CMS ends Medicaid and CHIP funding for sex-change procedures on minors

The rule bars federal Medicaid and CHIP payments for covered sex-change procedures on minors, a win for American families, while allowing a six-month transition for some existing hormone therapy.

One narrow exception remains: states may keep claiming federal matching funds for hormone medications for beneficiaries already receiving them, for up to six months¹.

“gender dysphoria services”

Only federal funds are barred

CMS says the action reaches only federal money².

Under the rule, a state Medicaid plan must provide that the agency will not pay for the covered procedures for children under 18, and a separate CHIP plan must say the same for children under 19. CMS explains that CHIP's enhanced federal match, capped at 85 percent, is available only to States whose plans meet federal requirements³. Medicaid and CHIP together cover 35.5 million children, CMS says. CMS also says the rule does not prohibit providers from delivering the procedures¹. On mental health services, CMS says the rule leaves coverage untouched².

1. Oct. 7Montana DPHHS issued its provider notice
2. Oct. 9Equality Virginia and the ACLU of Virginia sent Director Ford a joint letter
3. April 13, 2027Montana’s transition period for eligible hormone therapy ends

Four states halt coverage

Four states have already chosen to stop paying, according to Billboard Chris⁴. Virginia DMAS says it will stop covering what its bulletin calls “gender dysphoria services,” implementing the federal rule⁵. Billboard Chris notes that Virginia and Colorado are plaintiffs in the lawsuit to overturn the rule, and they still stopped paying⁶.

Montana's Department of Public Health and Human Services told providers in an Oct. 7 notice that it will no longer cover or pay for these services. Its transition period for eligible hormone therapy ends April 13, 2027. The notice says that period does not extend to puberty blockers⁷. Montana lawmakers had tried to end this years ago, Billboard Chris reports⁶.

The Colorado Sun reports that Colorado's suspension began the day the federal rule took effect⁸. Billboard Chris, citing the Sun, puts Colorado Medicaid's spending on these services for under-19s at just under $1.3 million in 2024–25. Arizona has excluded surgery for decades⁶. For parents, that is the point: the money stops unless an elected official votes to restart it.

States split over coverage

Separate CHIP plans must also stop payment for the covered procedures.

CMS estimates the rule cuts Medicaid and CHIP spending by $235 million from 2027 through 2036, per the agency's figures as summarized by Billboard Chris. Billboard Chris counts the four new states among roughly 30 whose Medicaid programs now will not pay⁶.

$235 million

State funding remains possible

The fight now moves to state capitols, where the rule leaves each state free to decide whether to use state-only funds³. In Virginia, Equality Virginia and the ACLU of Virginia sent Director Ford a joint letter on Oct. 9 pressing DMAS to reverse course⁹. Their letter admits the state's choice is its own, and Virginia officials made it.

Billboard Chris names ten states that kept paying with their own taxpayers' money: California, Oregon, Washington, New York, Massachusetts, Maryland, Illinois, Maine, Vermont and New Mexico. Illinois's state-only money has a date on it. Delaware has not said whether state money will cover the bill, so parents there, and in every state still funding these procedures, should tell their legislators now that taxpayers will not pay for them⁶.

Sources

1. Federal Register final rule, CMS-2451-F
2. CMS Ends Federal Medicaid and CHIP Funding for Sex-Rejecting Procedures for Children and Youth | CMS
3. Federal Register, Vol. 91, No. 155: Medicaid Program; Prohibition on Federal Medicaid and Children’s Health Insurance Program Funding for Sex-Rejecting Procedures Furnished to Children
4. @BillboardChris on X, 2026-10-14: The winning continues! Today the federal Medicaid money for puberty blockers, cross-sex hormones, and surgery on minors has ended. Virginia, Arizona, Montana and Colorado stopped paying instead of finding a workaround, joining the roughly 27 states whose b, 2026-10-14
5. Changes to Gender Dysphoria Coverage | MES
6. Win for kids: Federal Medicaid money for minors' puberty blockers, cross-sex hormones and surgeries ends, and Virginia, Arizona, Montana and Colorado won't replace it — Billboard Chris
7. Changes to Gender Dysphoria Coverage in Accordance with New Federal Final Rules
8. New Federal Rule Ends Medicaid Funding for Some Youth Gender Treatments in Colorado - Rocky Mountain Voice
9. Nothing prohibits Virginia from using our own dollars to continue gender-affirming care for Medicaid and CHIP recipients