Beginning January 1, 2027, a Medicare dual-eligible special needs plan tied to a Medicaid managed-care company will only be allowed to newly enroll people who are already signed up with that same company’s Medicaid plan, or who are actively in the process of signing up. The Centers for Medicare & Medicaid Services finalized the restriction to stop a mismatch it says undercuts the purpose of pairing the two programs: a beneficiary joining a D-SNP with no real coordination to their actual Medicaid coverage. For the dual-eligible seniors comparing plans this Open Enrollment season, it means the menu of D-SNPs open to a first-time sign-up just got shorter.
The New Rule Under 42 CFR 422.514(h)
D-SNPs exist specifically for people enrolled in both Medicare and Medicaid, and they typically pair a $0 premium with supplemental benefits, such as dental, vision or an over-the-counter allowance, that depend on the plan actually coordinating with the enrollee’s Medicaid coverage. When a D-SNP has no working relationship with the Medicaid plan an enrollee is actually on, that coordination breaks down, which is the gap the new enrollment limit is built to close.
The restriction lives in a regulation labeled 42 CFR 422.514(h), first adopted in the Contract Year 2025 Medicare Advantage and Part D final rule and then refined by the Contract Year 2027 Medicare Advantage and Part D final rule, which CMS published in the Federal Register on April 6, 2026. It applies whenever a Medicare Advantage organization, its parent company, or another MA organization sharing that parent also holds a Medicaid managed-care contract covering full-benefit dual eligibles in an overlapping service area.
CMS’s own implementation guidance spells out the mechanics: the agency’s Frequently Asked Questions on the enrollment limitation state that, beginning in 2027, “the D-SNP PBP may only newly enroll full-benefit dually eligible individuals that are aligned with the affiliated Medicaid MCO,” according to CMS’s Medicare-Medicaid Coordination Office. The same document confirms the limit covers every type of affected D-SNP, including coordination-only plans, not just the more tightly integrated HIDE and FIDE SNP models that already synchronize Medicare and Medicaid enrollment by design.
Inside the decision kit: A cost calculator spreadsheet comparing plans on cost, drugs and doctors, a prescription-by-plan comparison, a provider call script and the Open Enrollment calendar. Open The 2027 Medicare Open Enrollment Decision Kit.
A Five-Year Runway Before Full Alignment
The restriction only bites on new sign-ups at first. A dual eligible already enrolled in an affected D-SNP but not enrolled in its affiliated Medicaid plan, an arrangement CMS calls “unaligned” enrollment, can keep that coverage through 2029. CMS’s FAQ walks through a worked example of an organization running one D-SNP and a Medicaid plan whose service areas partly overlap: it must limit new D-SNP enrollment to Medicaid-aligned individuals starting in 2027, but does not have to disenroll its existing unaligned members until 2030.
Starting in 2030, the rule tightens again. Any D-SNP subject to the restriction must operate with what CMS calls exclusively aligned enrollment, meaning every member must also be enrolled in the affiliated Medicaid plan, unless the plan qualifies for one of the exceptions built into the regulation. Organizations consolidating overlapping D-SNPs into a single Medicaid-aligned plan can use a new crosswalk exception, created at 42 CFR 422.530(c)(4)(iii), to move existing members into the surviving plan without a fresh enrollment, though anyone still unaligned with the Medicaid plan by 2030 faces disenrollment from that D-SNP.
CMS also warned Medicare Advantage organizations that noncompliant filings will not be allowed to proceed. Its FAQ states that an organization subject to the restriction whose state Medicaid agency contract or bid does not comply “will be subject to having the state Medicaid agency contract for that D-SNP rejected by CMS,” and may have to withdraw the submission rather than revise it. That enforcement runs through the annual bidding process every Medicare Advantage organization already completes with CMS and its state Medicaid partners.
Where CMS Carved Out Exceptions
Not every overlapping D-SNP and Medicaid plan combination triggers the restriction. States that structure Medicaid managed care by age or benefit design can let one organization run more than one aligned D-SNP in the same area. CMS’s FAQ points to Massachusetts, where the Senior Care Options program covers dual eligibles 65 and older while One Care covers younger enrollees, as an arrangement that qualifies. New York’s Medicaid Advantage Plus and Managed Long Term Care programs, split by whether an enrollee needs nursing-facility-level care, work the same way.
CMS finalized two additional exceptions in the Contract Year 2027 final rule itself. One exempts Medicare Advantage organizations operating in U.S. territories that have not adopted the Medicare Savings Programs, a category that today means only Puerto Rico, since Puerto Rico is the only territory currently offering D-SNPs. The other lets a coordination-only D-SNP or HIDE SNP keep enrolling full-benefit dual eligibles covered by Medicaid fee-for-service, rather than a Medicaid managed-care plan, in states that do not require every dual eligible to join managed care and whose Medicaid agency contract permits it.
Questions about how a specific state’s Medicaid managed-care contract applies these exceptions go to CMS’s Medicare-Medicaid Coordination Office, which the agency’s FAQ lists as the contact point for states and plan sponsors sorting out which D-SNPs in their market still qualify. For a dual eligible holding a Medicare card issued under one of the affected plans, the practical test is simpler: whether the Medicaid managed-care plan on file with the state matches the D-SNP the beneficiary wants to newly join, starting with the enrollment season that opens this fall.
When Plan Eligibility Narrows
The enrollment restriction leaves a dual-eligible beneficiary to work out, largely alone, which Medicaid managed-care plan they are already on and which locally available D-SNPs are genuinely affiliated with it. CMS’s final rule and FAQ describe the contracting mechanics between Medicare Advantage organizations and state Medicaid agencies, not the plan-by-plan comparison an individual household actually has to make. That gap between regulatory text and a kitchen-table decision is where a structured comparison matters most.
The 2027 Medicare Open Enrollment Decision Kit is a 42-page decision kit built around the Open Enrollment calendar, walking a dual-eligible beneficiary through matching plan eligibility to their current Medicaid coverage before they choose.
Open the Open Enrollment calendar in The 2027 Medicare Open Enrollment Decision Kit.
This article was researched and drafted with the assistance of AI and reviewed by The Money Overview editorial team.
