The Trump administration's implementation of a federal mandate that millions of Americans on Medicaid must work or risk losing health benefits will force states to eliminate months of preparation, according to advocates for Medicaid enrollees and consultants who advise states.
And they say a review — less than seven months before states must begin enforcing the requirement — will be costly.
Regulations issued June 1 by the Centers for Medicare and Medicaid Services dictate many granular details about how the new work requirements will unfold. They cover how states must check whether Medicaid enrollees are following the rules and how people can claim a waiver so that their health benefits are not dependent on work, community service or school attendance.
Next year, President Donald Trump's One Big Beautiful Bill could require an estimated 18.5 million adults in 42 states and the District of Columbia who receive Medicaid benefits to prove they are working or engaging in a similar activity to maintain their health coverage, unless they qualify for a waiver.
Much of the verification will be done through state computer systems that assess whether low-income people qualify for Medicaid and other safety net programs — technology often built and managed by private companies under contracts typically worth hundreds of millions of dollars. Many of those systems have a history of errors that can cut off benefits to eligible people.
For months, states have been communicating with federal regulators and rushing to build systems to meet looming mandates, said Kinda Serafi, a partner at the law and consulting firm Manatt Health. The rules released this week represent a “significant political shift” from what states expected, Serafi said.
“The administration has actually taken what we know is a difficult situation and made it even worse,” Serafi said. States had already committed to paying contractors tens of millions to adjust their systems.
After Trump signed his tax and spending bill into law last July, one of the biggest outstanding questions was how much discretion the federal government would give states to define exemptions for people too sick to work. The “medical frailty” exemption allows a person to claim that they have a health condition that prevents them from working at least 80 hours a month, as required by law.
To qualify, a person generally must fit into at least one of five categories: they must be blind or disabled; have a substance use disorder; have a disabling mental disorder; have a physical, intellectual or developmental disability that significantly affects your daily life; or have a serious medical condition. States cannot add categories.
Under the new regulations, CMS said having a medical condition alone is not enough to exempt someone from work requirements. States must evaluate “the severity of an individual's condition” to determine whether they can remain on Medicaid without working, a standard that makes it more difficult for enrollees to meet the criteria.
CMS officials did not list specific conditions that qualify for exemptions, but the agency did say that homelessness cannot be a reason to claim that exemption because it is not a medical condition.
To implement the law, states “will have to undo the work they did,” said Daniel Meuse, deputy director of the State Health and Value Strategies program at Princeton University, which works with state governments on various health coverage issues.
The Trump administration previously acknowledged that work to improve state Medicaid eligibility systems to comply with the law comes at a cost. In January, top CMS officials said government contractors including Deloitte, Accenture and Optum promised to offer discounts and reduced rates through 2028 to help states adjust their systems.
The discounts “may be helpful” in some states, but “they won't be helpful across the board” because of variations in state contracts, said Heather Howard, director of the State Health and Value Strategies program.
“Every time you have to come back and say, 'Oops, we need to reschedule this,' there's a cost,” Howard said.
States were prepared to create lists of conditions and illnesses to qualify people for exemptions from work requirements, according to health care experts advising them. Mining data to verify someone's illness was already a difficult task for states because the computer systems that determine whether someone is eligible for Medicaid often don't communicate with the systems that track medical claims.
Health care payment systems in the United States are based on a set of standardized codes that correspond to specific diagnoses.
But there is no “code that someone is too sick to work — that's a subjective assessment,” said Rachel Klein, deputy executive director of the Aids Institute, a nonpartisan HIV advocacy group. “This is a recipe for disaster.”
The new federal standards pose immediate problems for Nebraska, which launched its Medicaid work requirement on May 1, eight months ahead of the deadline set by the federal government. Nebraska handles medical frailty decisions differently than the Trump administration does.
Nebraska officials had already released a nearly 300-page list of medical conditions that qualify as exemptions, such as cancers, dementia, autism, epilepsy, HIV and Parkinson's disease. The state, which relies on government workers to verify Medicaid eligibility, does not require a person to prove how sick they are.
But under Trump's rules, people will have to prove that their qualifying illness impedes their ability to work.
Now, Nebraska “will have to go back and figure out how to evaluate whether all of these people are too sick to meet the requirement,” Klein said.
Medicaid enrollees are scheduled to begin losing coverage this summer under Nebraska's early rollout.
Sarah Maresh, program director for Nebraska Appleseed, a low-income advocacy organization, said the state should hold off on canceling people's coverage until next year because of the changes it will need to make. State residents are already confused and scared, he said, and the new rule “makes things a lot worse.”
In response to several questions, Jeff Powell, spokesman for the Nebraska Department of Health and Human Services, said the state is reviewing the new federal regulation to determine potential impacts.
The new federal standards will limit people's ability to attest that they are medically fragile starting in 2028 and will require documentation as proof, another change states were not expecting, Meuse said. According to KFF, more than two dozen states had planned to allow applicants and enrollees to self-declare the conditions for obtaining waivers.
Striking the right balance of flexibility was an important part of the deliberations in crafting these rules, CMS Administrator Mehmet Oz said in a June 1 call with reporters. “The mantra we came back to again and again was that we forgive, but we are not fools,” he said.
Trump officials wrote in the rule that Medicaid work requirements have “the potential to empower Medicaid beneficiaries” by allowing them to “escape isolation and dependency, build confidence, achieve self-sufficiency and prosperity, and improve health.”
Stephanie Burdick, leader of the Protect Medicaid Utah coalition, questioned the premise.
“If they want to improve job opportunities or connection and decrease isolation and loneliness, they would start employment programs and volunteer service programs,” Burdick said. “They wouldn't just be putting more administrative burdens on people and then saying it's good for them.”
An estimated 5.3 million enrollees will be uninsured by 2034 due to Medicaid work requirements, according to the nonpartisan Congressional Budget Office.
But with the new regulations, Howard said, there is a risk that “that number will be even higher.”
