Deadline Looms for Medicaid Work Requirements – States Prepare for Changes

The work requirements, enacted under the 2025 reconciliation law, require certain Medicaid beneficiaries to document at least 80 hours per month of work, school, volunteer service or other qualifying activities to maintain coverage. Failure to comply could result in the loss of benefits. The policy is projected to reduce Medicaid enrollment by millions over the next decade, largely because of work requirements and related eligibility restrictions.

Recognizing the risk of disruptions, the Centers for Medicare & Medicaid Services (CMS) has distributed a 13-page mitigation worksheet outlining potential fixes for states that are unable to fully implement the requirements by Jan. 1. To learn more specific details about the legislation click here. According to documents first reported by the Washington Post, CMS anticipates a range of operational problems, from delayed beneficiary notices and insufficient call-center capacity to failures in screening people for exemptions before determining compliance. Greg Woods, New Jersey’s Medicaid director, said at a recent meeting of state Medicaid directors,

We are in an all-out sprint to get to Jan. 1.

The agency’s proposed solutions include expanding call centers, borrowing workers from other state agencies, accepting self-attestation for some eligibility determinations and extending reconsideration periods in certain situations. States that follow approved mitigation plans may avoid formal compliance actions for some deficiencies, though they could still face federal oversight and audits. Stakeholders welcomed some of that flexibility but questioned whether it will be enough.

Consultants at Manatt Health told Inside Health Policy that several proposed workarounds fail to address the underlying challenges states face. For example, CMS suggests that states unable to update application forms with work-reporting questions could direct beneficiaries to call centers. Manatt argued that approach does little to solve processing deficiencies and could create additional bottlenecks if call centers are already overwhelmed. The organization also raised concerns about allowing states to rely on social media outreach when traditional beneficiary notifications are unavailable, arguing that outreach campaigns cannot replace formal eligibility notices required for coverage determinations.

Adding to the uncertainty, KFF explained a federal district judge on Oct. 29 sided with 24 states, including Arizona, the District of Columbia and two Democratic governors who challenged CMS’ interpretation of the medical frailty exemption. The court ruled that CMS exceeded its authority when it required individuals not only to have a qualifying medical condition but also to prove that the condition limited their ability to work or volunteer. The ruling applies nationwide and means beneficiaries now need only demonstrate that they fall within one of the medical frailty categories established in statute to qualify for the exemption. The decision is expected to reduce administrative burdens, simplify verification and likely decrease the number of people who lose coverage because of paperwork issues. However, it does not eliminate broader implementation challenges facing states as the Jan. 1 deadline approaches.

The convergence of operational hurdles, legal uncertainty and aggressive implementation timelines has heightened concerns among states, provider advocates and policy experts that eligible beneficiaries could lose coverage because of administrative failures rather than eligibility changes. Whether CMS’ mitigation strategy will be sufficient to avoid widespread disruptions may not become clear until the new requirements take effect at the start of 2027.