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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).