The Disability Gap in Medicaid: Implications for the Federal Work Requirement Proposal

Jun, 20, 2025

The Disability Gap in Medicaid: Implications for the Federal Work Requirement Proposal

Emily Zylla and Elizabeth Lukanen, SHADAC

Medicaid plays a critical role in providing health coverage to millions of people with disabilities across the country. However, our analysis described below shows that more than two-thirds of Medicaid enrollees who self-identify as having a disability are not enrolled through the program’s disability eligibility pathway (Figure 1).

Figure 1. Gap Between Medicaid Enrollees Reporting a Disability and Qualifying Based on a Disability Determination

Note: The ACS identifies individuals as having a disability if they report difficulty in any of six core areas of functioning: hearing, vision, memory or cognitive, mobility, motility, and self-care and independent living.

Sources: SHADAC analysis of the 2023 American Community Survey (ACS) Public Use Microdata Sample (PUMS) file; Medicaid and CHIP Payment and Access Commission (MACPAC) MACStats: Medicaid and CHIP Data Book (2024)

The disconnect between how enrollees experience disability and how it is formally defined within Medicaid is especially relevant as Congress continues to advance the mandatory federal work requirement proposal for the adult expansion population in the federal budget reconciliation bill. Although this proposal includes an exemption for people with disabilities, it relies on the narrow Supplemental Security Income (SSI) definition of disability, which excludes many Medicaid enrollees who self-report having a disability.

While further research and analysis is needed to accurately estimate the prevalence of self-reported disability within the adult Medicaid expansion population, understanding self-reported disability prevalence across the broader Medicaid population can help inform how the work requirement proposal might affect individuals who report having a disability but are not formally recognized as such.

Understanding Disability in Medicaid

To qualify for Medicaid through a disability-related eligibility pathway, most individuals must meet the strict definition of disability used by the Supplemental Security Income (SSI) program. SSI eligibility requires applicants to have low income and limited assets, and demonstrate a significantly impaired ability to work due to age or qualifying disability. This narrow, work-focused definition excludes many individuals with serious health needs who may not meet the formal SSI criteria. In 2023, only 10.1% of Medicaid enrollees (roughly 9.5 million people) qualified for Medicaid through a disability-related pathway.

There are several reasons why an individual with a self-reported disability might not be enrolled through a disability eligibility pathway. Many individuals with disabilities who qualify for Medicaid through other eligibility pathways [such as the Medicaid expansion (or new adult) group, low-income children, or parents] do not pursue a formal SSI disability determination. These alternative pathways typically require less documentation and are easier to access compared to a disability-related pathway. In addition, the long wait times for SSI disability determinations, which are often months- or even years-long, further discourage individuals from applying. These delays are only expected to worsen due to ongoing and anticipated reductions in the federal workforce responsible for processing disability claims.

When individuals are asked to self-report a disability, however, the data reveal that Medicaid enrollees report functional limitations at much higher rates than those formally enrolled through a disability eligibility category. According to an analysis of 2023 American Community Survey (ACS) data conducted by the State Health Access Data Assistance Center (SHADAC), 33.9% of Medicaid enrollees nationally self-identify as having a disability, which is roughly double the overall national rate of 16.9%. Although self-reported disability prevalence varies across states, the SHADAC analysis shows it does not fall below 25% in any state. (State-level data by any disability and by type of functional limitation can be found in Appendix A and Appendix B, respectively). This gap (see Figure 1 above) between rates of self-reported disability and SSI-based Medicaid eligibility highlights a critical definitional disconnect while also underscoring the challenges of accurately identifying individuals with disabilities within the Medicaid program.

Budget Reconciliation Bill Proposal: Federal Medicaid Work Requirement

The House-passed “One Big Beautiful Bill Act” and the Senate Finance Committee draft legislative text both introduce a federal work requirement proposal that applies to the adult expansion population. This could significantly impact individuals with disabilities, including those not formally recognized under the SSI program, and those who are enrolled through Medicaid expansion or a section 1115 demonstration providing minimum essential coverage (MEC). The federal work requirement proposal in the House bill and Senate language would require states to implement work requirements for able-bodied adults ages 19 through 64 without dependents enrolled in Medicaid.

Both the House bill and Senate language specify several required exemptions, including for those individuals who are “medically frail or otherwise [have] special medical needs (as defined by the Secretary),” which includes individuals:

Who are blind or disabled (as defined in section 1614 of the Social Security Act)

With a substance-use disorder

With a disabling mental disorder

With a physical, intellectual, or developmental disability that significantly impairs their ability to perform one or more activities of daily living

With a serious or complex medical condition

While the proposal includes exemptions for people with disabilities in the adult expansion population, it is based on the strict SSI definition, which, as discussed above, will not capture all individuals in Medicaid who self-report having a disability. In addition, the proposal does not define what qualifies as a “serious or complex medical condition” or offer guidance on how to assess limitations in daily functioning. Nor does the proposal allow for states to suggest additional exemptions to Centers for Medicare & Medicaid Services (CMS) or to determine the appropriate duration of exemptions.

Each of these factors present major challenges for states as they try to implement these exemptions. For example, prior SHDADAC research shows that most state Medicaid programs are not currently collecting self-reported disability information at enrollment. Because this information is not already captured, enrollees with self-reported disabilities (but without official SSI-based disability eligibility) subject to the work requirement who believe they qualify for an exemption will most likely have to actively request one themselves, and provide documentation (if automated data-matching is insufficient and if the final bill does not allow for self-attestation).

The exemption process can pose substantial barriers for those having to submit complex paperwork or who face reluctance from providers to complete required forms. For example, during New Hampshire’s 2019 implementation of its Medicaid work requirement, the Granite Advantage Health Care Program, the state received only 1,951 exemption requests based on medical frailty—far fewer than expected given that more than 10,700 individuals had previously self-attested to that status. This gap highlights the significant administrative barriers that may prevent eligible individuals with self-reported disabilities from securing exemptions under Medicaid work requirements.

The effectiveness of using data-matching processes to grant Medicaid work requirement exemptions for people with self-reported disabilities in the adult expansion population appears limited. Both Arkansas and New Hampshire attempted to automatically exempt either disabled or medically frail individuals, respectively, based on information in existing state databases. However, researchers were unable to determine which data sources the states relied on, making it unclear whether these efforts effectively identified individuals with self-reported disabilities. This suggests that even well-intentioned efforts to exempt those with a self- reported disability from Medicaid work requirements might be challenged by definitional issues, incomplete data, and imprecise data-matching processes.

Conclusion

As policymakers consider a federal work requirement proposal for the adult expansion population, it is essential to acknowledge the disconnect between how disability is formally defined for eligibility purposes and how it is actually experienced by individuals.

Although the House Budget Bill purports to exempt Medicaid expansion enrollees with disabilities, its reliance on the narrow, SSI-based definition of disability fails to reflect the broader spectrum of self-reported functional limitations present in the Medicaid population. National data show that nearly two-thirds of Medicaid enrollees with self-reported disabilities do not qualify through the strict SSI pathway. Although the precise impact of this gap within the expansion population remains unclear, the evidence from the broader Medicaid population suggests that many individuals with self-reported disabilities could face heightened risks, either of losing coverage or being subjected to the administrative burden of having to navigate complex exemption processes.