Medicaid Retroactive Coverage Shrinks to One or Two Months for Applications From January 1, 2027

For Medicaid applications made on or after January 1, 2027, coverage for care given before the application gets much shorter. Section 71112 of Public Law 119-21, signed July 4, 2025, cuts it from up to three months to one month for adults in the Medicaid expansion group and two months for everyone else. For a NEMT company, that window decides whether a ride given to someone before Medicaid approved them can ever be paid.

Key dates

Date	What happens
July 4, 2025	Public Law 119-21 becomes law
November 18, 2025	CMS tells states the new limits apply to applications made on or after January 1, 2027
December 31, 2026	Last day to apply under the three-month rule
January 1, 2027	One month back for expansion adults, two months for everyone else, and a two-month cap on the optional CHIP window

The old rule and the new rule

For applications filed through December 31, 2026, 42 CFR 435.915 requires a state to make Medicaid effective as early as the third month before the month of application. The applicant must have received covered care in that time and would have qualified then. A state may also start coverage on the first day of any month in which the person was eligible at some point. Section 71112 rewrote the statute behind that rule.

Who applies	Application filed by December 31, 2026	Application filed on or after January 1, 2027
Expansion adult	Up to 3 months before the application month	Care furnished in or after the month before the application month
Anyone else on Medicaid, such as children, adults 65 and older, and people with a disability	Up to 3 months before	Care furnished in or after the second month before the application month
CHIP, where the state offers any back coverage	State option	No earlier than the second month before the application month

The rider still has to have been eligible in each month the state covers. The new window is counted in whole months, so the day of the month the rider applies matters less than the month.

A worked example

A rider applies on January 20, 2027:

• As an expansion adult, coverage can reach back to December 1, 2026 at the earliest.
• In any other group, it can reach back to November 1, 2026.
• Had the same rider applied on December 20, 2026, coverage could have reached back to September 1, 2026.

Say you drove a rider to therapy twice a week in September and October 2026, and the rider waits until January 2027 to apply. Under either new limit, none of those rides can be covered.

Who counts as an expansion adult

The expansion group is the adult group in 42 U.S.C. 1396a(a)(10)(A)(i)(VIII): people under 65 who are not pregnant, are not on Medicare Part A or Part B, do not fit another required Medicaid group, and have income up to 133 percent of the poverty line. North Carolina describes the one-month group as most adults ages 19 through 64 who do not have a disability. Pennsylvania calls them Medicaid expansion adults, ages 19 to 64.

Many regular NEMT riders fall in the two-month group instead. A dialysis rider on Medicare is not an expansion adult, and neither is a rider who qualifies for Medicaid because of a disability. In states that never expanded Medicaid, only the two-month limit matters.

Some states already cover less

Some states already limit back coverage more than federal law requires, or add steps of their own:

State	Back coverage today and from 2027
Iowa	A section 1115 waiver already ends retroactive coverage for most adults. Pregnant women, children, and some nursing facility residents keep three months today and two months from January 1, 2027.
Indiana	Healthy Indiana Plan coverage, other than HIP Maternity, starts no earlier than the first day of the application month. Qualified Medicare Beneficiary coverage starts the month after the state decides.
Virginia	The new limits apply from January 1, 2027. Current exceptions to back coverage, such as for Qualified Medicare Beneficiaries, still apply.
Texas	Back coverage is never automatic. The applicant must ask an HHSC representative for it and fill in the medical bills section of the application.

What it means for rides before approval

CMS’s transportation guide (SMD 23-006, September 28, 2023) says states must pay claims for covered transportation a member received during a retroactive period. That holds even when someone already paid for the ride. The provider may first have to return the rider’s money and then bill Medicaid. No payment is owed when the ride was free, such as one given by family, friends, or another public agency.

Indiana spells out the risk. A transportation company may choose to give rides to someone whose application is still pending, but has no guarantee of payment. If coverage is later approved back to a date on or before the ride, the company can be paid after refunding the rider, and prior authorization can be requested after the fact. For fee-for-service coverage, Indiana tells companies to ask Verida, its fee-for-service ride broker, how to submit the claim.

Back months are often billed outside the health plan. Indiana pays most retroactive months fee-for-service, even for members who are then placed in a health plan, and only if you were enrolled with Indiana Medicaid on the date of the ride. Delaware requires you to be enrolled as a fee-for-service provider to claim them. See fee-for-service Medicaid.

Deadlines for these claims run from different starting points:

State	Deadline for a ride in a retroactive period
New York	Submit the trip attestation within 120 days of the date eligibility is established in the eligibility verification system. Later requests are denied, and the state expects providers to watch the system.
Indiana	Bill within one year of the retroactive award. A claim more than 180 days after the ride needs the note “Retroactive eligibility. Please waive timely filing.” Prior authorization can be requested up to 12 months from the date the member’s card was issued.
Texas	For a client approved but not yet given a Medicaid number, the 95-day filing clock starts on the add date, when eligibility reaches the TMHP file
North Carolina	When a health plan takes back a paid claim because coverage moved to NC Medicaid Direct, resubmit to NC Medicaid Direct within 180 days of the recoupment date

Our timely filing limit entry explains the regular deadlines.

Charging riders who are waiting on approval

State rules on billing a rider who has applied but is not yet covered differ:

• Indiana: you may bill a member who was not eligible on the ride date if you told them and they agreed in writing. If coverage is later approved back to that date, you must bill Medicaid and refund them.
• Texas: you may choose not to accept Medicaid for retroactive periods, but only if you apply that policy to every such client and tell the client before the ride. If you do accept Medicaid, refund the client before you bill.
• Delaware: providers should promptly refund members who paid for care in the retroactive months, then bill the state.

What NEMT providers should do now

1. Tell riders without coverage to apply now. North Carolina says anyone who applies by December 31, 2026 can still get up to three months of back coverage.
2. Help riders list your rides. In Texas, back coverage must be requested on the application, with the medical bills listed. Unpaid ride bills from those months belong on that list.
3. Put your policy in writing. Decide whether you drive applicants before approval, and on what terms, under your state’s rules. Our private pay guide covers pricing and payment.
4. Keep a full record of every such ride. Log times, miles, and signatures on a trip log so the ride can be billed if coverage comes through.
5. Watch for the approval. Check the rider in your state system after they apply, then refund any payment and bill within your state’s limit. See Medicaid eligibility verification.
6. Plan for more coverage checks. With six-month renewals also starting in 2027, expansion adults face a renewal twice a year. Our guide to NEMT claim denials covers how to rebill when coverage is made retroactive.