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This article was originally published in the ABA’s Health Law Section, December 2025, and is reposted here with permission. 

In July 2025, multiple federal agencies announced a reinterpretation of provisions of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA), which prohibits “an alien who is not a qualified alien” from accessing “Federal public benefits,” unless an exception applies. The notice issued by the United States Department of Health and Human Services (HHS) (the HHS Notice) declares the Health Center Program—which qualifies certain community clinics for federally qualified health center (FQHC) reimbursement under Medicaid and Medicare and 340B drug pricing, among other benefits—to be one of thirteen newly identified Federal public benefit programs for which such “not qualified aliens” are not eligible under PRWORA.¹

The HHS Notice is not law or regulation, and it has been preliminarily enjoined in some states by a federal district court.² It may eventually be permanently blocked or narrowed by courts. In the meantime, the HHS Notice raises thorny practical issues for community clinics operating within the Health Center Program (Health Centers). As they evaluate their evolving compliance obligations, Health Centers should consider at least the following unanswered questions:

• How does the HHS Notice apply to Health Centers? What in the Health Center Program does HHS now view as a “Federal public benefit”—is it the federal grants awarded to some qualifying community clinics, or does HHS also view ancillary features of Health Center status, such as FQHC reimbursement, to be “Federal public benefits”?

• Could Health Centers be required to verify patient eligibility? Does the HHS Notice imply that individual Health Centers need to implement eligibility verification procedures for patients seeking services? Does it matter whether the Health Center is a nonprofit or public entity?

• How will HHS enforce eligibility restrictions for the Health Center Program? What are the consequences if a Health Center inappropriately provides a “Federal public benefit” to an alien who is not a “qualified alien”? Can a Health Center provide services for ineligible individuals outside of its federal scope of project?

Following a brief discussion of the HHS Notice and current litigation, this article unpacks each of these critical questions.

How Did HHS Reinterpret “Federal Public Benefit” in its July 14 Notice?

The HHS Notice aims to broaden the prohibition in PRWORA on a non-citizen who is not a “qualified alien” from accessing “any Federal public ����Ա�ھ���.”³ Similar notices were released by the U.S. Department of Labor, the U.S. Department of Education, the U.S. Department of Agriculture, and the U.S. Department of Justice (referred to collectively as the “PRWORA ���dzپ������”).⁴ 

The PRWORA Notices do not interpret what it means to be an alien who is “not a qualified alien.” Under PRWORA, all non-citizens are subject to the prohibition unless they fall within enumerated categories of “qualified aliens,” including non-citizens who have been lawfully admitted for permanent residence in the United States, have certain asylum or refugee status, or are lawfully resident in certain U.S. territories.⁵ Most individuals lawfully present on a temporary basis—such as individuals with a student visa or H-1B, H-2A, or H-2B work visas—are not qualified aliens. Individuals who do not have documentation of their immigration status are also not qualified aliens.

The statutory definition of “Federal public benefit” includes two prongs. Under the grant prong, a Federal public benefit is “any grant, contract, loan, professional license, or commercial license provided by an agency of the United States or by appropriated funds of the United ���ٲ��ٱ��.”⁶ Under the benefits prong, a Federal public benefit may also be “any retirement, welfare, health, disability, public or assisted housing, postsecondary education, food assistance, unemployment benefit, or any other similar benefit for which payments or assistance are provided to an individual, household, or family eligibility unit by an agency of the United States or by appropriated funds of the United ���ٲ��ٱ��.”⁷

The HHS Notice broadened the interpretation of “Federal public benefit” under both prongs to include an expanded set of federally funded social, educational, workforce, and emergency services. For example, the HHS Notice concludes that the Health Center Program, as well as federal block grants to states and localities, are Federal public benefits.

What is the Status of the Multi-State Litigation Challenging the PRWORA Notices?

The PRWORA Notices have been challenged in court by a group of 21 states and the District of Columbia.⁸ Specifically, in State of New York, et al v. U.S. Department of Justice, et al., the plaintiffs seek a judicial declaration that the PRWORA Notices violate the Administrative Procedure Act and the U.S. Constitution and request the court enjoin defendants from implementing them in the plaintiff states.⁹ On September 10, 2025, the court granted a preliminary injunction enjoining the defendants from enforcing or implementing the PRWORA Notices in the plaintiff states during the pendency of the lawsuit. With respect to Health Centers, the court concluded that the Health Center Program statute—which was enacted subsequent to PRWORA and requires Health Centers to provide services for all residents within its catchment area—exempts Health Centers from PRWORA limitations.¹⁰ On November 7, 2025, the defendant agencies appealed the court’s September 10 order to the United States Court of Appeals for the First Circuit.¹¹ The appellant’s brief is due January 5, 2026.¹² 

While litigation is likely to continue, it is important to note that following the Supreme Court’s 2024 decision in Loper Bright Enterprises v. Raimondo, courts are not required to afford the same level of deference to agencies such as HHS.¹³ While the federal administration has tried to argue that Loper Bright supports its reinterpretation, the first court to consider the issue did not share that view.¹⁴

How Does the HHS Notice Apply to Health Centers?

While the HHS Notice offers general reasoning for why HHS believes more of its programs are Federal public benefits, it does not address how this conclusion applies to particular programs. HHS has argued in ongoing litigation that it is not obligated to “minutely explain why every individual program listed in the HHS Notice provides Federal public ����Ա�ھ��ٲ�.”¹⁵ This reasoning gap is particularly important for the Health Center Program, which includes community clinics that receive federal grants as well as community clinics that meet similar qualifying criteria but do not receive any grant funds (i.e., lookalikes). The details of why HHS believes the Health Center Program is a Federal public benefit impacts which entities are subject to the HHS Notice and how it might be enforced against them.

For example, one straightforward position would be for HHS to view the Health Center Program as a Federal public benefit under the “grants” prong of the definition rather than the “benefits” prong. While it is indisputable that some Health Centers receive federal grants, it is much less clear that they constitute or administer a “health ����Ա�ھ���.” The mere fact that Health Centers have a federal status qualifying them at times for favorable treatment (e.g., FQHC reimbursement, Federal Tort Claims Act protections, 340B drug pricing) does not obviously transform them from a provider of services into a Federal benefit “provided to an individual, household, or family eligibility unit.”

If the Health Center Program qualifies as a Federal public benefit solely under the “grants” prong of the definition, then Health Center lookalikes should not be subject to the PRWORA exclusion because they do not receive federal grants. In other words, there is a simple textual argument—not addressed by HHS in the Notice—that only certain clinics regulated under the Health Center Program should be subject to PRWORA even under HHS’s broader interpretations.

The application of PRWORA to Health Centers through the “grants” prong of the definition is also not straightforward. Health Center grants are available only to designated public and nonprofit private entities, not to individual persons.¹⁶ This raises a natural question: Does a Health Center comply with PRWORA merely by ensuring it does not distribute federal grant funds it receives directly to any alien who is not a “qualified alien”? The HHS Notice, focusing on narrow issues of statutory interpretation, does not defend—or even articulate—the more expansive alternative that PRWORA prohibits federal grantees from expending grant funds on activities that benefit aliens who are not qualified aliens.¹⁷ Yet certain HHS rhetoric in the Notice at least implies that HHS might believe its action to have a broader impact.¹⁸ 

Could Health Centers be Required to Verify Patient Eligibility?

Under PRWORA, non-citizens who are not qualified aliens are not “eligible” for any Federal public benefit, unless an exception applies.¹⁹ In addition, the law directs the U.S. Attorney General, after consultation with HHS, to promulgate regulations requiring verification that persons “applying for” a non-excepted Federal public benefit are qualified aliens and are eligible to receive such benefit.²⁰ The Attorney General issued interim verification guidance in 1997, but has not issued regulations imposing affirmative verification obligations.²¹ 

Verification requirements are not substantively addressed in the HHS Notice.²² As a result, there is no new information about whether or how HHS expects Health Centers to conduct eligibility verification activities. The plain text of PRWORA provides, subject to a requirement for the Attorney General to promulgate regulations, that a “nonprofit charitable organization” is “not required under this chapter to determine, verify, or otherwise require proof of eligibility of any applicant for such ����Ա�ھ��ٲ�.”²³ Because the Attorney General has not yet promulgated regulations, there is therefore a straightforward textualist argument that this statutory provision exempts the more than 16,000 nonprofit Health Center sites from conducting eligibility verification.²⁴ 

While there is not a comparable statutory exemption directly applicable to the minority of public Health Centers, local government entities are not expressly required by PRWORA to verify eligibility. Instead, PRWORA most directly gives the states responsibility for verification by directing “a State that administers a program that provides a Federal public benefit” to “have in effect a verification system that complies with the regulations” issued by the Attorney General within 24 months of the date such regulations are adopted.²⁵ 

In short, there is no clear requirement at this time for Health Centers to modify their eligibility verification processes—or direction about how to do so. While Health Centers may choose to make changes, they should take care to balance risks and benefits if they do so. For example, the potential benefits of reducing the likelihood of future PRWORA enforcement should be weighed against potential risks involving noncompliance with federal Health Center Program requirements to serve all residents of the catchment area and state discrimination claims grounded in disparate treatment of protected classes. Federal agencies may address the subject of eligibility verification in the future, such as through the Attorney General promulgating the verification regulations required by PRWORA.

How Will HHS Enforce Eligibility Restrictions for the Health Center Program?

Finally, the HHS Notice does not address enforcement. During the multi-state litigation discussed above, HHS agreed to stay enforcement and application of the Notice through September 10, 2025.²⁶ And the court’s September 11 order temporarily enjoins HHS from enforcing or implementing the revised interpretation in the plaintiff states. As noted above, the preliminary injunction is currently on appeal before the First Circuit. At the time this article was drafted, appellate briefs had not yet been filed. In part for these reasons, there is limited information available about what enforcement would look like for Health Centers.

While the prior sections of this article underscore the uncertainty of whether and how PRWORA applies to Health Centers under the new HHS interpretation—and point to several defenses Health Centers could raise if faced with enforcement—there is nonetheless a risk that HHS may pursue termination of the Health Center status (and any accompanying federal grant) for a Health Center that knowingly provides services to aliens who are not “qualified aliens.”

One significant unanswered question is whether Health Centers that knowingly serve aliens who are not “qualified aliens” could insulate themselves from potential enforcement actions by carving those activities into a separate line of business outside their federal scope of project. Under this approach, the line of business would be separately accounted for so that no federal grant money would be used to pay for the services. There is a reasonable position that carved-out services would not constitute a Federal public benefit; for example, HHS guidance has long acknowledged that Health Centers need not comply with HHS requirements for separate lines of business.²⁷

Conclusion

The HHS Notice demonstrates executive intent to exclude certain non-citizens from the Health Center Program. Courts have already begun to address the expanded interpretation and the government’s authority to issue the notices. For now, the interpretation of PRWORA—and its application to Health Centers—is deeply unsettled. Even apart from the overarching question of whether the notice is lawful and the new interpretation will be upheld, there are a number of critical follow-up questions about how it would be applied to the Health Center Program. Health Centers should ensure they have a thoughtful and defensible position on each of these questions as they consider potential changes to their operations.

[1] See U.S. Dep’t. of Health and Human Svcs., “Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA); Interpretation of ‘Federal Public Benefit,’” 90 Fed. Reg. 31,232 (July 14, 2025).
[2] State of New York, et al., v. U.S. DOJ, et al., 25-cv-00345 (D.R.I.).
[3] See 8 U.S.C. § 1611.
[4] Training and Employment Guidance Letter No. 10-23, Change 2 (July 10, 2025); Clarification of Federal Public Benefits Under the Personal Responsibility and Work Opportunity Reconciliation Act, 90 Fed. Reg. 30896, Interpretive Rule (July 11, 2025); Personal Responsibility and Work Opportunity Reconciliation Act of 1996 Interpretation of “Federal Public Benefit,” 90 Fed. Reg. 30621 (Notice July 10, 2025); Revised Specification Pursuant to the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, 90 Fed. Reg. 32023 (Order July 16, 2025)
[5] 8 U.S.C. § 1641(b).
[6] 8 U.S.C. § 1611(c)(1)(A).
[7] 8 U.S.C. § 1611(c)(1)(B).
[8] See State of New York, et al., v. USDOJ, et al., 25-cv-00345 (D.R.I.). The 21 named plaintiff states are: New York, Washington, Rhode Island, Arizona, California, Colorado, Connecticut, Hawaii, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, Oregon, Vermont, and Wisconsin.
[9] See id.
[10] Memorandum and Order in State of New York, et al., v. USDOJ, et al., 25-cv-00345 (D.R.I.), Doc. 64 at 41.
[11] Notice of Appeal in State of New York, et al. v. USDOJ, et al, Case No. 1:25-cv-00345 (D.R.I), Doc. 71.
[12] Appellant’s Briefing Notice, State of New York, et al. v. USDOJ, et al., Case No. 25-2009(1^st Cir. Nov. 24, 2025), Doc. 00118370756.
[13] Loper Bright Enterprises v. Raimondo, No. 22-451 (June 28, 2024), together with Relentless, Inc. v. Department of Commerce, No. 22-1219, available .
[14] See supra n. 9 at 3, 30 (Loper Bright is “not a get out of considering reliance interests free card” and does not displace the “very great respect” afforded to “an agency’s interpretation of an ambiguous statute” that “was issued roughly contemporaneously with enactment of the statute and remained consistent over time”).
[15] Memorandum and Order in State of New York, et al., v. USDOJ, et al., 25-cv-00345 (D.R.I.), Doc. 64 at 29.
[16] See, e.g., 42 U.S.C. § 254b(c)(1), (e)(1).
[17] See 90 Fed. Reg. 31,233-31,234 (July 15, 2025).
[18] See, e.g., 90 Fed. Reg. 31,237 (July 15, 2025) (“President Trump has similarly issued numerous Presidential actions that reflect the will of the American people that aliens should not burden our public benefits system and that our public benefits system should not serve as a magnet for illegal immigration.”).
[19] 8 U.S.C. § 1611(a).
[20] 8 U.S.C. § 1642(a).
[21] See 62 Fed. Reg. 61,344 (Nov. 17, 1997).
[22] 90 Fed. Reg. 31,237 (July 14, 2025) (“[T]he Department is not formally revising the aspects of the 1998 Notice that touch on PRWORA’s verification requirements at this time.”).
[23] 8 U.S.C. § 1642(d). The statutory text leaves open the possibility that the Attorney General could change the default nonprofit exemption from eligibility verification requirements through regulation.
[24] See HRSA Data Warehouse, “Health Center Delivery and Look-Alike Sites” (updated 11/25/2025), available at .
[25] 8 U.S.C. § 1642(b).
[26] See also HHS Press Release, “HHS Bans Illegal Aliens from Accessing its Taxpayer-Funded Programs” (last reviewed 11/23/2025) (announcing the enforcement stay through September 10, 2025), available at .
[27] See, e.g., HRSA, Health Center Program Compliance Manual (last updated August 2018), Ch. 17 at p. 63 fn. 6 (acknowledging that because “other lines of business are not included in the health center’s total budget” they are “not subject to Health Center Program requirements and not eligible for related Health Center Program benefits”).