Two Months Before Launch, Medicaid Work Requirements Face a New Lawsuit and Calls for Delay
Medicaid work requirements take effect January 1, 2027. Under the One Big Beautiful Bill Act, certain adults covered through Medicaid expansion must complete 80 hours a month of work, school, or volunteering to keep coverage. The law exempts people who are medically frail, including those with disabling mental disorders, substance use disorders, or other serious or complex medical conditions. CMS defined who qualifies in a June 2026 interim final rule.
With the deadline approaching, implementation faces pressure on two fronts: a physician-led lawsuit over the medical frailty exemption and governors’ requests for more time to prepare state systems.
On September 18, a coalition of physician groups, including the American College of Physicians and the American Academy of Pediatrics, joined five Medicaid enrollees in suing over CMS’ June interim final rule. The plaintiffs argue CMS narrowed the medical frailty exemption by requiring enrollees to show their conditions significantly impair their ability to meet the requirement. They also object to provisions that would put clinicians in the position of judging patients’ ability to work.
On October 1, five Democratic governors asked HHS Secretary Robert F. Kennedy Jr. to delay the compliance date. Instead of a fixed January 1 start, the governors of Oregon, California, Maine, New Mexico, and Virginia asked HHS to let each state begin enforcement once its eligibility systems are ready. The governors said the June rule required system changes that can’t be built and tested in time. They cited Congressional Budget Office estimates that roughly half of projected coverage losses will stem from paperwork and reporting failures.
Nebraska, which began enforcing work requirements for new applicants in May and existing enrollees in July, offers an early look. Of nearly 560 new applicants denied under the new rules, 84% were turned away because they couldn’t provide the information needed to verify compliance. Among enrollees renewing coverage, about 530 lost it, 92% because they didn’t respond to verification requests.