The Centers for Medicare & Medicaid Services (CMS) on Monday issued an interim final rule detailing how states must implement new Medicaid work requirements that will take effect beginning Jan. 1, 2027.
Under the rule, certain Medicaid recipients will be required to complete at least 80 hours per month of qualifying work, education, community service or other approved activities to maintain eligibility. States generally must implement the requirement no later than Jan. 1, 2027.
According to Reuters, CMS Administrator Mehmet Oz said some beneficiaries were “crowding out programs that were originally designed for those truly in need.” Oz said the initiative aims to move able-bodied enrollees into employer-sponsored health plans and “free up critical space in the program for our most vulnerable populations.”
The requirement applies to certain non-pregnant adults ages 19 to 64 who are enrolled in Medicaid expansion coverage or certain Section 1115 demonstration programs.
How The Rule Works
CMS said affected beneficiaries may satisfy the requirement through employment, community service, participation in work programs, educational enrollment or a combination of qualifying activities totaling 80 hours per month. Individuals may also qualify by earning at least 80 times the federal minimum wage in monthly income.
Several groups are exempt, including pregnant individuals, people receiving postpartum coverage, medically frail beneficiaries, certain caregivers, American Indians and Alaska Natives, former foster youth and veterans with total disability ratings.
States must verify compliance during applications and renewals and may conduct more frequent reviews. Beneficiaries deemed noncompliant must receive a 30-day notice period to demonstrate compliance or prove eligibility for an exemption before coverage can be denied or terminated.
CMS also said states will be responsible for monitoring compliance, conducting outreach and submitting implementation data to the agency.
Broader Eligibility Changes
The rule implements provisions of President Donald Trump‘s tax and spending legislation, which introduced federal Medicaid work requirements for the first time. Earlier estimates from the Congressional Budget Office projected that 7.5 million people could lose Medicaid coverage by 2034 as states implement the new requirements.
States have already begun spending millions of dollars updating eligibility systems and verification processes to comply with the law. Contractors including Accenture PLC (NYSE:ACN), Deloitte and Optum have been involved in modernization efforts across multiple states.
The Medicaid changes come alongside broader work requirement expansions in other federal assistance programs. Several states have already begun implementing stricter Supplemental Nutrition Assistance Program requirements tied to the same legislation, including new work standards for certain recipients.
The guidance also arrives as the Trump administration increases scrutiny of public benefits programs. Last week, Vice President JD Vance defended a broader anti-fraud initiative targeting Medicaid and other government programs, arguing stronger verification systems are needed to protect taxpayer dollars and preserve benefits for eligible recipients.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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