States Need More Time to Prepare for Medicaid Work Requirement

The Medicaid work requirement enacted through the 2025 Republican reconciliation law (known as H.R. 1) will take effect on January 1, 2027. It will require Medicaid expansion adults^[1] to document income of at least $580 per month, complete at least 80 hours per month of “community engagement” through work or other qualifying activities, or qualify for an exemption to maintain coverage.^[2]

Years of evidence across multiple programs show that work requirements don’t increase employment but do take coverage away from eligible people, regardless of how well a state tries to implement them.^[3] But several challenges associated with the Medicaid work requirement in H.R. 1 mean even more eligible people will lose coverage from this policy. Factors likely to increase coverage loss from the work requirement include:

• Inadequate time to implement. H.R. 1 provides less than 18 months, from enactment to go-live date, for states to implement this complex policy.
• Lack of federal guidance. The Centers for Medicare and Medicaid Services (CMS) has yet to issue final guidance on key aspects of the policy. States have had to make many system design decisions (such as changes to eligibility rules and workflows) to meet the implementation deadline without adequate information.
• Technological and system limitations. While new tools and technologies built for the work requirement will help with some aspects of implementation (such as income verification), much of the burden of these policies will still fall on individuals and eligibility workers. Further, implementing the available tools well will require procurement, testing, and integration with other parts of states’ systems that cannot be fully completed within the current timeline.
• Limited state capacity. States are already facing staffing shortages, application processing backlogs, and long call center wait times before the changes have taken effect. Most don’t have capacity to handle the work requirement and other onerous changes from H.R. 1, like more frequent renewals. Accuracy, timeliness, and customer service are likely to suffer as a result.

The Urban Institute estimates that coverage losses could total up to 7 million people in 2028 alone due to the work requirement, with a conservative estimate of 3 million people even if states implement strong harm mitigation measures.^[4] If states are forced to rush implementation, they won’t be able put those measures in place that help ensure that fewer people who are eligible see their coverage taken away. Rushed implementation means that millions more people will become entangled in the maze of administrative burden and lose coverage than would be the case with more time to implement thoughtfully, a devastating outcome for people whose only source of health coverage is Medicaid.

Those at risk of losing their coverage include:

• Vulnerable groups to whom the work requirement doesn’t apply under H.R. 1 but will nevertheless face the cascading consequences of a system under administrative strain. These include children, pregnant adults, and people with disabilities;
• People in the expansion group who are caregivers or have a serious medical condition who meet the criteria for an exemption from the work requirement, but can’t verify it due to burdensome reporting requirements, and stretched eligibility workers and systems; and
• Working people who meet the work requirement but who are stymied in proving it due to administrative burden.

The best option is for Congress to repeal the harmful work requirement mandate from H.R. 1. But short of that, states need more time to ensure their policies, systems, and staffing plans are in place to minimize the number of eligible people whose health care is taken away because of the harsh work requirement and more frequent eligibility renewals implemented under a too-short timeline. To give states more time, CMS could grant “good faith” exemptions to delay implementation^[5] or take administrative action to delay denials and terminations in states that don’t have the systems in place to implement the policy; Congress could also delay or reverse the work requirement. Without sufficient time and guidance, states will be unable to implement the work requirement without harming many eligible people, and millions will have their health coverage taken away — not due to ineligibility, but due to preventable administrative failures.

Inadequate Time to Implement

H.R. 1 was enacted with a short, unrealistic timeline for implementing a change as significant as the work requirement, which involves many aspects of the eligibility determination process and, thus, requires significant transformation of state Medicaid agency processes and the systems that manage them. Changes required to comply with the law include:

• Integrating new data sources. States must use available data to attempt to verify if someone participates in qualifying activities or is exempt from the work requirement before asking the individual for additional information. This will involve connections to new data sources, including those with information on enrollment in an education program, disability ratings for veterans, SNAP enrollment and work requirement status,^[6] and information to determine medical frailty status.^[7]
• System changes. The work requirement is a new eligibility factor for the affected population, so states will have to make substantial changes to eligibility worker-facing systems that staff use to determine eligibility. States will have to modify their systems to collect additional information at application and renewal (from both data sources and individuals) to see if applicants and enrollees meet the work requirement. The systems will also need to determine if there is enough information to verify someone’s eligibility, modifying system logic to incorporate the work requirement as an additional eligibility factor. And systems will need to be configured to trigger new notices and requests for information at various steps in the process. Even if states can make the changes, they will not have enough time to test them adequately and train staff on how to use the systems effectively. The changes would need to be ready for testing months in advance to ensure readiness for implementation in January, but states will almost certainly not be ready to test their systems by then.
• Modifying consumer-facing materials and portals. States will have to create new, or change existing, application and renewal forms, websites, portals used to apply and renew, and outreach materials ranging from notices to call center updates and training. States that plan to go live in January 2027 must send initial outreach notices to enrollees informing them of the upcoming changes by the end of June, July, or August 2026 (depending on state decisions around the application lookback period).^[8] These notices must be newly developed to communicate changes specific to the work requirement, giving states limited time to ensure they meet the statutory requirements, are written in plain language, and user-tested before deployment.

Inadequate time to implement combined with a firm deadline will lead to many errors, confusion, and coverage loss among people who are in fact eligible. If systems are not properly tested, they will make incorrect eligibility determinations. If notices are rushed, they will cause confusion and could lead to eligible people believing they no longer qualify. And if data sources aren’t fully integrated into the eligibility determination process, individuals will have to submit more paperwork (and eligibility workers will have to process more paperwork), leading to mistakes and eligible people falling through the cracks.

Lack of Federal Guidance

The implementation timeframe in H.R. 1 would be unworkable even if states clearly understood the detailed policy around definitions of qualifying activities and exemptions, timing, and verification requirements. Unfortunately, more than halfway through the short implementation window, states still don’t have critical information they need to change systems and processes to implement the work requirement.

To date, states have received some information from CMS through public releases and through state-only calls and documents that the agency has been clear do not represent final agency guidance.^[9] States are awaiting answers to many questions about how exemptions are defined, what verification is needed across many factors, what data states will need to report, and other issues.

H.R. 1 requires CMS to release an interim final rule with more details related to work requirement implementation by June 1, 2026, which itself is not soon enough, but it is also unclear if CMS will meet that deadline based on recent history: H.R. 1 also required CMS to release guidance on implementing the new six-month renewal requirement by December 31, 2025, but that guidance was not released until March 2026. State Medicaid leaders have urged CMS to release final guidance as soon as possible, underscoring their need to have more final decisions to make these changes thoughtfully and effectively.^[10]

Even if CMS meets the June deadline, having formal guidance seven months before going live with the work requirement is insufficient time to program, deploy, and test systems that are used to determine whether people can access health coverage and train staff. States have already made many system design decisions to be ready to go live next January without formal guidance from CMS. This misalignment will lead to implementation errors and coverage losses, while also costing states time and resources when they have to reprogram their systems in response to delayed guidance.

Technological and System Limitations

There is no technology available to seamlessly implement these major changes within the constrained timeframe. While vendors and federal partners are developing tools to help improve some parts of the Medicaid eligibility and verification processes, these solutions will not address the full set of functions states must adopt to implement the work requirement.^[11] For example, some states are exploring consent-based verification (or CBV, which allows users to log into their personal payroll, bank, or other account to verify income) to streamline how compliance with the requirement is verified.^[12] CMS has created its own CBV product, Emmy (Eligibility Made Easy), that state agencies can use to verify income and potentially other forms of community engagement, such as education and volunteering.^[13]

However, these products only address some pieces of all that a state needs to do to implement the Medicaid work requirement. In addition, many products were newly created for the requirement and have not yet been piloted or user tested. And they may not integrate seamlessly with Medicaid eligibility systems or have the data linkage infrastructure needed to capture all forms of work requirement compliance. These products will likely not be fully operational by the implementation date, shifting the burden onto eligibility workers and clients to manually verify compliance or exemptions and increasing the risk of errors. And products are only one element of the systems upgrades that are needed.

Limited State Capacity

While states regularly face capacity constraints and high demand, the current moment is exceptionally challenging and may push some states into unprecedented levels of delays and access barriers. H.R. 1 mandated significant changes to SNAP and Medicaid, significantly impacting the many states that share systems and/or eligibility workers across programs.^[14] These mandates on such tight timeframes (most SNAP changes are already in effect) have forced states to prioritize H.R. 1 changes over the long list of system improvements that have been needed to improve agency operations and eliminate time-consuming and error-prone workarounds.

Administering the work requirement — along with other H.R. 1 changes to Medicaid like the mandate to conduct renewals every six months, rather than annually, for some enrollees — will add substantial administrative burden to an already struggling workforce.^[15] Many states are already facing challenges keeping up with eligibility and renewal processing demands, resulting in application backlogs, delays, and long call center wait times, even before the work requirements are in place.^[16] 

H.R. 1’s changes will make the Medicaid application and renewal process more complicated by requiring states to verify additional eligibility criteria (compliance and exemption status) and to do so more frequently. Eligibility workers will have to process more information more often, especially as eligible people lose coverage due to administrative errors and reapply (known as churn).^[17] The changes will also cause confusion among applicants and enrollees, leading to an increase in call volume and inquiries to eligibility workers, who themselves may be confused about all of the rules and processes due to a lack of time for training and preparation. These additional administrative burdens will affect service to the entire Medicaid population including children, adults, and people with disabilities.

Everyone Eligible for Medicaid Will Be at Risk of Having Health Coverage Taken Away Due to Administrative Burden

Despite herculean efforts by state staff, systems won’t be ready by January 2027 to prevent eligible people from losing coverage. The Medicaid work requirement applies to a relatively narrow group of individuals — adults in the Medicaid expansion population, and many of them should be exempt. The work requirement doesn’t apply to children, older adults, and people with disabilities.

However, everyone who is eligible for Medicaid will be at risk of having their health coverage taken away — whether or not the work requirement applies to them, and whether or not they prove their compliance or exemption status if it does — because the administrative burden of implementing the work requirement strains a state’s entire Medicaid system. Populations most at risk of coverage loss include:

• Children, older adults, and people with disabilities. If states cannot implement the work requirement policy effectively, it will trigger a cascade of operational challenges, including application errors, increased inquiries to eligibility workers, and a surge in workload. These pressures will lead to processing delays and long wait times, diverting limited staff capacity away from routine eligibility and renewal work. As a result, people who are not subject to the requirement, such as children, older adults, and people with disabilities, may experience coverage delays and a lapse in access to needed services.
• People who are “medically frail.” The medical frailty exemption under the law encompasses groups of people who may have difficulty working due to health conditions such as substance use disorders, mental health disorders, and serious or complex medical conditions. Though the law is clear that this population should not have to meet the work requirement and should be able maintain their access to health coverage, they will face a complex web of steps to qualify for an exemption and continue to meet the exemption.^[18] If states don’t have in place an adequate screener to capture someone’s medical frailty status or don’t have their claims system programmed to identify people who are medically frail, vulnerable individuals will become entangled in the administrative web and lose their coverage as a result.^[19]
• People who meet the requirement. Most Medicaid enrollees who can work do work or engage in another qualifying activity (such as education).^[20] However, this group could face many difficulties in reporting compliance on an ongoing basis if the state systems aren’t ready. If the person doesn’t get the right notice, doesn’t understand what they need to do to report their activities, or the state doesn’t timely process such reports, working people could lose or be denied access to Medicaid.

With states struggling to implement this requirement effectively, CMS should provide states with additional time to prepare. Without sufficient time and guidance, states will be unable to implement these requirements without harming many more eligible people and millions will lose coverage.