CMS framework aims to clarify Medicaid work requirements

Outlining work requirements and exemptions

The framework reiterates the community engagement guidelines, stating that non-pregnant adults ages 19-64 who are not entitled to or enrolled in Medicare but are enrolled in Medicaid in an expansion state are required to participate in the program.

These individuals must work, complete community service, participate in a work program or be enrolled in an educational program at least half-time to fulfill program requirements. Individuals may also complete a combination of these activities for at least 80 hours per month or have a monthly income that is not less than the federal minimum wage multiplied by 80 hours.

Notably, the framework outlines exemptions to these requirements, including the following:

• Pregnant individuals or those eligible for postpartum coverage in their state.
• Former foster care youth.
• Veterans with a disability rating.
• Parents, guardians or caretakers of dependent children under age 13 or dependents with a disability.
• Those in a drug or alcohol rehabilitation program.
• Inmates of a public institution.
• Individuals who already comply with similar requirements through the Supplemental Nutrition Assistance Program or the Temporary Assistance for Needy Families (TANF) program.
• American Indian/Alaska Native people.
• Medically frail people.

States may also extend hardship exemptions to those who need to travel for themselves or a dependent to obtain certain medical care not available within their community. Optional hardship exemptions may also apply to those living in a county with an unemployment rate at or above 8% or 1.5 times the national average.

Notably, the interim final rule does not provide a definition for medical frailty beyond having "special medical needs that significantly impair [beneficiaries'] ability to comply with the requirement."

This is a sticking point for some industry groups, including America's Physician Group (APG).

"It will be extremely difficult, if not impossible, to administer the community engagement requirements in a manner that will [be] workable, reasonable, and fair for individuals, states, and the health care system, and potentially millions of sick individuals could lose their Medicaid health coverage when they most need it," the group said in a statement.

Particularly, provisions stating that individuals with common chronic illnesses might not qualify for exemptions.

The rule states that conditions like asthma, hypertension, generalized pain, type 1 or 2 diabetes or headaches do not "significantly impair an individual's ability" to meet community requirements. The rule also said those conditions might fluctuate such that they may no longer impair an individual's ability to work.

"These statements suggest that individuals on Medicaid with chronic or serious conditions may be forced into a nearly endless cycle of doctors' visits to determine how ill they really are and whether they can work; that states will similarly have to digest endless streams of such information about enrollees; and that states will also have substantial latitude to force enrollees off the program through subjective interpretations about their illnesses and their ability to work," APG said.

Understanding reporting provisions

According to the CMS, states are required to verify and report individual Medicaid eligibility and compliance with work requirements.

When states are unable to verify compliance, they must send the individual a notice of noncompliance and provide 30 calendar days to demonstrate eligibility. Should an individual fail to do so, states should deny the application or disenroll the beneficiary.

States might use data from state or local agencies, federal databases, payroll data or claims data to verify compliance with work requirements, the CMS said.

"States must have a process to obtain the information defined as reliable information available to the State without seeking information from the individual," the CMS wrote in the interim final rule. "The process may be automated, such as through an Application Programming Interface (API) or other electronic interface or could require a worker to manually obtain the information from its source."

State verification processes are expected to require a significant technology overhaul, the CMS acknowledged. To that end, the agency is offering $200 million in Government Efficiency Grants to support state system modernization and another $600 million in support from private-sector technology vendors to help defray state costs.

It remains to be seen how the framework will affect state approaches to Medicaid work requirements. Earlier this year, KFF reported that most states are taking a broader approach to exemptions, aiming to achieve fewer disenrollments.

Still, the effects of Medicaid work requirements are expected to be pronounced. In March of 2026, the Robert Wood Johnson Foundation and Urban Institute estimated that between 4.9 and 10.2 million people would lose Medicaid coverage as a result of work requirements and increased eligibility checks.

Sara Heath is an executive editor at Xtelligent Healthcare Media, where she covers patient engagement, healthcare policy and health IT.