The Centers for Medicare & Medicaid Services (CMS) has issued a final rule prohibiting the use of federal Medicaid and Children’s Health Insurance Program (CHIP) funds to pay for what the rule terms “sex-rejecting procedures” for minors, according to an official announcement published in the Federal Register on August 13, 2026.
What the New Medicaid and CHIP Rule Prohibits
Under the rule, state Medicaid plans must include provisions barring payment for such procedures for individuals under age 18, while separate state CHIP plans must bar payment for individuals under age 19. The age difference reflects the existing age boundaries of the two programs — Medicaid covers children under 18 in this context, while separate CHIP programs extend coverage to children under 19.
The rule takes effect on October 13, 2026, giving states approximately two months to update their Federally approved state plans to comply with the new requirements.
A limited transition provision is included for beneficiaries already receiving cross-sex hormone therapy at the time the rule takes effect. State Medicaid and CHIP agencies may continue to claim federal matching funds — known as Federal Financial Participation — for those hormone therapy medications for up to six months from the rule’s effective date. After that window closes, federal funding for such treatments would no longer be available under either program.
What the Rule Means for State Medicaid and CHIP Programs
The rule amends 42 CFR Parts 441 and 457, which govern Medicaid and CHIP benefits and state plan requirements. Because Medicaid and CHIP are jointly funded and administered by states and the federal government, states that do not update their plans to conform with the prohibition risk losing federal matching payments for the affected services.
Medicaid and CHIP together provide health coverage to millions of low-income children and families across the country. States set their own eligibility standards and benefits packages, but must operate within federal statutory and regulatory boundaries. Federal matching payments to states are calculated using the Federal Medical Assistance Percentage for Medicaid and an enhanced rate for separate CHIP programs.
Families Should Check How Their State Will Implement the Change
Families whose children currently receive affected care through Medicaid or CHIP should contact their state program to determine how the rule will be implemented and whether their coverage will change. The federal rule takes effect October 13, while a limited six-month transition applies to federal matching funds for certain hormone therapy already being provided when the rule takes effect.
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Amanda Blankenship is the Chief Editor for District Media. With a BA in journalism from Wingate University, she frequently writes for a handful of websites and loves to share her own personal finance story with others. When she isn’t typing away at her desk, she enjoys spending time with her daughter, son, husband, and dog. During her free time, you’re likely to find her with her nose in a book, hiking, or playing RPG video games.