Vermont Medicaid prepares for a wave of federal eligibility shifts affecting nearly 50,000 residents

The upcoming adjustments stem from the federal budget bill passed in July 2025.

A major set of Medicaid changes is about to begin in Vermont, with the first rules taking effect Oct. 1 and another round following in January. State health officials and advocates say the impact could touch nearly 50,000 people, although many are expected to keep coverage if they can navigate a much more demanding enrollment process.

The upcoming adjustments stem from the federal budget bill passed in July 2025. Alex McCracken, communications director for the Department of Vermont Health Access, said state workers are focused on helping as many people as possible remain insured while the program changes around them.

For a smaller group, the effect will be immediate. The Oct. 1 rule change will bar some immigrants from Medicaid, including most adult refugees and asylum seekers in Vermont. The state estimates about 235 people will lose coverage under that provision. Lawful permanent residents, immigrants from Cuba, Haiti, Micronesia and the Marshall Islands, pregnant people and anyone under 21 are exempt.

Healthcare advocates say those who lose benefits may have few alternatives unless they can get insurance through a job or a spouse. Mike Fisher, Vermont’s healthcare advocate, said the loss of coverage for that group will be severe even though the number affected is relatively small.

The larger overhaul arrives at the start of 2027 and will apply to Medicaid recipients ages 19 to 64. To stay enrolled, people will need to show monthly earnings of at least $580 while remaining below the Medicaid income limit of 138% of the federal poverty level. Those who do not meet that income floor will have to certify 80 hours a month of work, education or community service. They will also have to renew eligibility every six months instead of once a year.

State officials estimate that 49,000 Vermonters will have to meet those standards to keep their benefits.

Fisher said his office has already heard concern from Vermonters worried that children or Medicare beneficiaries could be swept up in the changes, but those populations are not included. He said many people will also qualify for exemptions from the new January requirements.

Among those exempt are pregnant people, Indigenous people, medically frail individuals, people eligible for federal food benefits, veterans with a disability and some people who remain Medicaid-eligible while incarcerated. Parents of children under 13 and family caregivers are also excluded from the work and reporting rules.

Even so, Fisher said paperwork could become the biggest obstacle, especially for people without stable housing or a mailing address. He warned that some Vermonters may not be cut off because they fail the work test, but because they miss a document or deadline.

The state is trying to reduce that risk by spreading information through community organizations, videos and materials in multiple languages, McCracken said. The department also received funding in the state’s 2026 budget for 12 new employees to help manage the added eligibility work. Officials are looking to use existing state and federal records, including wage data, food-assistance work reports and information about incarcerated people and veterans, so fewer residents will have to report details themselves.

Community groups are already preparing. The Vermont Afghan Alliance, working with Vermont Legal Aid, has held a health insurance clinic to help people understand the changes. It has also used Medicaid assisters, community WhatsApp groups and materials in Dari and Pashto, said Ellen Yount, the alliance’s director.

Many Afghan residents in the alliance are in Vermont under special permanent immigrant visas because they worked with the U.S. government during the war and occupation of Afghanistan. Those residents will not lose Medicaid on Oct. 1, though they will still be subject to the new work rules. Afghan asylum seekers without that permanent status may lose coverage.

To handle those who become uninsured, the state is coordinating with Vermont’s free clinic network so patients can be directed to lower-cost care. Melanie Clark, a Medicaid assister at the Open Door Clinic in Middlebury, said many of the people affected will likely still qualify for aid through federally qualified health centers or through hospital emergency departments and urgent care sites.

She said the coverage will not function like Medicaid, but some people will still find care through those other systems. The clinic is preparing for more demand, while also expecting some patients to seek treatment elsewhere. Clark pointed to the recent loss of advanced premium tax credits on the Affordable Care Act marketplace as another example of how people can shift between coverage options and safety-net care.

McCracken said there is also concern that hospitals and clinics could see more uncompensated care if more people end up uninsured. During recent hospital budget hearings, several Vermont hospitals warned that the loss of marketplace coverage could add financial pressure to an already strained healthcare system.