Work Requirements for Medicaid Beneficiaries: Implications for States

KFF's policy research provides valuable insights into healthcare policy issues, emphasizing public programs and Medicaid. Of particular interest is the 2025 reconciliation law, which mandates work requirements for certain Medicaid beneficiaries. Starting January 1, 2027, 43 states must ensure that eligibility conditions based on work compliance are met by adults under the ACA Medicaid expansion. However, states can choose to impose these requirements before the deadline.

Research conducted by KFF in partnership with the Georgetown University Center for Children and Families reveals varied state implementation plans. Although many will adhere to the 2027 timeline, states like Nebraska, Montana, and Iowa intend to enforce the requirements earlier in 2026. Compliance checks will differ; while most states aim for semi-annual confirmations, others, such as Indiana and New Hampshire, propose more frequent quarterly checks.

States are also evaluating the adoption of hardship exemptions, which could apply in situations of high local unemployment or natural disasters. The exemptions will differ across states; for example, Indiana and Iowa have opted out, whereas Oklahoma and Missouri have chosen specific exemptions.

Implementing the new work requirements necessitates alterations to application procedures and data sources utilized for verifying eligibility. Numerous states are planning updates to their online platforms and paper documents to collect compliant information. Automation of verification processes will largely rely on existing data sources, such as quarterly wage data and unemployment information, to reduce administrative efforts.

States acknowledge logistical challenges, including costs and system interoperability hurdles. Many express concerns over inadequate time for integrating new data sources needed for verifying work compliance or exemptions. Focus groups stress the necessity for federal guidance, particularly regarding definitions and verification methods for exemptions such as medical frailty, which lack consistent standards nationwide.

To address these challenges, states are considering various administrative strategies, including contracting with vendors for system upgrades. While some explore AI technologies to aid implementation, the tight timeline requires reliance on current vendors. Overall, states urge CMS to provide detailed guidance to streamline the efficient adoption of work requirements, effectively managing systemic changes and ensuring regulatory compliance.