CMS lets states punt Medicaid work requirements by six months

Medicaid programs have the option not to fully implement Medicaid work requirements until June 30, 2027, according to a Friday letter the Centers for Medicare and Medicaid Services sent to state officials.

During that “hold harmless” period, states can decide to not deny Medicaid coverage to individuals who are out of compliance with work requirements. But states must still assess whether individuals meet work requirements during the period, the letter said.

“Doing so will let states test and refine their systems and processes before enforcement begins, supporting a successful launch of the community engagement requirement,” it explained. 

“This will also provide states the opportunity to learn from the early months of implementation to identify and address workforce training needs and improve the applicant and beneficiary experience before enforcement begins,” it continued.

CMS will not take enforcement action against states that opt for the hold harmless period. The agency asked states to request flexibility in their mitigation plans by Dec. 11.

Certain Medicaid recipients have to work, volunteer or study at least 80 hours per month to maintain coverage under the One Big Beautiful Bill Act signed by President Donald Trump. The work requirements take effect on Jan. 1, and states have raced to upgrade eligibility systems before the deadline. CMS has been working on various technology initiatives to help states meet the deadline.

In an accompanying press release, CMS encouraged states to take four steps to implement work requirements, in addition to using the hold harmless period. The agency said states should maximize automated verification, give individuals timely notifications, test systems’ end-to-end processes and work with community organizations.

“If the state can use data to show that someone is working or qualifies for an exclusion, that person should not have to track down paperwork to prove it,” CMS Deputy Administrator Dan Brillman said in the release. “And when someone needs support, they should know exactly what to do, when to do it, and where to go.”

But the future of Medicaid work requirements is still murky.

Legal battles are playing out over the policy after four states asked a court to halt the Jan. 1 deadline. A court struck down the Trump administration’s definition of “medical frailty” last month, which drew ire from blue states for being too burdensome to operationalize.

Meanwhile, Democrats will likely move to repeal Medicaid work requirements when they take control of Congress in January.