Medicaid expansion cost sharing starts October 1, 2028

What Section 71120 requires and when

Beginning October 1, 2028, state Medicaid plans must impose an amount greater than $0 on certain non-exempt care, items, or services that the state selects. A state determines which eligible non-exempt care is charged and the amount, but the federal requirement itself is mandatory for states that cover the specified population.

The specified population is narrower than all Medicaid enrollees. It consists of people whose family income exceeds 100% of the federal poverty level and who are enrolled in the ACA Medicaid expansion adult group, or are described in that group and enrolled through an equivalent state-plan waiver.

The statute sets a $35 ceiling for covered care, items, or services; it does not set $35 as the standard charge. Prescription drugs follow separate limits. Total family cost sharing remains capped at 5% of family income on a monthly or quarterly basis, as the state specifies.

What the rule excludes

Section 71120 prohibits this new cost sharing for categories already protected under Section 1916(a)(2)(B)-(J), as well as primary care, mental health care, and substance use disorder services. It also excludes services provided by FQHCs, certified community behavioral health clinics (CCBHCs), and rural health clinics (RHCs).

Those exclusions describe the new Section 71120 charge. Section 71120 does not establish a $0 patient bill for every FQHC encounter, product, drug, or service. Current Medicaid cost-sharing rules, coverage rules, plan design, pharmacy rules, and an organization's approved sliding-fee policy may still matter. Staff should verify the member, product, service, site, and date before quoting an amount.

What is not in effect today

The mandatory Section 71120 framework does not begin until October 1, 2028. Current federal rules generally permit, but do not require, states to impose cost sharing on certain Medicaid populations and services. KFF's May 2026 brief separates those current rules from the future requirement.

Neither the statute nor CMS's bulletin establishes that these future rules will move patients to FQHCs, change an FQHC's reimbursement, create revenue, or require hiring. Organizations should not use Section 71120 alone to forecast visits, staffing, payment, or financial outcomes.

Section 71120 is a future cost-sharing rule for a defined group, with important service and provider-site exclusions. What it means in practice will depend on federal guidance, state choices, and each visit. Treat it as a 2028 compliance item. Today it is not a marketing claim, a patient-volume forecast, a reason to hire, or a payment outcome.

Questions to track

CMS has published a statutory overview and timeline, while more Section 71120 implementation detail may still emerge. Each organization should track primary records rather than infer a benefit design from the $35 ceiling.

• CMS rules, guidance, and implementation tools that specifically address Section 71120.
• State-plan amendments, waiver materials, public notices, and effective benefit schedules.
• Managed-care and fee-for-service configuration for eligible populations, services, sites, and prescription drugs.
• Member notices and staff scripts approved by the state, plan, and the organization's compliance or legal owners.

A readiness checklist

Preparation in 2026 should focus on evidence ownership and system readiness, not projected utilization:

• Assign a policy owner to maintain a dated Section 71120 decision log and primary-source links.
• Inventory the Medicaid expansion products and billing workflows that could be in scope, without changing patient quotes prematurely.
• Require compliance review before changing registration, eligibility, billing, or communications workflows.
• Keep staffing, capacity, and financial models separate unless later evidence supports a quantified connection.

What to tell patients

Do not promise that every community-health-center service will cost $0. A safer script is: ‘Your cost sharing depends on your eligibility group, plan, service, site, and date. We will verify your benefits before quoting an amount.’