Approximately 70.5 million people are enrolled in Medicaid across the United States. If you also include the Children's Health Insurance Program (CHIP), enrollment is just under 78 million. This means about one in five Americans currently rely on Medicaid or CHIP for their health coverage.
Considering its importance, it’s no surprise that Medicaid is the target of numerous news stories, rumors, and legislation, making it difficult to know what changes are actually going into effect. Medicaid eligibility is further complicated by variations in state-level policies. This blog aims to summarize the changes made to Medicaid through the One Big Beautiful Bill Act, the massive budget reconciliation bill passed in July 2025.
The changes coming to Medicaid are perhaps the most significant since the Affordable Care Act (ACA) took effect in 2014.
The Basics
Medicaid is a health insurance program jointly run by federal and state governments. It is intended to help people with low income and few assets obtain health care coverage. Unlike Medicare, which is available to anyone over 65 and to younger people with disabilities, Medicaid has strict eligibility requirements. Because states run their own programs for residents, each has a different name for Medicaid. In California, for example, it is called Medi-Cal, while in Wisconsin it is called BadgerCarePlus.
Typically, Medicaid eligibility revolves around your income and family size. You can apply for Medicaid directly through your state or through the Health Insurance Marketplace at HealthCare.gov.
Nearly 40% of Americans get their health insurance through either Medicare or Medicaid. As you’d imagine, the cost to the federal government is significant. That is why Medicare and Medicaid are often targets for budget cuts. Both the federal government and the states are now looking at ways to cut costs.
Federal Funding Cuts
Federal funding for Medicaid is expected to be cut by approximately 15% over the next decade, totaling around $1 trillion. This could greatly affect state budgets. States will have more flexibility to make benefit and eligibility changes, but will also be responsible for either cutting services or paying for costs themselves. New cost-sharing measures will be introduced for some expansion enrollees, with out-of-pocket limits and certain exemptions (such as primary and preventive care).
However, the ACA expanded coverage for preventive care services. States that expanded Medicaid under the ACA will not be able to charge copays for preventive care, such as annual checkups. Only ten states have not expanded Medicaid under the ACA: Alabama, Florida, Georgia, Kansas, Mississippi, South Carolina, South Dakota, Tennessee, Texas, Wisconsin, and Wyoming.
New Medicaid Work Requirements
Another significant change is the introduction of work requirements for certain adult Medicaid recipients. Starting in December 2026, adults aged 19 to 64 who are covered through Medicaid expansion or certain state waivers will need to work at least 80 hours per month. Job training, education, or approved community service activities will also count toward the requirement. There are exemptions for parents of young children, disabled veterans, the “medically frail,” anyone over age 64, and certain tribal members.
There is also a “hardship exception” for people who are in counties with an unemployment rate of 8% or higher. Who qualifies for this will depend on how states measure unemployment and the current state of the economy when you apply.
States have until 2027 to comply, although states are free to implement work requirements prior to that date. Alabama tried to implement a similar program in 2018, but it was never federally approved.
More Frequent Reporting Requirements
States must now conduct Medicaid eligibility checks for most enrollees every six months, rather than yearly. More frequent address and status verifications are also required, meaning eligible individuals must be careful to avoid accidentally losing coverage.
Reduced Retroactive Coverage
Previously, Medicaid enrollees could have coverage for medical care provided up to three months prior to enrollment. That retroactive coverage period is now being reduced to one or two months, depending on when you enrolled. Some states also had waivers that previously reduced retroactive coverage. For those states, there may not be a change.
Impact on Immigrants
It’s always been true that only people lawfully in the U.S. can receive Medicaid. However, Medicaid eligibility will be further restricted for certain non-U.S. citizens and recent immigrants. For example, some lawful permanent residents will have to wait five years after receiving their green card before becoming eligible for Medicaid.
State Changes
Some states are also experiencing separate issues regarding Medicaid funding. North Carolina implemented cuts to its Medicaid program starting October 1, 2025, because the state legislature did not approve enough funding to keep pace with rising healthcare costs. The state will now pay doctors, hospitals, nursing homes, and other providers less money for treating people with Medicaid coverage. Most healthcare providers will see their payments reduced by at least 3%. Nursing homes and hospitals could face cuts of up to 10%.
For Medicaid enrollees in North Carolina, this may make it harder to find doctors or clinics, particularly in rural areas. Small providers, facilities with high numbers of Medicaid patients, or those struggling financially may have to cut services or even close.
Lawmakers in the state may reconsider or add funding, but for now, Medicaid payments in the state are being reduced.
What Does This Mean for Medicaid Enrollees?
The Congressional Budget Office (CBO) estimates that if the changes occur as planned, approximately 7.5 million people will lose Medicaid coverage. This is a rough estimate that could change, perhaps drastically, depending on how states implement work requirements and whether they increase funding to Medicaid. That’s why staying informed is so important, as state-level policy variations will have a large impact on how and when people can qualify for Medicaid.
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