• While their effective dates vary, HFS has started work to make the administrative, operational, and technological changes necessary to implement provisions from Trump’s budget bill. 

   

  OBBA Provision                                                                                           Effective Date    

  Freeze current and prohibit new taxes                                                             July 4,2025
  Prohibit Medicaid funding to Planned Parenthood for 1 year                            July 4, 2025
  Cap new SDP's at 100% Medicare payment rates                                              July 4, 2025
  Rural Provider Relief Fund                                                                                Application period will end no later than December 31, 2025
  Narrow the definition of "qualified aliens"                                                         October 1, 2026
  6-month eligibility redeterminations for ACA adults                                          January 1, 2027
  Work requirements                                                                                          January 1, 2027
  Cost-sharing for ACA adults                                                                             October 1, 2028
  Phase-down provider hold harmless threshold                                                 October 1. 2028
  Reduce current SDPs by 10 percentage points per year until the
  SDPs are no greather than 100% of Medicare                                                    January 1, 2028
  Modify "generally redistributive" provider tax criteria                                         Transition period of up to 3 years
  Several other eligibility-related proposals                                                          January 1, 2027 - October 1, 2029

   

   

   

• Work requirements

• Adults ages 19-64 and adults with dependents 14 and older will be subject to work requirements. Adults with dependents 13 and under will not be subject to work requirements.

• Medicaid customers will have to prove they work or volunteer 80 hours a month or that they are enrolled in school part-time. 

• Certain populations will be exempt, including people with disabilities, individuals with mental health diagnoses, and individuals with substance use disorders. 

• The effective date is January 1, 2027.

• Requirements specific to ACA expansion adults (the ACA expansion adult category are single, childless, nondisabled adults under 65 years of age who previously had no option to enroll in Medicaid)

• In addition to work requirements, ACA expansion adults will be subject to more frequent redeterminations (every six months rather than once every year) and a reduced timeframe for retroactive coverage. 

• Adults with incomes above 100% of the Federal Poverty Level (FPL) will be subject to expanded cost-sharing. The out-of-pocket cap is 5% of an individual’s annual income. 

• irect impact on eligibility and coverage. Federal law has long-allowed certain noncitizens, such as refugees, parolees, and asylees, among others, to be eligible for Medicaid. Starting October 1, 2026, Medicaid eligibility and coverage for noncitizens will be limited to:

• Lawful Permanent Residents (green cardholders) who have been in the U.S for at least 5 years. 

• Certain Cuban and Haitian Entrants. 

• Individuals lawfully residing in the United States in accordance with a Compact of Free Association (COFA). 

• It is too early to know exactly which programs and constituencies will be impacted. However, given the wide-ranging policy changes and funding cuts, there will likely be indirect impacts on access to care for many Medicaid customers due to individuals losing Medicaid coverage and reduced Medicaid funding to support providers. There are numerous other areas where HFS anticipates downstream impacts upon implementation of the various provisions of Trump’s budget bill. HFS continues to analyze the impacts to mitigate harm to Medicaid customers and providers. 

• Trump’s budget bill significantly limits the use of provider taxes, which are used by almost all states to levy taxes and assessments on a wide range of provider types, including hospitals and nursing facilities, to fund the state share and garner federal match to put back into the Medicaid system. The budget bill specifically:

• Immediately freezes provider taxes as-is and prevents states from creating new provider taxes.

• Reduces the hold harmless threshold, effectively limiting the total amount states can generate from each tax. In other words, states will no longer be able to tax providers as much, limiting their ability to raise the state share. In the first five years of implementation, Illinois is expected to lose out on nearly $5 billion in federal dollars.

• Changes the “generally redistributive” criteria so that Medicaid lines of business cannot be taxed differently than non-Medicaid lines of business. This effectively changes how states structure provider taxes. 

• Trump’s budget bill also makes changes to how State Directed Payments (SDPs) are made. SDPs allow states to direct Medicaid Managed Care Organizations (MCOs) to make specific payments to providers. In Illinois, SDPs mostly apply to hospital payments, which are funded by hospital provider taxes. Under Trump’s budget bill:

• New SDPs are capped at 100% of Medicare payment levels for ACA expansion states like Illinois, and states’ existing SDPs are required to be reduced by 10% until they meet the 100% of Medicare payment rate. These changes will reduce Illinois’s SDPs to hospitals by $3.4 billion over five years.

• States will also receive less federal funding due to the new eligibility requirements in Trump’s budget bill and resulting coverage losses outlined above.

HFS has created a Federal Resource Center to help stakeholders understand how the federal funding cuts imposed by Trump’s budget bill will impact Medicaid. HFS will update the page as more information becomes available. The Stakeholder Newsletter also provides updates on major agency initiatives, policy, and program changes. Subscribe here to receive regular updates from HFS. 

• Some provisions of the bill take effect immediately. However, there is a 120-day hold harmless provision for other parts. This means that the U.S. Department of Agriculture (USDA) Food and Nutrition Service (FNS) will not consider the first 120 days after the bill takes effect when assessing Quality Control errors. The hold harmless provision ends November 1, 2025. The Illinois Department of Human Services (IDHS) is awaiting further guidance from the federal government regarding implementation following the end of the 120-day hold harmless period.  

• The Able-Bodied Adults Without Dependents (ABAWD) changes are set to be implemented immediately. However, Illinois has an existing waiver related to this through January 31, 2026.  IDHS is awaiting guidance from the federal government on the waiver as well.   

• The “Alien SNAP Eligibility” section of the bill takes effect immediately, though there is a 120-day hold harmless period for implementing changes. Federal regulations also allow changes to some non-income related eligibility factors to be delayed to the household’s next scheduled redetermination. FNS must provide further guidance. 

• The cost shifting of federal funds to state funds will begin in October 2026 for administrative costs and October 2027 for benefit costs.  

• This is very difficult for states to predict at this time.  

• FNS must provide guidance on when Illinois’ ABAWD waiver will end.   

• If the State must implement time-limited SNAP policy for ABAWDs not meeting the work requirement as early as November 2025, IDHS anticipates individuals may lose SNAP eligibility as soon as February 2026. If the implementation is delayed until the State’s current waiver ends January 31, 2026, the loss of benefits for individuals not meeting the work requirements could be May 2026. 

• Work requirements will apply to ABAWDs, which is now defined as adults ages 18-64 with no dependent children in the home and no disabilities. Dependent children are now defined as under 14 years of age. 

• ABAWDs will need to provide verification that they are meeting work requirements at application and at the annual redetermination. Individuals are required to report any change within 10 days, including if they are no longer participating in an activity or are no longer working.  Individuals do not have to verify on a monthly basis that they are meeting

• Generally, the following groups are exempt from ABAWD work requirements: 

• People younger than 18 or older than 64. 

• A parent or other member of a household that includes a child under age 14. 

• People who are medically certified as physically or mentally unable to work.  

• People who are pregnant. 

• Some Native Americans (as defined in paragraphs (13) and (28) of section 4 or section 809(a) of the Indian Health Care Improvement Act). 

• A parent or other member of a household with responsibility for the care of an incapacitated person. 

• A regular participant in a drug addiction or alcoholic treatment and rehabilitation program.  

An individual can be exempt from the work requirement if they are physically or mentally unable to work. This can be due to a temporary medical condition or a chronic illness. Acceptable verification for this exemption could include caseworker observation, a statement letter from a medical provider or counselor, IDHS disability form completion by a doctor, a Social Security Administration designation, or receipt of Worker’s Compensation or other type of disability income. Caseworkers can help the individual obtain verification of a disability or medical condition. 

• To meet the work requirements, an individual must: 

• Work (paid or unpaid) an average of 20 hours per week; or 

• Volunteer to take part and comply with a SNAP Employment and Training activity such as basic education, vocational training, work experience, community workfare, or Earnfare; or 

• Do self-initiated community service with a community-based organization for an average of 20 hours per week; or  

• Any combination of the above. 

• SNAP recipients who are not exempt from the monthly work requirements and are not working can only receive benefits for a total of three months within a fixed three-year period. 

• People who are not exempt from the work requirements, are not meeting the work requirements, and have already received three months of SNAP benefits will no longer be eligible to receive SNAP benefits for the remainder of the fixed 3-year period. They will be blocked from SNAP eligibility for the remainder of the fixed 3-year period unless they can prove work or training for 30 days to regain eligibility or meet one of the exemption reasons.  

• IDHS is looking at all options to help reduce the SNAP payment error rate, including policy changes and the use of technology. IDHS staff are meeting with states that have lower payment error rates to identify best practices that can be adopted in Illinois.  

• It is important to note that a significant portion of the State’s payment error rate for Federal Fiscal Year 2024 was the result of inadvertent household errors. These are errors resulting from incorrect information provided on the application or during the interview. This means that community partners can help Illinois reduce its error rate by continuing to educate individuals applying for or receiving SNAP on the reporting requirements, eligibility rules, acceptable verifications, etc.  

Immigrants granted official humanitarian protections are now excluded from SNAP eligibility. This group includes Refugees, Asylees, certain victims of human trafficking, and certain victims of violence and torture. 

• Lawful Permanent Residents (green cardholders) who have been in the U.S for at least 5 years. 

• Certain Cuban and Haitian Entrants.  

• Individuals lawfully residing in the United States in accordance with a Compact of Free Association (COFA). 

IDHS has created a website to include current information and resources on IDHS programs impacted by the bill. IDHS will update this website as more information becomes available.