CMS Issues Rule Setting 80-Hour Work Threshold for Medicaid Eligibility

WASHINGTON, The federal government moved this month to put Medicaid work requirements into force, issuing a rule that gives states roughly seven months to build the administrative machinery before millions of low-income adults face a new eligibility test.

The Centers for Medicare & Medicaid Services published the rule June 1. According to a fact sheet on the CMS website, the agency "issued an interim final rule implementing a new statutory requirement for certain adults in Medicaid to meet an 80 hours per month work requirement as a condition of eligibility."

The rule flows from the One Big Beautiful Bill Act, signed by President Trump on July 4, 2025. According to an analysis by the American Psychological Association Services, that law cuts federal Medicaid funding by roughly $1 trillion over 10 years. The nonpartisan Congressional Budget Office estimated the work-requirement provisions alone will reduce federal spending by $326 billion over a decade and cause millions to become uninsured, according to KFF, which reviewed the CBO figures.

Under the new rule, non-pregnant adults between 19 and 64 enrolled in Medicaid expansion must document at least 80 hours per month of employment, education, job training, community service, or similar activity, according to the National Association of Counties, which reviewed the interim final rule. The income equivalent threshold is set at $580 per month, equal to the federal minimum wage multiplied by 80 hours as of 2026, the National Association of Counties reported.

Exemptions cover pregnant and postpartum women, veterans with total disability ratings, medically frail individuals, caregivers of children 13 and younger, tribal members, and people already satisfying SNAP or TANF work requirements, according to Holland & Knight attorneys who reviewed the rule.

States face a Jan. 1, 2027 deadline for full implementation, though they can apply for a good-faith effort extension through December 2028. According to Mondaq's summary of the Holland & Knight analysis, Nebraska is already the furthest along, having gone live May 1, 2026, as the first state to implement community engagement requirements. Montana and Arkansas are set for July 1, 2026 launch dates. Iowa has a December 1, 2026 target.

Nebraska may need to adjust parts of its existing framework. According to Mondaq's review of the rule, Nebraska built a nearly 300-page index of diagnosis and procedure codes to identify medically frail individuals, but the new CMS standards add specificity that could require revisions to the state's approach.

Because CMS chose the interim final rule format, the agency isn't required to substantially revise the policy before it takes effect. Holland & Knight noted in its client alert that the rule's provisions become effective July 31, 2026, the same date that public comments are due.

The rule covers the 43 states and Washington, D.C. that expanded Medicaid under the Affordable Care Act. The CBO has estimated the Medicaid provisions in the underlying law will result in 11.8 million people directly losing Medicaid coverage, according to the APA Services analysis.

The American Medical Association issued a statement in July 2025 expressing outrage at passage of the law, citing the projected coverage losses. Crowell & Moring attorneys noted in a client alert that the rule focuses on equipping states to administer the requirement and does not impose new operational obligations on Medicaid managed care plans.

Comments on the interim final rule are due July 31, 2026.

Sources cited:
- CMS Fact Sheet (Medicaid.gov) (https://www.medicaid.gov/resources-for-states/working-families-tax-cut-legislation/community-engagement)
- National Association of Counties (https://www.naco.org/news/cms-issues-interim-final-rule-medicaid-community-engagement-requirements)
- Holland & Knight / Mondaq (https://www.mondaq.com/unitedstates/healthcare/1799182/cms-issues-interim-final-rule-implementing-medicaid-community-engagement-requirements)
- Crowell & Moring LLP (https://www.crowell.com/en/insights/client-alerts/president-trumps-one-big-beautiful-bill-makes-changes-to-medicaid)
- KFF (https://www.kff.org/medicaid/a-closer-look-at-the-work-requirement-provisions-in-the-2025-federal-budget-reconciliation-law/)
- American Psychological Association Services (https://updates.apaservices.org/update-on-proposed-cuts-to-medicaid-funding)
- American Medical Association (https://www.ama-assn.org/health-care-advocacy/federal-advocacy/changes-medicaid-aca-and-other-key-provisions-one-big)