States Seek Delay on Medicaid Work Rules

Five states are urging federal officials to delay implementation of new Medicaid work requirements, citing mounting evidence that administrative hurdles, rather than a lack of work activity, are causing eligible beneficiaries to lose coverage. 

In an Oct. 1 letter to the U.S. Department of Health and Human Services, the governors of:

• California
• Oregon
• Maine
• New Mexico
• Virginia

asked for a postponement of the Jan. 1, 2027 compliance deadline. Inside Health Policy states the governors need more time to update eligibility systems, train staff and test new processes required under federal rules implementing the work requirement mandate. They warned that a rushed rollout could lead to wrongful terminations, litigation and costly remediation efforts.

These are not minor or technical adjustments. They fundamentally change the processes
and system logic underlying states’ implementation plans. With less than 100 days remaining before January 1, states cannot reasonably rebuild, test, and validate these systems while ensuring accurate notices, properly trained workers, and reliable, lawful coverage determinations.

The concerns echo early findings from Nebraska, one of the first states to implement Medicaid work requirements. Analysis by KFF found most individuals losing coverage were not deemed ineligible because they failed to work, but because they did not complete reporting requirements or navigate the administrative process successfully. The report suggested paperwork and verification challenges, rather than noncompliance, were driving many coverage losses. 

Arizona officials are preparing for similar challenges. As reported in The Hertel Report last month, AHCCCS recently revised its estimates of the number of members who could be affected by work requirements, highlighting the significant operational effort required to identify exempt individuals, verify eligibility and manage reporting systems. 

The issue has also become a political flashpoint. In Arkansas, Gov. Sarah Huckabee Sanders defended Medicaid work requirements in a recent advertising campaign, arguing they promote accountability and workforce participation according to the Arkansas Advocate. The ads drew criticism from groups including the NAACP as well as some conservative commentators, underscoring the unusually broad debate over how the policy should be implemented and communicated. Supporters contend work requirements encourage employment and help preserve Medicaid for the most vulnerable populations. Critics argue most Medicaid adults already work, attend school, provide caregiving or qualify for exemptions, and that complex reporting systems risk disenrolling eligible individuals who remain entitled to benefits. 

The governors’ request comes amid ongoing litigation over federal implementation rules and growing scrutiny of how states will operationalize the policy. Their letter specifically cited concerns about new requirements related to determining medical frailty exemptions and said significant system changes cannot be completed and validated before the current deadline. As more states move toward implementation, Nebraska’s early experience is emerging as a closely watched test case. Health policy experts say its results suggest the success or failure of Medicaid work requirements may depend less on whether beneficiaries are working and more on whether states can build systems that accurately document compliance without disrupting coverage for eligible residents.