NJ Spends $10M to Protect Medicaid Enrollment in 2026

Gov. Mikie Sherrill has put more than $10 million into her $60.7 billion budget proposal to shore up New Jersey’s Medicaid enrollment system before new federal rules hit in January, when hundreds of thousands of residents could lose their health coverage if the state’s infrastructure isn’t ready.

The federal changes, approved by the Trump administration, will require certain Medicaid members to regularly submit pay stubs, school records, or other documents to prove they still qualify for coverage. The biggest shift applies to low-income adults who are not disabled. Trump has said the changes aim to reduce costs to the federal government, which currently pays roughly two-thirds of all Medicaid expenses nationwide.

State officials aren’t waiting to see how it plays out. Human Services Commissioner Stephen Cha briefed community groups that work directly with Medicaid members, telling them the stakes are clear. “It’s up to us, as a community, here in New Jersey. The final magnitude of coverage losses will depend largely on how effectively our systems perform,” Cha said. “We will do everything possible to minimize harm to residents.”

Experts predict as many as 350,000 New Jerseyans could lose coverage because of the added paperwork burden. Sherrill called the policy change one that “makes people jump through hoops to stay on Medicaid” when she presented her budget to lawmakers earlier this month.

“To prevent that, this budget invests in new technology to help people meet Trump’s burdensome paperwork requirements,” she said.

Some of the $10 million may also draw a significant federal match, something state officials said they intend to pursue aggressively. Every dollar stretched matters here. Medicaid, known in New Jersey as NJ FamilyCare, accounts for nearly $26 billion in Sherrill’s draft budget. Of that, roughly $7.2 billion comes from state taxpayers.

The Urban Institute painted a stark national picture in a recent study. If states take no action to keep eligible residents enrolled, up to 10 million people nationwide could lose coverage. The study found that two-thirds of those at risk are between 50 and 64 years old. More than half live with a disabled resident or are themselves in poor health. Nearly three-quarters are self-employed. One in five has a child under the age of 14. These are not edge cases. These are the people New Jersey’s Medicaid system was built to serve.

Sherrill has also proposed raising $145 million by fining large companies whose employees rely on Medicaid for coverage rather than employer-provided insurance. The idea is that corporations should share responsibility when their workers fall back on the public program. Business leaders have pushed back hard on that piece of the proposal, and some advocates for low-income workers have raised concerns as well. That fight will play out in the legislature.

The governor’s full budget proposal is now in the hands of state lawmakers, who must craft and adopt a final spending plan before fiscal year 2027 begins on July 1. That deadline puts real pressure on how quickly Trenton can move on the technology upgrades and system improvements Sherrill is seeking. January will arrive fast, and building enrollment infrastructure capable of processing a flood of new verification documents takes time.

New Jersey enrolled its Medicaid expansion population under the Affordable Care Act, which brought in a large share of those low-income working-age adults who will now face the new eligibility requirements. The state built systems around getting people enrolled. Now it has to rebuild them around keeping people enrolled despite added friction.

The next several months will test whether Trenton can move with the urgency the situation demands. For the 350,000 residents who could lose coverage, the difference between a functioning enrollment system and a broken one is not an administrative footnote. It’s whether they see a doctor when they’re sick.