HHS Narrows Medical Exemptions as Medicaid Work Requirement Rollout Looms

The provision getting the most attention in the interim final rule is that HHS declined to give states flexibility to create additional categories of “medically frail” Medicaid beneficiaries exempt from the new work requirements. The agency said the five exemption categories established in federal law are broad enough to cover individuals with legitimate medical limitations and expressed concern that allowing states to expand the definition could lead to exemptions for people who would not reasonably be considered medically frail.

Patient advocacy organizations lamented the Trump administration’s decision to constrict the work requirement exemption and tie the language of disability to one’s ability to work. According to Inside Health Policy, HIV patient advocates have spent months urging the administration to be flexible on the requirement’s language. Blood Cancer United’s Chief Medical Officer Gwen Nichols noted the inherent contradiction in tying healthcare to employment for those with ongoing health concerns:

Cancer is unpredictable — it doesn’t follow a work schedule. Treatment may be grueling and disruptive, making it hard to maintain a steady job. Many patients are in and out of remission. Patients might be in recovery one day and in the hospital the next. Requiring anyone with cancer to work or jump through bureaucratic hoops to keep their health coverage puts lives at risk–full stop.

The Department of Health and Human Services (HHS) issued the interim final rule with a comment period in accordance with the One Big Beautiful Bill Act of 2025 (OBBBA) that will establish restrictions to the Medicaid program by outlining work requirements for eligibility.

The bulk of the OBBBA was paid for through implied cuts to the Medicaid program that would arise from limiting eligibility and establishing work requirements for most enrollees. The Congressional Budget Office (CBO) has estimated that 5 million people would become uninsured because of the work requirement, including some working people who would be unable to prove their employment status. The New York Times notes that the law allowed for a “medically frail” carveout, but the law failed to describe what the term meant.

In the final rule, this was interpreted by HHS to mean that someone’s medical conditions must “significantly impair” their ability to meet the work requirement. From Dan Brillman, Director of Medicaid and the Children’s Health Insurance Program (CHIP) at the Centers for Medicare and Medicaid Services (CMS):

The exemption ensures that work expectations are directed to those who can participate fully and protecting those fully who cannot.

Enrollees will be required to verify that they complete at least 80 hours of work, school or volunteer service per month and may combine activities to meet the requirement. Modern Healthcare reports that they will also be considered compliant if their monthly incomes exceed federal minimum wage multiplied by eighty hours, or $580 per month. States may offer exemptions for people in the hospital or in nursing facilities, enrollees with high unemployment rates, counties that experience natural disasters, and for those traveling for an extended period to access healthcare.

Medicaid work requirement rules begin in almost all states on Jan. 1, 2027.
CMS is allowing some initial self-attestation and phased verification processes before stricter documentation requirements kick in during 2028.