have a monthly income that is not less than the applicable federal minimum wage requirement under section 6 of the Fair Labor Standards Act of 1938, multiplied by 80 hours; e.g., currently, $7.25 x 80 = $580 per month.3 (G) Have had an average monthly income over the preceding 6 months that is not less than the applicable federal minimum wage requirement under section 6 of the Fair Labor Standards Act of 1938 multiplied by 80 hours, and is a seasonal worker, as described in section 45R(d)(5)(B) of the Internal Revenue Code of 1986. Exclusions from and Exceptions to Community Engagement Requirements Exclusions (section 1902(xx)(9)(A)(ii) of the Act) Individuals meeting the definition of a “specified excluded individual” (meaning that they are excluded from the “applicable individual” definition) for part or all of a relevant month are not subject to demonstrating community engagement for that month. The following persons are “specified excluded individuals”: 1. An individual described in section 1902(a)(10)(A)(i)(IX) of the Act (the former foster care children eligibility group); 2. An American Indian or Alaska Native who: (A) is an Indian or an Urban Indian (as defined in paragraphs (13) and (28) of section 4 of the Indian Health Care Improvement Act), (B) is a California Indian (as described in section 809(a) of such Act), or (C) has otherwise been determined eligible as an Indian for the Indian Health Service under HHS regulations; 3. A parent, guardian, caretaker relative, or family caregiver (as defined in section 2 of the RAISE Family Caregivers Act, P.L. 115-119)4 of a dependent child who is 13 years of age and under or of a disabled individual; 4. A veteran with a disability rated as total under 38 U.S.C. § 1155; 5. An individual who is medically frail or otherwise has special medical needs (as defined by the Secretary), including an individual: who is blind or disabled (as defined in section 1614 of the Act); with a substance use disorder; with a disabling mental disorder; with a 3 29 U.S.C. § 206(a)(1)(C). 4 See https://www.congress.gov/115/statute/STATUTE-132/STATUTE-132-Pg23.pdf.

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physical, intellectual, or developmental disability that significantly impairs their ability to perform one or more activities of daily living; or with a serious or complex medical condition; 6. An individual who is compliant with any requirements applied by the individual’s state Temporary Assistance for Needy Families (TANF) program under section 407 of the Act (relating to “Mandatory Work Requirements”), or who is a member of a household that receives Supplemental Nutrition Assistance Program (SNAP) benefits under the Food and Nutrition Act of 2008 and is not exempt from a work requirement under such Act;5 7. A participant in a drug addiction or alcoholic treatment and rehabilitation program (as defined in section 3(h) of the Food and Nutrition Act of 2008); 8. An inmate of a public institution; or 9. A woman who is pregnant or entitled to postpartum medical assistance under section 1902(e)(5) or (16) of the Act. Exceptions (section 1902(xx)(3) of the Act) Applicable individuals are excepted from demonstrating community engagement for a month if, for part or all of that month, they are: under the age of 19; entitled to, or enrolled for, benefits under Medicare Part A, or enrolled for benefits under Medicare Part B; or described in a mandatory categorically needy eligibility group in any of subclauses (I) through (VII) of section 1902(a)(10)(A)(i) of the Act.6 An additional exception applies to an individual who was an inmate of a public institution at any point during the three-month period ending on the first day of a month in which the individual is otherwise subject to the community engagement requirement. States also have the option, under procedures established by the State (in accordance with standards specified by the Secretary), to provide an exception for “short-term hardship events” for applicable individuals. A state that elects this option must deem an applicable individual as demonstrating community engagement for a month if, for part or all of the month, the individual: 1. receives inpatient hospital services, nursing facility services, services in an intermediate care facility for individuals with intellectual disabilities, inpatient psychiatric hospital services, or such other services of similar acuity (including outpatient care relating to the above-listed services) as the Secretary determines appropriate, and the individual requests such an exception; 5 Further clarification on the scope of the affected individuals is forthcoming. 6 Sections 1902(a)(10)(A)(i)(I)-(VII) of the Act generally describes the mandatory categorically needy eligibility groups other than the adult group or former foster care children eligibility group.

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2. resides in a county or equivalent unit of local government in which: a) an emergency or disaster has been declared by the President pursuant to the National Emergencies Act or Robert T. Stafford Disaster Relief and Emergency Assistance Act; or b) subject to a request from the state to the Secretary, has an unemployment rate that is at or above the lesser of eight percent or 1.5 times the national unemployment rate; or 3. must travel, or their dependent must travel, outside of their community for an extended period of time to receive medical services necessary to treat a serious or complex medical condition that are not available in their community of residence, and the individual requests such an exception. VI. Demonstrating and Verifying Community Engagement Demonstrating Community Engagement at Application (section 1902(xx)(1)(A) of the Act) States must require applicable individuals who have filed an application for Medicaid to meet community engagement requirements detailed in section 1902(xx)(2) of the Act for at least one month immediately preceding the month during which the individual applies. States may elect to require that applicable individuals demonstrate community engagement for up to three consecutive months immediately preceding the month of application. As an illustrative example, a state must require applicable individuals applying for coverage in January 2027 to demonstrate community engagement in December 2026. If a state elects to require that an applicant demonstrate community engagement for two consecutive months prior to the month of application, an applicable individual applying for coverage in January 2027 in that state would need to demonstrate community engagement in November and December 2026. Should a state elect to require applicants to demonstrate community engagement for three months prior to the month of application, an applicable individual applying for coverage in January 2027 in that state would be required to demonstrate community engagement in October, November, and December 2026. Demonstrating Community Engagement at Renewal (section 1902(xx)(1)(B) and (4) of the Act) States must require Medicaid beneficiaries who are subject to community engagement to demonstrate compliance for one or more months in between renewals, as part of the state’s routine renewal process. Such Medicaid beneficiaries must demonstrate community engagement for one or more months (as specified by the state), whether or not consecutive. CMS interprets this to mean that a beneficiary is considered to have successfully met the requirements if during any part of the eligibility period the beneficiary demonstrated community engagement for the number of months the state specified. Under CMS’s interpretation, the state may not dictate the specific months during which an applicable individual must demonstrate community engagement. If the state requires applicable individuals to demonstrate community engagement

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Page 8 – CMCS Informational Bulletin for more than one month between renewals, it must permit, but may not require, them to demonstrate community engagement in consecutive months. Note that, as required by Section 71107 of the WFTC legislation,7 states will be required to conduct renewals of eligibility once every 6 months, instead of once every 12 months, for a population8 that significantly overlaps with the population subject to the new community engagement requirements, beginning with renewals initiated on or after January 1, 2027. As such, individuals subject to both of these provisions will be required to demonstrate community engagement at least every 6 months at each subsequent renewal. In addition to verifying compliance with community engagement at renewal, states may elect to verify compliance with community engagement more frequently between determinations or redeterminations of eligibility for beneficiaries.9 Using Reliable Information (section 1902(xx)(5) of the Act) States must establish processes and first attempt to use reliable information available to the state, including from the individual case record or information obtained through reliable data sources, to establish whether an individual met the community engagement requirement or was not required to do so. Reliable information could come from, for example and without limitation: payroll data, Medicaid provider payments, or encounter data, and data sources about higher education enrollment, job training participation, or community service. The state may not request additional information or documentation unless it is unable to establish that the individual met community engagement requirements (or was not required to do so) using reliable information available to it. This requirement for a state to use reliable information available to it for these purposes prior to requiring additional information (where possible) applies both at application and at renewal. Similarly, states electing to verify compliance with community engagement requirements more frequently than the renewal schedule are also required to use information available to the state prior to requesting additional information. CMS expects to provide additional guidance on section 1902(xx)(5) of the Act, including guidance on the use of reliable data sources, and instructions on documenting such policies and procedures. 7 In accordance with Section 71107(b) of the WFTC legislation, CMS will issue guidance to support states with implementing the requirement to conduct renewals once every 6 months for certain individuals. 8 Those subject to renewals once every 6 months include almost all individuals enrolled under the state plan in the Medicaid adult group described at section 1902(a)(10)(A)(i)(VIII) of the Act and almost all individuals described in 1902(a)(10)(A)(i)(VIII) who are enrolled in coverage “under a waiver” of the state plan that provides coverage equivalent to MEC to all individuals described at section 1902(a)(10)(A)(i)(VIII) of the Act. Additional details will be provided in the forthcoming guidance referenced in footnote 7. 9 See section 1902(xx)(4) of the Act.

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VII. Procedures in the Case of Non-Compliance (section 1902(xx)(6) of the Act) If a state cannot establish that someone met the community engagement requirements or was not required to do so, it must provide notice of noncompliance and allow the applicant or beneficiary 30 calendar days from the date such notice is received to demonstrate compliance or show that the requirement does not apply to them. This notice must include information on how to demonstrate compliance or show that the requirement does not apply, and how to reapply for medical assistance if the individual’s application is denied or if the beneficiary is disenrolled. A state must continue to provide an enrolled beneficiary with medical assistance during the 30-day period. If no satisfactory showing of compliance with or inapplicability of the requirement is made, the state must determine whether the individual has any other basis for eligibility for Medicaid or another insurance affordability program. The state must then provide written notice and fair hearing rights in accordance with 42 C.F.R. part 431 subpart E (including advance notice in the case of an eligibility termination or other adverse action) and, if there is no other basis for Medicaid eligibility, deny the application or terminate eligibility by the end of the month following the 30-day period. How Non-Compliance Affects Certain FMAP Increases and Premium Tax Credit Eligibility (section 1902(xx)(7) of the Act) Certain FMAP Increases (section 1902(xx)(7)(A) of the Act) Section 1902(xx)(7)(A) of the Act directs that a state shall not be treated as not providing medical assistance to all individuals described in section 1902(a)(10)(A)(i)(VIII), or as not expending amounts for all such individuals under the Medicaid state plan or waiver of the plan, solely because it has determined that such an individual is ineligible for Medicaid due to a failure to demonstrate community engagement. Premium Tax Credit Eligibility (section 1902(xx)(7)(B) of the Act) An individual who is eligible for Medicaid coverage that provides MEC is generally not eligible for advance payments of the premium tax credit (APTC) and premium tax credits (PTC) used to pay for coverage on a Health Insurance Exchange. Under section 1902(xx)(7)(B) of the Act, an individual is deemed to be eligible for MEC if the individual would have been eligible for Medicaid but for their failure to meet community engagement requirements. As such, an applicable individual who does not demonstrate community engagement and would otherwise be eligible for Medicaid is precluded from eligibility for APTC and PTC. VIII. Outreach to Applicable Individuals (section 1902(xx)(8) of the Act) Prior to initial implementation of these community engagement requirements in a state, and periodically thereafter, states are required to notify beneficiaries who are applicable individuals of the requirement to demonstrate community engagement. This outreach notice must include

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Page 10 – CMCS Informational Bulletin information on how to comply with the community engagement requirements, including an explanation of the definition of an “applicable individual” and the exceptions; the consequences of non-compliance; and how to report a change in status that could result in the individual qualifying as a specified excluded individual, meeting an exception, or being subject to the community engagement requirement after an exclusion or exception ends. States must provide this outreach notice to the beneficiary by mail (or in an electronic format, if elected by the individual), and one or more additional formats. Additional formats may include telephone, text message, an internet website, other commonly available electronic means, and other formats the Secretary determines appropriate. States must notify applicable individuals before implementing community engagement requirements on a timeframe that is based on the state’s implementation date (i.e., either January 1, 2027, or an earlier date selected by the state) and the number of consecutive months a state requires applicable individuals to demonstrate community engagement at application. The set number of months prior to initial implementation that outreach is required in a particular state is determined by adding three months to the number of months a state requires an applicable individual to demonstrate community engagement at application. As such, states requiring an applicable individual to demonstrate one, two, or three months of community engagement at application would be required to begin outreach no later than September, August, or July 2026, respectively, for implementation on January 1, 2027. For a visual representation of these outreach timelines, reference the Appendix. IX. Managed Care Plan Role (WFTC legislation Section 71119(c)) States are prohibited from using Medicaid managed care organizations (MCOs), prepaid inpatient health plans (PIHPs), prepaid ambulatory health plans (PAHPs), or other contractors with direct or indirect financial relationships to MCOs, PIHPs, or PAHPs to determine beneficiary compliance with community engagement requirements. There is no other prohibition in the statute on states choosing to delegate some support activities to managed care plans to support states’ successful implementation of community engagement requirements. CMS expects to issue further guidance on the potential role that managed care plans can appropriately play in activities that are not related to determining beneficiary compliance. X. Timeline for Implementation, and Temporary Exemption for Good Faith Effort (Section 1902(xx)(1) and (11) of the Act) Section 1902(xx)(1) of the Act requires that states implement the new community engagement requirements beginning January 1, 2027, although states may elect an earlier implementation date via a section 1115 demonstration or through a state plan amendment. States interested in an earlier implementation should contact CMS for more details.

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Page 11 – CMCS Informational Bulletin The Secretary of Health and Human Services has the authority to provide states with a temporary good-faith-effort exemption to delay implementation of community engagement requirements. To receive a temporary exemption, a state must submit a request to the Secretary, and the Secretary needs to determine that, based on the request, the state is demonstrating a good-faith effort to comply with the statutory requirements. In considering whether a state is demonstrating a good-faith effort, the Secretary will consider actions taken by the state toward compliance, any significant barriers or challenges to meeting the requirements that the state has faced or continues to face, the state’s detailed plan and timeline for achieving full compliance, and any other criteria the Secretary determines appropriate. Good-faith-effort exemptions, if granted by the Secretary, must expire no later than December 31, 2028, consistent with section 1902(xx)(11)(C)(i) of the Act. The Secretary may terminate any granted exemptions early if a state fails to comply with quarterly reporting requirements or ceases making good-faith compliance efforts. Good-faith- effort exemptions will be considered on a case-by-case basis and will be approved only for states that make the required showing; in general, CMS anticipates that approvals will be limited to states that are making meaningful efforts towards implementation and experience severe and/or unexpected issues that hinder their progress. XI. Financial Resources for States Government Efficiency Grants to States (WFTC legislation Section 71119(e)) Federal funding totaling $200 million for fiscal year 2026 is available for the 50 states and the District of Columbia to establish systems necessary to carry out section 71119 of the WFTC legislation and other sections of WFTC legislation, title VII, subtitle B, chapter 1 related to conducting eligibility determinations or redeterminations. CMS will award states funding through two mechanisms: 1) $100 million distributed equally among all 50 states and the District of Columbia, and 2) $100 million distributed to the 50 states and the District of Columbia based on their share of individuals subject to community engagement relative to the total number of such individuals across all 50 states and the District of Columbia, as of March 31, 2025. Medicaid Information Technology (IT) System Costs These new requirements should function seamlessly with new and existing system functionality. It is important for states to ensure the vendors supporting their community engagement implementation clearly understand their role and expectations. Without proper alignment between policy design and technological capabilities, states may create administrative burdens that undermine program effectiveness and cost-efficiency. When establishing state-specific policies related to community engagement, states should consult with their system implementation teams to ensure policies can be operationalized in their systems. CMS recognizes the program changes will require information technology (IT) system work to fulfill policy implementation. Certain state Medicaid agency IT system costs necessary to

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Page 12 – CMCS Informational Bulletin support the community engagement requirements may be eligible for enhanced federal financial participation (FFP). Approval of enhanced match requires the submission of an Advanced Planning Document (APD). A state may submit an APD requesting approval for 90/10 enhanced match for the design, development, and installation of their Medicaid Enterprise Systems (MES) initiatives contributing to the economic and efficient operation of the program. States may also submit an APD to request 75/25 enhanced match for ongoing operations of CMS- approved systems. States should refer to 45 C.F.R. Part 95 Subpart F – Automatic Data Processing Equipment and Services-Conditions for FFP for the specifics related to APD submission. States should refer to 42 C.F.R. Part 433 Subpart C – Mechanized Claims Processing and Information Retrieval Systems for the specifics related to systems approval and claiming enhanced FFP. XII. Closing CMS recognizes implementing Section 71119 of the WFTC legislation is a significant undertaking for states that will require policy, operational, and system changes. CMS is currently developing the required interim final rulemaking along with additional guidance on the new requirements. CMS is available to answer questions and provide technical assistance to states; requests can be directed to MedicaidWorks@cms.hhs.gov.

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Page 13 – CMCS Informational Bulletin Appendix: State Options for Initial Community Engagement Beneficiary Outreach and Compliance Review Periods at Application Based on the statutory implementation date of January 1, 2027, the following graphic depicts state options for timelines accounting for the required three months of initial outreach to existing beneficiaries and the state’s “review period” – how many months an applicable individual must demonstrate community engagement to qualify for Medicaid at application (one to three months, at state option).

(2025-12-09)CMCS Informational Bulletin, December 9, 2025#

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DEPARTMENT OF HEALTH & HUMAN SERVICES Centers for Medicare & Medicaid Services 7500 Security Boulevard, Mail Stop S2-26-12 Baltimore, Maryland 21244-1850 CMCS Informational Bulletin DATE: December 9, 2025 FROM: Dan Brillman Deputy Administrator, CMS Director, Center for Medicaid and CHIP Services (CMCS) SUBJECT: 2026 SSI, Spousal Impoverishment, and Medicare Savings Program Resource Standards This CMCS Informational Bulletin provides an update on the 2026 Supplemental Security Income (SSI) and Spousal Impoverishment Standards as well as the 2026 resource standards for the Medicare Savings Program (MSP) groups. SSI and Spousal Impoverishment Standards Certain Medicaid income and resource standards are adjusted beginning each January in accordance with changes in the SSI federal benefit rate (FBR) and the Consumer Price Index (CPI). Many states offer, for example, categorical eligibility to individuals who are not receiving SSI but who meet the financial eligibility requirements of the program, as authorized by section 1902(a)(10)(A)(ii)(I) of the Social Security Act (“the Act”). Similarly, most states have adopted the “special income level” institutional eligibility category authorized under section 1902(a)(10)(A)(ii)(V) of the Act, the maximum income standard for which is 300% of the SSI FBR. Additionally, certain eligibility standards relating to coverage of long-term services and supports, including the home equity limitation in section 1917(f) of the Act and elements of the spousal impoverishment statute in section 1924 of the Act, are increased each year based on increases in the CPI for All Urban Consumers (CPI-U). Included with this Informational Bulletin is the 2026 SSI and Spousal Impoverishment Standards chart that displays the new standards. These standards are also available on Medicaid.gov at https://www.medicaid.gov/medicaid/eligibility/spousal-impoverishment/index.html. States must update their standards in accordance with this information for the changes that become effective on January 1, 2026. MSP Resource Standards The MSP groups are mandatory Medicaid eligibility groups that provide coverage of some or all Medicare Part A and B premiums and cost-sharing for low-income Medicare beneficiaries.0F1 The resource standard for the MSP groups are based on the SSI resource standard, which is set forth in 1 Sections 1902(a)(10)(E), 1905(p) and 1905(s) of the Act and 42 C.F.R. §§ 435.123-435.126.

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Page 2 – CMCS Informational Bulletin the statute.1F2 Three of the four MSP groups—the Qualified Medicare Beneficiary (QMB), Specified Low-Income Beneficiary (SLMB), and Qualified Individual (QI) groups—have the same resource standard. Since 2010, the resource standard for these groups has been set at three times the SSI resource standard in 2006 for a single or married individual, as applicable, adjusted each year after 2006 by the percentage increase in the CPI-U as of September of such previous year.2F3 The other MSP group, the Qualified Disabled and Working Individual (QDWI) group (described in section 1905(s) of the Act), has a resource standard of twice the SSI resource standard for a single or married individual (as applicable), without annual adjustment, and remains $4,000 for a single individual and $6,000 for a married individual. Effective January 1, 2026, the resource standards for single and married QMBs, SLMBs, and QIs will be, respectively, $9,950 and $14,910.3F4 If you have any questions or need additional information, please send your question to CMCS@cms.hhs.gov. 2 Section 1611(a)(3) of the Act. 3 Sections 1905(p)(1)(C) and 1860D-14(a)(3)(D) of the Act. 4 Early in the calendar year following the publication of the new federal poverty levels, CMS publishes an annual informational bulletin which includes the Dual Eligible Standards chart for each calendar year. The Dual Eligible Standards chart displays each year’s income and resource standards for all MSP groups. The resource standards for the QMBs, SLMBs, and QIs announced in this informational bulletin will be included in the 2026 Dual Eligibles Standards Chart.

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2026 SSI and Spousal Impoverishment Standards Supplemental Security Income (SSI) Effective 1-1-26 SSI Federal Benefit Rate (FBR) SSI Resource Standard Income Cap Limit (300%) Earned Income Break Even Point Unearned Income Break Even Point Individual 994.00 2,000.00 2,982.00 2,073.00 1,014.00 Couple 1,491.00 3,000.00 N/A 3,067.00 1,511.00 Substantial Gainful Activity (SGA) Limit: 1,690.00 (Blind SGA: 2,830.00) CPI Increase for 2026: 3.0% CPI Increase, Since September 1988: 171.1% Spousal Impoverishment Effective 1-1-26 Unless Otherwise Noted Minimum Monthly Maintenance Needs Allowance (MMMNA): 2,643.75 All States (Except Alaska and Hawaii) (Effective 7-1-25) 3,303.75 Alaska 3,040.00 Hawaii Maximum Monthly Maintenance Needs Allowance: 4,066.50 Community Spouse Monthly Housing Allowance: 793.13 All States (Except Alaska and Hawaii) (Effective 7-1-25) 991.13 Alaska 912.00 Hawaii Community Spouse Resources: Minimum Resource Standard: 32,532.00 Maximum Resource Standard 162,660.00 Home Equity Limits: Minimum: 752,000.00 Maximum: 1,130,000.00

(2026-04-27)CMCS Informational Bulletin, April 27, 2026#

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DEPARTMENT OF HEALTH & HUMAN SERVICES Centers for Medicare & Medicaid Services 7500 Security Boulevard, Mail Stop S2-26-12 Baltimore, Maryland 21244-1850 CMCS Informational Bulletin DATE: FROM: April 27, 2026 Dan Brillman Deputy Administrator, CMS Director, Center for Medicaid and CHIP Services SUBJECT: Updated 2026 SSI and Spousal Impoverishment Standards This Center for Medicaid and CHIP Services (CMCS) Informational Bulletin (CIB) provides an update on the 2026 Supplemental Security Income (SSI) and Spousal Impoverishment Standards. Certain Medicaid income and resource standards are adjusted annually in accordance with changes in the SSI federal benefit rate (FBR) and the Consumer Price Index (CPI). These include some of the standards described in section 1924 of the Social Security Act (the Act), which describes the financial eligibility rules (the “spousal impoverishment rules”) that apply when married individuals seek coverage of certain long-term services and supports. While some of the spousal impoverishment standards, such as the maximum community spouse income maintenance allowance and community spouse minimum and maximum resource allowances, are adjusted each January, section 1924 of the Act directs that the community spouse’s minimum monthly maintenance needs allowance (MMMNA) be adjusted, in accordance with changes to the federal poverty level, effective July 1 of each year. Additionally, as the community spouse’s monthly housing allowance (which is the basis for determining if the community spouse may have an excess shelter allowance) is calculated based on a percentage of the MMMNA, the housing allowance is adjusted each July 1 as well. Included with this informational bulletin is the revised 2026 SSI and Spousal Impoverishment Standards chart that displays the updated MMMNA and Community Spouse Monthly Housing Allowances. These standards are also available on Medicaid.gov at https://www.medicaid.gov/medicaid/eligibility/spousal-impoverishment/index.html. Please update your standards in accordance with this information. If you have any questions or need additional information, please send your question to CMCS@cms.hhs.gov.

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2026 SSI and Spousal Impoverishment Standards

Supplemental Security Income (SSI) Effective 1-1-26

SSI Federal Benefit Rate (FBR) SSI Resource Standard Income Cap Limit (300%) Earned Income Break Even Point Unearned Income Break Even Point Individual 994.00 2,000.00 2,982.00 2,073.00 1,014.00 Couple 1,491.00 3,000.00 N/A 3,067.00 1,511.00 Substantial Gainful Activity (SGA) Limit: 1,690.00 (Blind SGA: 2,830.00) CPI Increase for 2026: 3.0% CPI Increase, Since September 1988: 171.1%

Spousal Impoverishment

Effective 1-1-26 Unless Otherwise Noted

Minimum Monthly Maintenance Needs Allowance 2,705.00 All States (Except Alaska and Hawaii) (Effective 7-1-26) 3,381.25 Alaska 3,111.25 Hawaii Maximum Monthly Maintenance Needs Allowance: 4,066.50 Community Spouse Monthly Housing Allowance: 811.50 All States (Except Alaska and Hawaii) (Effective 7-1-26) 1,014.38 Alaska 933.38 Hawaii Community Spouse Resources:

Minimum Resource Standard: 32,532.00 Maximum Resource Standard 162,660.00 Home Equity Limits:

Minimum: 752,000.00 Maximum: 1,130,000.00

(2025-05-28)CMCS Informational Bulletin, May 28, 2025#

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(2025-05-28)CMCS Informational Bulletin, May 28, 2025#

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(2025-11-18)CMCS Informational Bulletin, November 18, 2025#

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(2025-12-08)CMCS Informational Bulletin, December 8, 2025#

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(2025-12-09)CMCS Informational Bulletin, December 9, 2025#

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(2026-04-27)CMCS Informational Bulletin, April 27, 2026#

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