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) dollars to pay for what the rule terms “sex-rejecting procedures” for minors. The rule was published in the Federal Register on August 13, 2026, and takes effect on October 13, 2026.
What the New CMS Rule Prohibits
Under the new rule, state Medicaid plans must include a provision stating that the state Medicaid agency will not make payments for these procedures for individuals under the age of 18. Similarly, separate state CHIP plans must provide that the CHIP agency will not make payments for such procedures for individuals under the age of 19. The age difference reflects the differing eligibility thresholds between the two programs.
The rule directly affects state governments that administer Medicaid and CHIP programs, since those programs are funded through a federal-state matching arrangement. States receive federal matching funds — known as the Federal Medical Assistance Percentage for Medicaid and an enhanced matching rate for CHIP — only when their programs comply with federal statutory and regulatory requirements. By requiring state plans to prohibit payment for these procedures, the rule effectively eliminates federal financial participation for covered services that fall under the prohibition.
Existing Hormone Therapy Gets a Six-Month Transition
CMS did include a limited transition provision for beneficiaries who are already receiving cross-sex hormone therapy at the time the rule takes effect. According to the official announcement, state Medicaid and CHIP agencies may continue to claim federal matching funds for those hormone therapy medications for up to six months from the rule’s effective date of October 13, 2026.
The rule amends Title 42 of the Code of Federal Regulations, specifically Parts 441 and 457, which govern Medicaid and CHIP benefits and coverage requirements, respectively. Medicaid and CHIP together provide health coverage to millions of low-income Americans, with children making up a substantial portion of enrollees.
The rule applies to separate CHIP programs — those in which a state receives federal funding from its Title XXI allotment to provide child health assistance through coverage meeting specific federal requirements. Medicaid-expansion CHIP programs are governed under separate provisions.
What Families Should Know Before October 13
Because Medicaid and CHIP rules are administered at the state level within federal guidelines, the practical impact on individual beneficiaries may vary depending on each state’s plan and applicable state laws. Families and caregivers of children currently enrolled in Medicaid or CHIP who have questions about how this rule affects their coverage are encouraged to contact their state Medicaid or CHIP agency directly or visit CMS at cms.gov to verify their specific circumstances.
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