Data / Federal rules / 2026-14897
Medicaid Program; Amending the Indirect Hold Harmless Threshold of Health Care-Related Taxes
The Centers for Medicare & Medicaid Services published this proposed rule in the Federal Register on July 23, 2026. Comments closed on September 21, 2026.
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What the agency says
This proposed rule would revise standards for determining whether an indirect hold harmless arrangement exists for a health care- related tax. This proposed rule is necessary to implement a provision in the "One Big Beautiful Bill Act," herein referred to as the "Working Families Tax Cut (WFTC) legislation," which established new indirect hold harmless thresholds for health care-related taxes. Currently, the threshold for a State's collection of tax revenues is no more than 6 percent of net patient revenue attributable to the assessed permissible class of health care items or services. Effective October 1, 2026, the WFTC legislation generally sets the threshold equal to the applicable percent of net patient revenue attributable to taxes imposed as of July 4, 2025. Effective October 1, 2027, the WFTC legislation also requires a phase down of the hold harmless threshold in expansion States. Apart from establishing the new threshold in regulation and proposing related changes and enhancements to existing processes, we propose to sunset a secondary prong to the indirect hold harmless determination to ensure the thresholds determined as of July 4, 2025, serve as the maximum permissible level. Finally, this rule proposes to add a new permissible class to enhance CMS oversight of health care- related taxes.
Key facts
- Document number
- 2026-14897
- Type
- Proposed rule
- Action
- Proposed rule
- Agency
- Health and Human Services Department; Centers for Medicare & Medicaid Services
- Published
- July 23, 2026
- Comments due
- September 21, 2026
- Dates
- To be assured consideration, comments must be received at one of the addresses provided below, by September 21, 2026.
- Docket
- CMS-2452-P
- Regulation ID (RIN)
- 0938-AV93
- Code of Federal Regulations
- 42 CFR 433
- Topics
- Administrative practice and procedure; Child support; Claims; Grant programs-health; Medicaid; Reporting and recordkeeping requirements
- Pages
- 38
Other documents from the Centers for Medicare & Medicaid Services
Everything from the Centers for Medicare & Medicaid Services · Rules on administrative practice and procedure · Rules on child support · Rules on claims · Published in July 2026
Read from the Federal Register API, last updated 2026-10-23. The document on federalregister.gov is the official record; dates and dockets can change through later corrections. Free to reuse with credit to SpecStream under CC BY 4.0.