Aug, 15, 2025

Medicaid Work Reporting Requirements: Implementation Basics and State Decision Points

Dan Meuse, State Health and Value Strategies

The enactment of H.R.1 establishes mandatory work reporting requirements for certain Medicaid enrollees, marking the first federal mandate making Medicaid eligibility conditional on work or other qualifying activities in the program’s history. Beginning January 1, 2027, states must implement these requirements for “applicable individuals” ages 19 through 64 who are enrolled in Medicaid expansion or equivalent coverage. This expert perspective provides state Medicaid officials with essential implementation details, identifies affected populations, outlines compliance pathways, and provides information on state choices for implementing work requirements.

Background and Legislative Framework

Section 71119 of H.R.1 amends the Social Security Act to require states to establish “community engagement” requirements as a condition of Medicaid eligibility for specific populations. Unlike previous state waiver demonstrations, this represents a federal statutory mandate that cannot be waived under section 1115 authority. The legislation provides states with modest implementation flexibility while establishing uniform federal standards for compliance verification and exemption categories.

Understanding the Framework of the Work Reporting Requirement Mandate

H.R.1 creates a structure for the implementation of work requirements that includes both mandatory guidelines, as well as optional policies for states. To help state officials parse the complexities of the new policy, this expert perspective will breakdown: which populations are subject to and exempt from work requirements; what activities meet the mandatory compliance requirements; what policy choices states will need to consider; and what the timeline is for implementation. There is one clear element of work requirements where states do not have flexibility – there is no option to waive work requirements mandates.

Affected Populations

Work requirements will apply to individuals who are eligible under Medicaid expansion or a section 1115 demonstration providing minimum essential coverage (MEC). Generally, this population includes adults that qualify for Medicaid only because of their income being at or below 138% of the federal poverty level. In addition to the 40 states and the District of Columbia that have chosen to expand Medicaid, states such as Georgia and Wisconsin that utilize Section 1115 waiver authority to provide Medicaid coverage to adults above mandatory eligibility levels will be required to comply with the new requirements. States will need to review their approved waivers to identify populations that may be covered through waivers that are equivalent to “minimum essential coverage.”

Mandatory Exceptions (Other than Specified Excluded Individuals)

H.R.1 also specifies which enrollees covered under Medicaid expansion are mandatorily exempted from work requirements (other than specified excluded individuals, discussed later):

  • Individuals under age 19
  • Pregnant individuals entitled to or enrolled in Medicare Part A or B benefits
  • Foster youth
  • Individuals enrolled in the Parents and Other Caretaker Relatives eligibility group
  • Individuals eligible for a mandatory eligibility group (e.g., non-MAGI individuals)
  • Individuals recently incarcerated in the previous three months

Specified Excluded Individuals

As described above, H.R.1 provides that “specifically excluded individuals” are not subject to work requirements. Essentially, this creates a set of exemptions from work requirements. The following populations are exempt from work requirements:

  • American Indians, Alaska Natives, and California Indians
  • Parents, guardians, or caregivers[1] of dependent children 13 years or younger or disabled individuals
  • Veterans with total disability ratings[2]
  • Former foster care youth under age 26
  • Medically frail individuals or those with special medical needs [as defined by the Secretary of the United States Department of Health and Human Services (HHS)], including:
    • Blind or disabled individuals[3]
    • Individuals with a substance-use disorder
    • Individuals with a disabling mental disorder
    • Individuals with a physical, intellectual, or developmental disability that significantly impairs their ability to perform one or more activities of daily living
    • Those with serious or complex medical conditions
  • Individuals complying with Temporary Assistance for Needy Families (TANF) work requirements
  • Members of a household that is in receipt of Supplemental Nutrition Assistance Program (SNAP) and not exempt from SNAP work requirements
  • Individuals participating in a drug addiction or alcohol treatment and rehabilitation program[4]
  • Inmates of public institutions
  • Pregnant individuals or those receiving postpartum coverage[5]

Short-Term Hardship Exemptions (Optional Exemptions)

In addition to the mandatory exemptions, states are allowed, at their discretion, to offer other exemptions from work reporting requirements for a given month, if at any point during that month, they experience a “hardship exemption” from a defined list. These exemptions include:

  • Inpatient care – If, during a month when a person would have been required to meet the work requirement, the person received inpatient care at a hospital, nursing facility, or intermediate care facility for individuals with intellectual disabilities, inpatient psychiatric hospital services or such other services of similar acuity (including outpatient care relating to other specified services), then upon request of the individual, a state can consider the work requirement as being met for that month.
  • Emergency declaration – If a person lives in a county or local jurisdiction where, during the month that they were subject to the work requirement, there was an emergency or disaster declared by the President, then the state can consider the work requirement as being met for that month.
  • Unemployment rate – If a person lives in a county or local jurisdiction that has an unemployment rate of 8% or 1.5 times the national unemployment rate (whichever is lower) during a month that they were subject to the work requirement, then the state can consider the work requirement as being met for that month.
  • Travel for care – If, during a month when a person would have been required to meet the work requirement, the person or their dependent must travel outside of their community for an extended period of time to receive medical services to treat a serious or complex medical condition, then upon request of the individual, a state can consider the work requirement as being met for that month.

Work or Other Activity Requirements

Once a state determines that an applicant or enrollee is subject to work requirements, H.R.1 provides a list of activities that would satisfy the work requirement, including:

  • Employment – The individual would need to work not less than 80 hours in a month.
  • Community service – The individual would need to complete not less than 80 hours of community service in a month.
  • Work program participation – The individual would need to participate in a work program for not less than 80 hours in a month. Any program that qualifies as a SNAP work program will meet the qualifications for a Medicaid work program.
  • Enrollment in an educational program – The individual would need to be enrolled as least half-time in an educational program, defined as an institution of higher education or a career or technical education program.
  • Any combination of these activities totaling at least 80 hours.

 

Alternatively, the work requirement mandate could be satisfied if an individual has:

  • A monthly income equivalent to at least 80 hours at federal minimum wage (an income of $580 per month).
  • Average monthly income over six months equivalent to 80 hours at federal minimum wage and is a seasonal worker.

When and How Affected Individuals Need to Comply With Work Requirements

States must verify compliance with work requirements at both the initial application and at a six-month redetermination for continued coverage. For initial applications states must review work requirements compliance, at a minimum, for at least one month prior to the month of application, though states can choose to review up to three consecutive months preceding the month of application.

For active enrollees, however, the requirements to demonstrate compliance can be much more complex. At a minimum, a state must verify compliance with work requirements at the time of redetermination for one of the months between the last determination and the current redetermination. That one month does not need to be the month immediately preceding the redetermination. States can, at their option, require compliance for more than one month, including all months since the last verification. Additionally, states can, at their option, require more frequent verifications for compliance with the work requirement (e.g., monthly).

H.R.1 requires states to use automatic verification (known as ex parte verification) to the maximum extent possible. For example, states should be using reliable information available to the state such as payroll data to determine if a person meets the work requirement or claims or encounter data to determine if a person meets one of the exemptions. The goal is to determine if a person is complying with the requirements or is exempt from the requirements without the person submitting additional information to the state. The law does allow the Secretary of HHS to establish “standards” for the use of ex parte verification.

What Happens if a State Cannot Verify Compliance With Work Requirements

Given the automatic (ex parte) verification requirements, states must attempt to verify that an individual either meets the work requirement or qualifies for an exemption without the individual taking any action. However, there will be a group of people that will not be able to be automatically verified for compliance.

For these enrollees or applicants, the state will need to provide notice to the individual that they have 30 days to “make a satisfactory showing” to the state that they complied with work requirements or that they are eligible for an exemption. If an individual does not make that “satisfactory showing” in the 30-day timeframe, the state will need to determine if there are any other bases for eligibility for Medicaid or other insurance affordability plans. If not, the application will be denied or the enrollee will be disenrolled and the individual will be informed of their right to a fair hearing.

Those persons who are disenrolled or denied Medicaid coverage because of failure to meet the work requirement are barred from receiving subsidized Marketplace coverage. However, if the individual’s income was the disqualifying factor for Medicaid coverage, they may still be eligible for Marketplace coverage.

Outreach Requirements to all Potentially Affected Enrollees

H.R.1 sets out standards for states to conduct outreach to enrollees to inform them of the new requirements. Three months before a state’s work requirements go into effect, a state must notify all potentially affected enrollees of the new requirements, how to verify compliance, what exemptions are available, and how to verify an exemption. This notice must be sent via mail (or through electronic format, if elected by the individual) and through at least one other modality such as telephone, e-mail, text messages, or website postings.

Understanding State Decision Points and Unknowns

As described above, states can make a number of choices in the implementation of work requirements that will lead to differences in the number of individuals excluded from coverage. For each of these choices, summarized below, states will need to examine how different decisions will impact continued access to care, increased complexity for enrollees, staff and systems, costs to operate, and the ability to implement within the required timeframes.

  • When to begin enforcing work requirements – States must begin enforcing work requirements no later than January 1, 2027. However, whether through a waiver or a state plan amendment, a state could choose to begin enforcing the work requirements earlier.
  • Work requirements application look-back – For a new application, states must look at the month preceding the month in which the application was filed. However, states can choose to look back up to three consecutive months preceding the month in which the application is filed.
  • Frequency of work requirements compliance checks – States are mandated to review for work requirements compliance at initial application and at regularly scheduled redeterminations. States can choose to check for compliance more frequently.
  • Renewal compliance look-back – For a Medicaid renewal, states can verify compliance using any single month during the period between the last verification. However, states can choose to add additional months for required verification.
  • Optional exemptions – States have the option to use any or all of the Short-Term Hardship Exemptions.

 

There are also state choices that may be constrained by future guidance and regulation from the federal government. A number of elements in the work requirements section of H.R.1 provide the Secretary of HHS with the discretion to set standards. However, the law does not require the regulation to be promulgated until June 1, 2026, much later than the deadlines for states to commit to policy choices to build the systems for verifying compliance. States will be seeking earlier clarity on these points of federal standards-setting, which include, but are not limited to:

  • The standards and criteria for determining compliance with work requirements.
  • The procedure for a state to determine if an enrollee qualifies for a short-term hardship exemption.
  • The outpatient healthcare services that a person would need to receive to qualify for a short-term hardship exemption.
  • The manner in which a state would notify and request approval from the Secretary that a county or local jurisdiction has an unemployment rate over 8.5% or at least 1.5 times the national average unemployment rate.
  • The standards for the use of ex parte
  • The information required to be shared with an individual whose compliance cannot be determined using ex parte
  • The standard for being medically frail or having special healthcare needs to qualify for an automatic exemption.

 

The federal government was also granted the ability to, at the request of a state, postpone the implementation of work requirements if the state made a good faith effort to comply with the mandate but was unable to go live with its system.

Next Steps and Additional Resources

Given the complexity of the work requirement mandate and the need to procure and implement systems changes that impact Medicaid eligibility, the timeline for making policy decisions is extremely short. To support states, SHVS has released Medicaid Work Reporting Requirements: Implementation Planning Milestones.

One key step for states in the short term is engaging with Medicaid enrollees to understand their thoughts and questions about the new requirements. Given that states are now required to have Beneficiary Advisory Councils, there is an opportunity to work with enrollees immediately.

 

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[1] Defined in section 2 of the RAISE Family Caregivers Act

[2] Defined by the VA

[3] Defined in Section 1614 of the Social Security Act

[4] Defined in section 3(h) of the Food and Nutrition Act of 2008

[5] Listed under both mandatory exceptions and specified excluded individuals.