CMS Issues Medicaid Work Requirement Rule, Putting Millions of Low-Income Adults at Risk of Coverage Loss

The Centers for Medicare and Medicaid Services issued an interim final rule on June 1 that spells out how states must implement Medicaid work requirements by January 1, 2027 - and the fine print on who counts as too sick to comply is already drawing sharp criticism from patient advocates and policy researchers.

As detailed in a CMS fact sheet reviewed for this report, the rule applies to non-pregnant adults between the ages of 19 and 64 who receive coverage through their state's ACA Medicaid expansion. Covered enrollees will have to document 80 hours per month of qualifying activity - employment, community service, job training, or at least half-time enrollment in school - or earn at least $580 monthly, to keep their insurance.

Forty-three states and the District of Columbia currently cover this population and must comply. Montana and Arkansas are already scheduled to go live before the national January deadline, according to an analysis by Holland and Knight reviewed for this story.

The coverage math is large. The Congressional Budget Office estimates that 4.8 million people will lose Medicaid specifically because of work requirements over the next decade, according to a summary published by the Center for Health Care Strategies. The CBO figure does not include the millions more projected to lose coverage from other changes in the same legislation.

The rule's most contested provision involves the medical frailty exemption - the escape hatch for people whose health makes compliance impossible. Under the new definition, a diagnosis alone is no longer enough. According to a KFF analysis of the rule, CMS adopted a more restrictive definition of medical frailty than states had been told to expect, requiring that a condition significantly impair a person's ability to meet the work requirement in order to qualify for an exemption. The Center on Budget and Policy Priorities, in an analysis published alongside the rule, wrote that this last-minute shift will force states to redo system programming and outreach materials they built around earlier informal guidance from CMS.

What that means in practice: a Medicaid patient with, say, well-controlled hypertension or asthma is unlikely to qualify for the exemption. According to Holland and Knight's reading of the rule, conditions that would generally not qualify absent additional severity include diabetes, asthma, hypertension, ADHD, obesity, and anemia. Cancer, end-stage renal disease, HIV/AIDS, multiple sclerosis, and Parkinson's disease are listed as conditions CMS would generally expect to qualify.

For the first year of implementation, states may accept a patient's own attestation that a condition blocks compliance. Starting in 2028, documentation will be required in most cases where records are not already available in the state's data systems, according to the CMS fact sheet.

The administrative burden is the part that worries clinicians who have seen how paperwork requirements play out at the bedside. Research on Arkansas' work requirement, which ran from 2018 to 2020, found substantial coverage losses without measurable increases in employment, according to analyses by both CBPP and Holland and Knight. In Arkansas, 18,000 enrollees were disenrolled not because they were found ineligible but because they could not complete the reporting process, according to a statement from the American Association of People with Disabilities.

Patient advocacy organizations including the HIV+Hepatitis Policy Institute and the American Cancer Society Cancer Action Network said in statements reported by Healthcare Dive that they were concerned the rule leaves too much discretion to individual states on what counts as impaired enough to skip the paperwork.

States are required to send outreach notices to enrollees between June 30 and August 31 of this year, according to the Center for Health Care Strategies summary. Many enrollees do not yet know the requirement is coming, according to a survey cited by Healthcare Dive and the Health Management Academy.

Comments on the interim final rule are due July 31, 2026. Because it is an interim final rule rather than a proposed rule, CMS is not obligated to substantially revise the policy before implementation. Legal challenges are considered likely, according to the CBPP analysis, which noted the new medical frailty definition appears inconsistent with the plain language of the underlying statute.

Sources cited:
- CMS Fact Sheet (CMS-2454-IFC) (https://www.cms.gov/newsroom/fact-sheets/medicaid-community-engagement-requirement-certain-individuals-interim-final-rule-comment-period-cms)
- KFF Quick Takes (https://www.kff.org/quick-insights/cms-requires-more-restrictive-definition-of-medical-frailty-in-new-medicaid-work-requirements-rule/)
- Center on Budget and Policy Priorities (https://www.cbpp.org/research/health/administrations-last-minute-restrictions-likely-to-worsen-impact-of-medicaid-work)
- Center for Health Care Strategies (https://www.chcs.org/resource/a-summary-of-national-medicaid-work-requirements/)
- Healthcare Dive (https://www.healthcaredive.com/news/cms-medicaid-work-requirements-final-rule-state-guidance/821631/)
- Holland and Knight (https://www.hklaw.com/en/insights/publications/2026/06/cms-issues-interim-final-rule-implementing-medicaid-community)
- American Association of People with Disabilities (https://www.aapd.com/work-requirements-update/)