The federal budget law's first cut hit New Jersey's Medicaid program on Oct. 1, ending full coverage for thousands of legal immigrants. Work requirements for 540,000 more adults arrive in January.
The first eligibility provision of the federal budget law signed in July 2025 took effect Thursday, ending full NJ FamilyCare coverage for several categories of legal immigrants. Greg Woods, the assistant commissioner who oversees Medicaid at the state Division of Medical Assistance and Health Services, told the Medical Assistance Advisory Council in July 2025 that 15,000 to 25,000 New Jerseyans would lose coverage in this first round, as NJ Spotlight News reported.
NJ FamilyCare is the state's Medicaid program, paid jointly with Washington. Federal law sets the terms for the federal share, which is how a budget bill out of Congress rewrote eligibility for a program Trenton administers. A second provision takes effect January 1, 2027: work requirements for about 540,000 adults covered under the Affordable Care Act expansion. The state has estimated roughly 350,000 people could eventually lose coverage under both phases, according to NJ Spotlight News.
The law ended full coverage for legal immigrants
Humanitarian parolees admitted for at least a year, refugees and asylees who never adjusted to permanent residency, trafficking victims and certain family members, lawfully residing veterans and active-duty military families all lost full coverage Thursday. So did Afghan and Ukrainian humanitarian parolees, people whose deportation is being withheld and applicants under the Violence Against Women Act. The state lists narrow windows for two groups: Afghans paroled between July 31, 2021, and September 30, 2023, and Ukrainians admitted on humanitarian parole between February 24, 2022, and September 30, 2024.
Coverage continues for "children under 19 regardless of immigration status," lawfully present people under 21, pregnant and postpartum people, Cuban and Haitian entrants, migrants from Pacific-island nations with treaty rights to live in the United States and green-card holders of at least five years. The state Medicaid office posted one exception: members whose documents remain under review keep coverage until the review closes.
In July, the program sent its first mailing, the Non-citizen Initial Letter, to members it could not verify as still eligible, and benefits for the affected groups ran through September 30. Members who got the letter send documents to HMS, a company based in Texas: through a portal called VerifyOS.com, by fax at 1-877-223-8478 or by mail to Irving. A hotline, 1-833-635-7060, fields questions. The state asks up to 30 days to process, then sends one of three outcome letters.
Cumberland County's health department posted English and Spanish links about the changes on April 23, more than five months before the deadline. The state Department of Human Services followed with a translated information page and, in the final week, an urgent post. The state Office of Legislative Services documents the preparation spending: a $7.5 million October 2025 contract with Boston Consulting Group and $10.5 million in new state funding proposed this year.
The changes brought confusion
A September 26 post by the state Department of Human Services drew 398 reactions and 298 comments as of October 1, some objecting that noncitizens had been covered at all, others asking about exemption letters and notices that seemed to contradict each other.
On the r/newjersey subreddit, a member with an ABP plan, the Medicaid category for expansion adults, described two letters. The first, dated September 2, renewed coverage for a year beginning October 1. The second, dated September 11, said "members need multiple qualifications to keep coverage as of January 1, 2027." Nine days apart, the letters pointed in different directions: one renewing, the other warning of new qualifications to keep it. The member couldn't get anyone on the phone to say which rules apply, calling the line "literally just an endless loop of menu options that lead nowhere when you call," and writes, "I am unsure if I'm technically covered."
Laura Waddell of New Jersey Citizen Action, which helps people enroll, described "a lot of confusion" among people seeking help over the summer, NJ Spotlight reported at the time.
Under a state Department of Human Services Facebook post about the 2027 work requirements, one commenter wrote that "my husband has Parkinson's and was denied 3 times"; other commenters described doctors declining to certify serious conditions. On the September 26 post, some reported certification letters arriving without drama and urged keeping every document.
In a September Reddit thread, a part-time worker described being dropped for too much income after three calls produced three different answers; "all I got was 'oh well,'" the member wrote. Another member described a relative's case: the program treated the teenager's summer job earnings as a full-time worker's income spread across the whole year, the member wrote, putting the family over the income limit.
The January rules add work requirements
Adults ages 19 to 64 covered under the Medicaid expansion must show 80 hours a month of work, school, job training or volunteering, or household income of at least $580 a month, starting January 1. Unemployment benefits, Social Security other than SSI, and rent and interest income count toward the $580. Members need qualifying activity in only one month before a renewal, according to state guidance. The state says it may already hold the records to verify that, and it asks members to send nothing unless asked. Those who fall short get 14 to 30 days to respond by mail, depending on their situation. An online tool, the Activity Requirements Checker, tells members in about 10 minutes whether the rules apply to them.
Exempt from the requirements: parents and caregivers of children under 14; people caring for someone with a disability; people with a "serious physical or mental health condition," or a substance-use disorder; pregnant and postpartum people; foster youth under 26; and the recently incarcerated.
New applicants on or after January 1 and members with March 2027 renewals face the requirements first. The state has mailed initial letters to households with adults covered under the expansion, and non-respondents will get reminders from managed-care plans by phone, text and email, according to the July presentation to the advisory council. Members dropped for noncompliance cannot buy subsidized coverage on the state marketplace, according to the state page and Advocates for Children of New Jersey.
The law also lands on hospitals
The same law cuts what Washington pays for emergency care for immigrants who would otherwise qualify for Medicaid, from 90 percent of the cost to the state's regular 50 percent, effective Thursday. The Congressional Budget Office scores the provision as saving $28.2 billion over ten years.
The FY2026 Governor's Budget put NJ FamilyCare's acute-care managed-care program at $12.1 billion, $4.2 billion of it state money and $7.9 billion federal, according to the state Office of Legislative Services. Cathy Bennett, president of the New Jersey Hospital Association, put roughly $300 million in direct hospital funding at risk in a May opinion piece.
The state's buffer is the County Option Hospital Fee Program, created in 2024: participating counties impose fees on their own hospitals, and the revenue supports enhanced Medicaid payments. It channeled an estimated $3,834.8 million to hospitals in 14 counties in the most recent fiscal year, according to the Office of Legislative Services. The state Medicaid office told the advisory council in July that federal regulators held up approval for eight of the fourteen counties for more than a year before a May preliminary agreement. On the Cumberland County Department of Health's April post, a commenter's warning that the cuts could cost the county its hospital drew agreement; the state has published no county-level figures on hospital impact to test it.
Senators Gordon Johnson (D, 37th District) and Nilsa Cruz-Perez (D, 5th District) introduced S2753 in January to extend comprehensive NJ FamilyCare coverage to undocumented pregnant immigrants and their children up to age one. Because Medicaid coverage draws federal matching dollars, the bill is written to take effect only if Washington approves federal funding or the state appropriates the full cost; it rests in the Senate Health, Human Services and Senior Citizens Committee. The advisory council meets again October 29, with public comment newly added to the agenda.
People who lose coverage have 60 days from the loss to enroll through Get Covered New Jersey, the state insurance marketplace, without waiting for open enrollment, according to the state. Keep whatever arrives: especially the Non-citizen Initial Letter and the letter that answers it.
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Sources
• Advocates for Children of New Jersey, "New Medicaid Work Requirements and Eligibility Redeterminations Starting This Year," Advocates for Children of New Jersey (March 6, 2026)
• American Association of Medical Colleges, "Summary and Implementation Timeline of Medicaid Provisions Within the One Big Beautiful Bill Act (OBBBA)," American Association of Medical Colleges (2025)
• Cathy Bennett, [opinion piece on federal Medicaid hospital funding cuts], New Jersey Monitor (May 20, 2026)
• Centers for Medicare and Medicaid Services, [CMCS Informational Bulletin on OBBBA Medicaid provisions], Centers for Medicare and Medicaid Services (November 18, 2025)
• Congressional Budget Office, "H.R. 1, the One Big Beautiful Bill Act," Congressional Budget Office (2025)
• Cumberland County Department of Health, "Changes to NJ FamilyCare eligibility starting fall 2026," Facebook (April 23, 2026)
• New Jersey Department of Human Services, "Important N.J. FamilyCare update!," Facebook (September 26, 2026)
• New Jersey Department of Human Services, [post showing translated eligibility information page], Facebook (April 25, 2026)
• New Jersey Division of Medical Assistance and Health Services, [Medical Assistance Advisory Council meeting presentation], New Jersey Division of Medical Assistance and Health Services (July 22, 2026)
• New Jersey Division of Medical Assistance and Health Services, [Medical Assistance Advisory Council meeting schedule and public comment notice], New Jersey Division of Medical Assistance and Health Services (October 29, 2026)
• New Jersey Division of Medical Assistance and Health Services, "New Work Requirements," nj.gov (October 1, 2026)
• New Jersey Division of Medical Assistance and Health Services, "Non-Citizen Eligibility," nj.gov (October 1, 2026)
• New Jersey Legislature, "Senate Bill No. 2753," New Jersey Legislature (introduced January 13, 2026)
• New Jersey Office of Legislative Services, [FY2026 Governor's Budget — Department of Human Services response], New Jersey Office of Legislative Services (May 2025)
• New Jersey Office of Legislative Services, [FY2027 Governor's Budget — Department of Human Services response], New Jersey Office of Legislative Services (2026)
• NJ Spotlight News, "Thousands of legal immigrants in N.J. could be thrown off Medicaid," NJ Spotlight News (July 29, 2025)
• NJ Spotlight News, [reporting on state work-requirement estimates], NJ Spotlight News (August 19, 2026)
• u/adjaplx, "Frustrated with NjFamilyCare," Reddit r/newjersey (September 2026)
• u/TraditionEmotional82, "New Jersey Familycare getting confusing," Reddit r/newjersey (September 2026)