CMS Final Rules for Medicaid Work Requirements Are Out. Here’s What You Need To Know.

Michigan AG Dana Nessel and her secret cabal of Democratic Attorneys General have filed suit against Medicaid work rules:

https://michiganadvance.com/2026/06/29/repub/25-democratic-led-states-sue-trump-administration-over-medicaid-work-requirements/

25 Democratic-led states sue Trump administration over Medicaid work requirements
By Anna Claire Vollers of Stateline - June 29, 2026

Twenty-five Democratic-led states plus the District of Columbia have sued the Trump administration over its new work requirements for people who get their health insurance through Medicaid.

At issue is a “medically frail” designation that the states say is too narrow and will make it too difficult for ill and disabled people to remain on Medicaid.

They’re challenging the administration’s guidance on who can be exempt from the work requirements included in the so-called One Big Beautiful Bill Act, the broad tax and spending measure President Donald Trump signed a year ago.

Medicaid is the publicly-funded health insurance for people with low incomes. Under the One Big Beautiful Bill Act, states that have expanded Medicaid eligibility to more adults under the Affordable Care Act — 40 states plus the District of Columbia — must require those adults to prove they’re working, going to school or serving their communities for at least 80 hours a month to receive Medicaid. Georgia, Tennessee, and Wisconsin, which have used federal waivers to expand their Medicaid programs, are also subject to the new work rules.

The new lawsuit specifically targets new federal guidance that narrows the definition of who can qualify as “medically frail,” a key exemption used to excuse Medicaid recipients from work requirements if they have serious disabilities or illnesses. The guidance came in the form of an interim final rule published this month by the U.S. Department of Health and Human Services and the Centers for Medicare and Medicaid Services (CMS).

The Democratic attorneys general and governors who are plaintiffs in the suit claim the feds surprised them with this new rule months after they’d already been working with CMS on how to implement the work requirements.

“This eleventh-hour attempt to further narrow protections for medically frail Medicaid recipients seeks to punish those who cannot fend for themselves,” said Rhode Island Attorney General Peter Neronha, a Democrat, in a statement.

“Further, this Administration is once again attempting to sidestep Congress by unlawfully reinterpreting the law, and coercing the states to rush to implement their last-minute changes or face penalties,” he said.

To qualify as “medically frail” and therefore exempt from work requirements, the new guidance says, a Medicaid recipient must have a significant health condition and be significantly impaired in their ability to work. It’s a distinction the states say Congress did not make in the One Big Beautiful Bill Act.

The states also claim the new guidance violates federal law by ignoring evidence that work requirements cause people to lose coverage due to red tape.

For example, Arkansas tried instituting work requirements for Medicaid recipients in 2018, during Trump’s first term. A federal judge halted the policy less than a year later, after 18,000 adults had lost coverage. Studies later found that Arkansas’ work requirements didn’t increase employment. A recent analysis from the Urban Institute projects that 3-7 million people could lose coverage because of the new work requirements.

Supporters of the new work rules say they are sufficiently flexible and that the category of who qualifies as “medically frail” remains broad.

“This rule helps Americans build skills and independence through work, education, job training, or community service, creating new opportunities for themselves and their families,” said Dr. Mehmet Oz, director for the Centers for Medicare & Medicaid Services, in a statement earlier this month announcing the new guidance.

The lawsuit says states have already invested significant resources into implementing the new work requirements based on the original law’s language and prior federal guidance. They’re staring down an August 31, 2026, deadline for notifying Medicaid recipients about changes to the “medically frail” designation, a timeline the states say is not workable. They face financial penalties for not meeting the deadline.

States are expected to put the new work requirements into place by January 1, 2027, though the feds could choose to grant them temporary extensions through 2028.

The lawsuit was filed by the attorneys general of Arizona, California, Colorado, Connecticut, Delaware, the District of Columbia, Hawaii, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, New York, North Carolina, Oregon, Rhode Island, Vermont, Virginia, Washington and Wisconsin, as well as the governors of Kentucky and Pennsylvania.

A long form update on the Medicaid work requirement conflict from Politico:

https://www.politico.com/news/2026/07/28/trump-dems-court-battle-over-medicaid-work-requirements-01013114

Trump and Democratic states clash in court over who’s too sick to work
Medicaid eligibility will soon hinge on how the government defines “medical frailty.”
By Alice Miranda Ollstein and Robert King - July 28, 2026

Democratic attorneys general and the Justice Department are facing off for the first time in court Tuesday over the fine line between being sick and being “medically frail,” a distinction that could cost Medicaid recipients their health benefits.

At stake is a key part of a new Trump administration rule imposing work requirements on Medicaid, the state-federal health insurer for low-income people, starting in January. How a Boston judge comes down will determine who in Medicaid’s expansion population — typically low-income people without young children — must work, volunteer or go to school for 80 hours a month to keep their benefits.

Republicans in last year’s One Big Beautiful Bill Act set those work requirements, they said, as a way of ensuring the program remains on firm financial ground so it can serve low-income people who really need it. Democrats in Congress argued the work requirements would leave deserving people without health insurance in order to fund tax cuts for the rich. The debate is playing out in midterm campaigns, foreshadowing what figures to be a much larger fight in the 2028 presidential year, when the new rules will be in full effect.

The administration declared in an interim final rule released last month that a diagnosis, even for a disease as grave as cancer, isn’t enough to claim an exemption from the 80-hour requirement, unless beneficiaries submit additional proof that they physically can’t work. Democratic attorneys general from 25 states and Washington, D.C. plan to argue the rule is both too strict, in not offering blanket exemptions to people with certain diseases, and too vague, in failing to guide states on how to determine who is too sick to work — and will ask the judge to block the stricter medical frailty policy.

“This is one of those cases where it’s really hard to overstate how dire the consequences could be,” said North Carolina’s Democratic attorney general, Jeff Jackson, who has joined the lawsuit with other Democratic state officials challenging the policy. “You’re going to have 50 states doing 50 different things, and we’re all going to have to create a whole new bureaucracy. …You are talking about a lot more paperwork, more evaluations, more doctor visits, and a lot more work for doctors themselves.”

Imposing work requirements on the millions of Americans insured through Obamacare’s Medicaid expansion was one of the driving forces behind the One Big Beautiful Bill Act Republicans enacted in 2025 — predicted to save the federal government $385 billion over the next decade by reducing the number of people enrolled by roughly 5 million.

Before expansion, Medicaid primarily covered low-income single parents (mostly women), children, elderly people and people with disabilities. Expansion opened eligibility to anyone with household income below 138 percent of the poverty level — a new population of adults that many Republicans think should get their health insurance through a job rather than the government.

Most non-disabled adults on the Medicaid expansion are already working, according to an analysis of 2023 Medicaid data by the health research organization KFF. The remainder didn’t work for a variety of reasons, including 12 percent who were caregiving, 10 percent enrolled in school and 8 percent who were retired or unable to find work.

Republican state officials have largely embraced the new work requirements, with Nebraska and Montana moving ahead with implementation of the rules months before the Jan. 1, 2027 date Congress mandated.

The Trump administration is allowing people to self-attest that they are too medically frail to work for the first year of the program, and will only require proof beginning in 2028. What kind of proof, however, is an open question.

States are currently in talks with the federal health department about which methods of verifying a person’s medical condition will count under the new policy — whether, for instance, patients will need to get a doctor’s note testifying that their condition prevents them from working part-time, or whether the state can cobble together a formula from existing data sources to exempt patients who have a certain number of medical visits or drug prescriptions per year.

“We have states that have sent us their approach that we’ve sort of looked through. We want to make sure it aligns,” Caprice Knapp, the principal deputy director of the Center for Medicaid, said on a recent episode of the podcast for the nonprofit Center for Accountability, Modernization, and Innovation. “For folks who are already in the Medicaid system, where I have claims because I’ve gone to the doctor, maybe I have case notes from case management. There’s data that we have.”

The Centers for Medicare and Medicaid Services, the federal agency that includes the Center for Medicaid, declined to respond to a list of questions about its work with states to implement the rule, citing the ongoing litigation.

As states wait for the Trump administration to answer their questions on how to enforce the policy, doctors say they’re being inundated with questions they can’t answer from Medicaid patients who are scared of losing their insurance. They worry those queries will skyrocket next month when states are required to start reaching out to impacted beneficiaries to inform them about the incoming work requirements.

“They need to give us some very specific guidance,” said Barbara McAneny, an oncologist and CEO of an oncology practice in New Mexico who sees Medicaid patients. “If you have skin cancer are you medically fragile? And if you are a cancer survivor, you aren’t [in active treatment], but may have a disability from the treatment to cure you.”

McAneny said even though the rules don’t take effect in her state until January her staff has spent a lot of extra time helping patients figure out whether the rules apply to them and what they need to do to maintain coverage.

“There is going to be a lot of denials and fighting back,” she said. “It’s an unfunded, administrative burden.”

Marvin Figueroa, health secretary to Virginia’s Democratic governor, Abigail Spanberger, said in an interview that his team has been stuck on several aspects of implementation as they wait for more guidance and clarity from the Trump administration on what data sources they’ll be allowed to use to determine whether a person is sick enough to get an exemption. The goal, he said, is to make it as automatic as possible so that patients and doctors don’t have to slog through additional paperwork.

“We have about 11 different system upgrades that we need to make based on the information that we get from them on these definitional questions,” he said. “But even having that information and having a better understanding of the scope of what it entails doesn’t necessarily mean that we can just flip that switch. You can have the data systems and the infrastructure that is right, but then you also have to train people to be able to implement this new guidance.”

Should the Democratic attorneys general win a court injunction against the stricter medical frailty rule, Figueroa said it would provide “an opportunity for us to have more time to be able to work with CMS to be able to implement this in a way that is the least impactful for those people that may lose their coverage.”

‘Flying blind’

The Trump administration argued ahead of Tuesday’s court hearing that granting an exemption to the work requirement on the basis of a diagnosis alone would give too many people a pass who are physically capable of working, studying or volunteering.

Without stricter rules, they wrote in their legal brief, “many of the exclusions are broad and ambiguous. For example, does a person with a tobacco use disorder qualify as ‘medically frail’ because he has a ‘substance use disorder,’ even if he has no functional limitations whatsoever? Do asthmatics and diabetics have a ‘serious’ or ‘complex’ disorder if they are not functionally limited?”

In her agency’s podcast, Knapp also defended CMS’ decision to make every state come up with its own list of diagnoses that qualify someone for a medical frailty exemption. Nebraska, which began enforcing the rules earlier than Congress required, in May, created a 300-page list.

“Would it have been great if we could have produced a whole list for them? Sure, that would have taken us a lot longer than the deadline for putting out the [final rule],” Knapp said, referring to the law’s June 1 deadline to publish the rule.

CMS told POLITICO in June that the rule doesn’t make doctors responsible for determining if an individual must meet the work requirement, saying that responsibility lies with the state.

But Democratic state officials party to the lawsuit say they remain confused about how to make that call based on the data they can access, such as Medicaid insurance claims.

“Medical claims are able to tell you that someone received treatment. They don’t necessarily tell you whether that person is capable of working,” Figueroa said. “There’s a whole other set of policies and processes that you need to put in place to be able to make that determination.”

Meanwhile, groups that work with Medicaid patients worry that even with the ability to self-attest to medical frailty, poor communication from state and federal officials will mean many become uninsured.

“People just truly don’t know that that’s an option or how to go about that process,” said Sarah Maresh, the program director for health care access at Nebraska Appleseed, an advocacy group for low-income people.

Groups like Nebraska Appleseed and individual doctors are scrambling to create educational materials to make sure their patients understand what they need to do and when to avoid being booted from the rolls.

“I don’t want people to fall through the cracks,” said Kathy Oubre, CEO of the Pontchartrain Cancer Center in Louisiana.

One challenge, she and other physicians said, is figuring out which patients to educate. Some states, including Louisiana, do not give patients or providers information on whether someone gets their insurance through the expansion provided under Obamacare or qualified under the Medicaid eligibility rules that preceded the expansion: low-income parents, children, people with disabilities and seniors.

“We are completely flying blind,” said Oubre, who added her clinic is reaching out to all Medicaid patients to be safe.

‘A bad sign’

As they wait to hear whether the district court in Boston will halt enforcement of the medical frailty provision of the law, doctors and health officials around the country are closely watching Nebraska — which opted to start enforcing the rules in May and will begin dropping people from Medicaid at the end of July if they fail to prove compliance — for signs of the challenges they are likely to encounter next year.

Health care workers and patient advocates say the state’s rollout has been marked by mass confusion and a lack of transparency. State health officials, who previously held monthly meetings with patient and provider groups, have canceled all scheduled sessions since the May start date. Patients calling the health department with questions about their eligibility are facing wait times over an hour. Some have been told incorrect information by caseworkers. And pleas from hospital and physician groups for the state to publicly share data — on how many new Medicaid applicants are being denied because of the rules, how many have been approved, how many have been granted an exception for medical frailty or another reason — have been met with silence.

“We still have a fairly long list of questions that we don’t have answers to yet,” said Amy Behnke, the CEO of the Health Center Association of Nebraska, which oversees community health centers around the state that serve Medicaid enrollees and other low-income people.

“We don’t have good clarity on what level of [substance use disorder] treatment qualifies someone for an exemption,” she said. “If somebody is in a weekly outpatient treatment, does that count? Do they have to be fully inpatient? We don’t know. Similarly with the ‘temporary hardship’ exemption for people who have to travel outside of their community for care. Does somebody have to travel 100 miles? Do they have to cross state lines? At some of our rural health centers, we have patients who will drive two hours for health care. Does that count?”

Nebraska’s health department did not respond to questions about its outreach and implementation work.

Some experts see the state’s struggles as a cautionary tale for the rules’ upcoming national implementation.

“States are trying to figure out how to combine data sources — such as diagnoses and visits to the doctor or hospital — to identify who’s significantly impaired. That’s hard enough on its own. Doing it while building the operational capacity to act on it, on this timeline, is extremely challenging,” said Hannah Katch, a former senior adviser for the federal Centers for Medicare and Medicaid Services under President Joe Biden and a former leader of California’s Medicaid program.

“And if the first state out of the gate is struggling, that’s a bad sign for what happens when far more people start losing coverage in the months ahead.”