In Brief: New York’s Essential Plan

New York went farther than most states when it created the Essential Plan in 2016 with funding from the Affordable Care Act (ACA). The plan, with no monthly premiums and no deductibles, has grown to cover 1.7 million New Yorkers — including some 725,000 legal immigrants —who don’t get insurance through their employer and aren’t eligible for Medicare or Medicaid.

In 2024, the state received federal permission to expand eligibility for the Essential Plan to 450,000 New Yorkers in households making up to 250 percent of the federal poverty line ($39,125 a year for a single adult or $80,375 for a family of four). Before this change, the Essential Plan was limited to those earning up to 200 percent of the federal poverty level.

Medicaid covers an additional 7 million New Yorkers, but its income eligibility cutoff for most recipients is much lower. Federal law also limits Medicaid eligibility to citizens, permanent legal residents who have held their green cards for at least five years, and certain humanitarian immigrants like refugees, asylum seekers and trafficking victims.

The federal government picks up nearly all the costs for the Essential Plan, unlike Medicaid, whose costs are shared by local, state and federal government.

Contrary to a popular myth, undocumented immigrants are not eligible for either Medicaid or the Essential Plan. Legal immigrants, however, are estimated to make up more than 40 percent of the state’s 1.7 million Essential Plan enrollees.

In July, Congress cut federal funding for Medicaid by nearly $1 trillion over the next decade. One of the most immediate and expensive changes for New York takes effect January 1, when the federal government will eliminate an estimated $7.5 billion in annual support for certain legal immigrants enrolled in the Essential Plan.

New York has long offered health insurance to legal immigrants that aren’t eligible for federal Medicaid dollars. That’s because of a 2001 court case, Aliessa v. Novello, in which the state Court of Appeals ruled that denying Medicaid benefits to otherwise eligible legal aliens violated the state’s constitution. As a result, the state was required to provide Medicaid benefits to permanent residents who had held green cards for less than five years and those permitted to remain in the US through programs like the U Visa or DACA. However, since these immigrants weren’t eligible for federal funding, state and local governments had to pick up the tab.

That changed in 2016 with the creation of the Essential Plan, when federal funding became available for this group for the first time under the Affordable Care Act.

Now, impending federal budget cuts could force the state to pick up the tab again.

A host of other changes to Medicaid such as new work rule requirements, more frequent renewals, and out-of-pocket charges will roll out in phases starting in late 2026 and extend into 2028.

The new law is also expected to significantly increase the cost of healthcare plans available for purchase by individuals on the state marketplace. According to Governor Kathy Hochul, average premiums statewide are expected to rise by nearly 40 percent.

The new federal law will ultimately force New York to make tough decisions about how much it’s willing to spend to keep near-universal coverage.

Earlier this month, Hochul filed a request seeking federal approval for the state to revert to the Basic Health Plan, which provides coverage to those earning up to 200 percent of the federal poverty level. This would undo the state’s recent 2024 expansion of the Essential Plan, which added 450,000 New Yorkers that earn up to 250 percent of the federal poverty level.

If approved, the maneuver would retain coverage for 1.3 million out of the 1.7 million New Yorkers currently enrolled in the Essential Plan, including 725,000 immigrants. Of those, 500,000 are “Aliessa immigrants,” covered by the 2001 court ruling.

This option would not only allow the state to avoid using its own funds to cover the Aliessa immigrants — which was estimated to cost the state $2.7 billion annually — but would also give it access to a trust fund containing up to $10 billion.