CMS Issues Guidance on Medicaid Community Engagement Requirements Starting 2027

The Centers for Medicare & Medicaid Services (CMS) issued preliminary guidance in December 2025 to assist states in implementing Medicaid community engagement requirements mandated by H.R. 1, known as the Working Families Tax Cut legislation. Starting January 1, 2027, certain Medicaid beneficiaries in states that have expanded Medicaid under the Affordable Care Act or through Section 1115 demonstration waivers must demonstrate community engagement by working, participating in educational programs, or completing community service for 80 hours monthly. These requirements are designed to apply to adults covered under the ACA expansion or equivalent waiver programs. The guidance clarifies the categories of individuals subject to these requirements and those exempted, including temporary exemptions for medical hardships or other circumstances that impede participation. States may also grant short-term hardship exceptions, but these require affirmative requests by beneficiaries. Verification processes involve states utilizing existing data sources like payroll, Medicaid provider payments, and educational enrollment data before requesting additional documentation from beneficiaries. Compliance verification is required at both application and renewal stages, with six-month renewal cycles mandated for many beneficiaries. States must notify affected individuals about these community engagement requirements at least three months before implementation and provide notices regarding noncompliance with an opportunity for beneficiaries to respond within 30 days. If noncompliance persists, states must explore eligibility for other insurance programs and follow procedural rights, including fair hearings, before denying or terminating Medicaid eligibility. States can request exceptions to delay implementation by up to two years, contingent on demonstrating a good-faith effort toward compliance. CMS evaluates these requests based on the state's progress, challenges, and plans, with exceptions expiring at the end of 2028. This guidance reflects CMS's efforts to standardize application and enforcement of community engagement criteria for Medicaid beneficiaries, affecting payer and provider operations across states with expanded Medicaid coverage. The implementation of these provisions will require states to enhance data-sharing, monitoring, and beneficiary communication processes. Stakeholders in Medicaid administration, public health policy, and healthcare delivery should anticipate operational changes and compliance requirements tied to these community engagement mandates. Further detailed guidance from CMS is expected to provide additional clarity on data sources and procedural aspects.