Photo: World Economic Forum, via Wikimedia Commons (CC BY-SA 2.0)
President Donald Trump’s administration is giving states another six months before they must remove people from Medicaid for failing to meet new work requirements, delaying enforcement of one of the most contested provisions of the president’s sweeping domestic policy law.
The Centers for Medicare and Medicaid Services told state Medicaid directors on Friday that states will have an optional “hold harmless” transition period running through June 30, 2027. The work requirements will still technically take effect on January 1, but states will not have to remove anyone from coverage, or deny coverage, solely because they failed to meet the requirement until July 1, 2027. States that are ready to enforce the rules can still do so from January.
What the rules require
Under the policy, many Medicaid beneficiaries must work or volunteer at least 80 hours a month, or be enrolled in an educational programme at least half-time, to keep their coverage. The requirement applies only to people who receive Medicaid under the voluntary expansion that 40 states undertook to extend health coverage to more lower-income adults without children at home.
There are exceptions for people over 64, those caring for children under 14, and people deemed too medically frail to work. States must still assess whether applicants and beneficiaries meet the requirements or qualify for an exclusion during the transition period — they simply will not face federal penalties, or have to cut people off, for failing to enforce them.
The requirements were established by Republicans in the One Big Beautiful Bill Act, the sweeping domestic policy and tax law Trump signed last year. The Congressional Budget Office estimated that the work requirements alone could leave 5.3 million additional people uninsured by 2034.
Why the delay
States have said they were not given enough time to set up the staffing, training and technology needed to police the new rules by January. CMS Administrator Dr. Mehmet Oz had been under pressure from states and Democratic lawmakers to grant a delay, and the agency said states are making progress but still face implementation challenges.
Democratic Senator Ron Wyden of Oregon and Representative Frank Pallone Jr. of New Jersey wrote to Oz this week asking him to delay the work reporting requirements. Their letter cited a recent decision by a federal court in Boston that determined medically frail people should not be bound by the work requirement rules — a ruling they called an important victory for the millions of medically frail people who rely on Medicaid.
“I think these extra six months are going to give states the ability to respond to the change, and there will be fewer people that lose their coverage due to administrative failures,” Kathy Hempstead, a senior policy officer for the Robert Wood Johnson Foundation, told The Associated Press. Kate McEvoy, executive director of the National Association of Medicaid Directors, said state Medicaid leaders “appreciate the additional flexibility that CMS is providing.”
An early warning from Nebraska
Nebraska was the first state to launch the work requirements early, starting in May. Preliminary data presented to the state’s Medicaid Advisory Committee showed that more than 9 in 10 people subject to the requirement and due to have their benefits renewed in July and August qualified — but 533 people were denied continuing coverage, and for most of them it was over paperwork: they did not show that they were working or were exempt. Of those denied, 43 lost coverage because they did not meet the new requirement.
“There are likely people who are still eligible for coverage who lost it,” said Amy Behnke, chief executive of the Health Care Center Association of Nebraska. Critics of the policy say most enrollees covered by the mandate are already working, and that people are more likely to lose coverage because of the paperwork needed to prove it than because they are failing to work.
What comes next
The six-month delay is a reprieve, not a repeal. The work requirements remain the law, and enforcement arrives on July 1, 2027, whether states are ready or not. The decision could also give Congress breathing room to consider changes to the requirement: Democrats, who are taking control of both chambers in January after their sweeping election victories last week, have said they want to roll back the requirements.
For now, state social service departments have more time to make sure the complicated changes are ready to run before there are consequences — and millions of lower-income Americans will not face losing their health coverage over the new rules until at least July.
Sources: Associated Press; Fierce Healthcare; The Hill