Health insurance coverage of low-income children and parents in immigrant families has become more precarious since passage of the federal welfare law in 1996. This is primarily the result of a substantial decline in Medicaid coverage for these children and parents, which stems from restrictions that the welfare law placed on the eligibility of immigrants. Pending legislation to grant states the option of extending Medicaid and School Children's Health Insurance Program (SCHIP) coverage to immigrant children and pregnant women who entered the country since the welfare law was signed would constitute an important step toward addressing this gap in the health insurance system and would provide coverage to some of the nation's most vulnerable uninsured people. This paper examines: proposals to restore eligibility for insurance; the background on legal immigrant eligibility for health insurance; declines in participation among eligible immigrants; recent trends in the health insurance coverage of legal immigrants (coverage for children and for parents); results that show immigrants constitute a sizeable share of the uninsured population and are major segments of Latino and Asian communities; immigrants' access to medical and dental care; and the potential for legislative change. (SM)