Medicaid Program; Preserving Medicaid Funding for Vulnerable Populations-Closing a Health Care-Related Tax Loophole

What it does

This final rule addresses a loophole in a regulatory statistical test applied to State proposals for Medicaid tax waivers. The test is designed to ensure, as required by statute, that non- uniform or non-broad-based health care-related taxes, authorized under a waiver, are generally redistributive. The inadvertent loophole currently allows some health care-related taxes, especially taxes on managed care organizations, to be imposed at higher tax rates on Medicaid taxable units than non-Medicaid taxable units, contrary to statutory and regulatory intent for health care-related taxes to be generally redistributive. The final rule closes the loophole by finalizing the policies in the proposed rule to add additional safeguards to ensure that tax waivers that exploit the loophole because they pass the current statistical test, but are not generally redistributive, are not approvable. By adding these safeguards, the final rule is also implementing recently added statutory requirements for a tax to be considered generally redistributive.

The Centers for Medicare & Medicaid Services's summary, as published in the Federal Register.

What changed in the regulation

1 part of Title 42 of the Code of Federal Regulations:

42 CFR 433

Wording on eCFR: the day before it took effect and from the day it took effect (first part listed).

Compared with

The Centers for Medicare & Medicaid Services has published 24 final rules in 2026 so far, compared with 12 in all of 2025.

Counted by the Tribune from Federal Register records since Jan. 1, 2025.

Before this

1 earlier Federal Register document under regulation identifier 0938-AV58 since Jan. 1, 2025.

• May 15, 2025 Proposed rule. Medicaid Program; Preserving Medicaid Funding for Vulnerable Populations-Closing a Health Care-Related Tax Loophole Proposed Rule

What happens next and when

These regulations are effective on April 3, 2026.

The agency's dates, word for word.

Check it yourself

• The document in the Federal Register
• Docket CMS-2025-0052 on Regulations.gov
• Title 42 on eCFR

The record as published

Source: the Federal Register (public domain). The document in the Federal Register