Federal Rule Expands Medicaid Work Requirements Amid Legal Battles

The Centers for Medicare & Medicaid Services (CMS) issued an interim final rule that tightens the “medically frail” exemption for Medicaid work requirements. Individuals who receive Medicaid must complete at least 80 hours of work, volunteer service, or job-training each month, and those classified as medically frail must prove that their condition “significantly impairs” their ability to meet the requirement. The rule went into effect on July 31 2026 and states must enforce it beginning January 1 2027. A federal judge declined to block the rule, leaving the requirements in place while the underlying lawsuit proceeds.

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The rule implements provisions of the One Big Beautiful Bill Act (OBBBA), enacted last summer. OBBBA mandates work requirements for most Medicaid expansion recipients and earmarks the federal government to cover 90 percent of states’ implementation costs.

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• The Congressional Budget Office projects that five million Medicaid enrollees could lose coverage because of the new burden.

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• The Urban Institute estimates the loss at seven million.

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• 40 percent of Americans living with HIV rely on Medicaid, according to the HIV+Hepatitis Policy Institute.

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Judge Richard J. declined to issue an injunction.

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Medical groups have filed amicus briefs opposing the rule. The American Medical Association described the rule as “likely to undermine physician-patient relationships” and to add “unnecessary paperwork burden” for both patients and doctors.

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Jennifer Wagner of the Center on Budget and Policy Priorities noted that “states don’t have a ton of capacity” to implement it.

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Brenda Oluwalana, a single mother of five from West Valley City, said Medicaid saved her from blindness after a retinal separation and warned that losing coverage would lead to “complete dependence on others.”

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Estimates of enrollment loss vary: the CBO’s five million, the Urban Institute’s seven million, and broader administrative-burden figures from other analysts. The rule also leaves unclear what documentation satisfies the “significant impairment” test, with no federal guidance on whether a doctor’s note, pharmacy claims, or other records will suffice.

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• “I'd like you to all think exactly what that means: complete dependence on others. Suddenly not driving, not cooking, not reading, not volunteering, not doing any of the countless little tiny things that add up to an independent life.” — Brenda Oluwalana

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• “That’s not an existing standard, and there’s no data source for that information,” — Jennifer Wagner

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States must communicate the new requirements to Medicaid enrollees by the end of August and have systems in place by January 1 2027. The lawsuit filed by 25 states and the District of Columbia remains pending, and the court has scheduled further briefing before a final decision on the rule’s legality.

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