Issues over new work rules for Medicaid recipients

Katheryn Houghton, Bram Sable-Smith, Tribune News Service

When President Donald Trump signed a law adding work requirements for some Medicaid recipients, he may have undercut lawmakers in at least 14 states who were designing their own plans, according to health industry observers.

Georgia is the only state with a work requirement in place for Medicaid, but several states have been pursuing such a policy for years, only to be blocked by courts or, most recently, the Biden administration. Some seek state-specific touches to the new rules. Others aim to implement work requirements before the federal law takes effect at the end of 2026. These states’ moves and Trump’s massive tax-and-spending law share one demand: To keep their Medicaid health coverage, adults who can work must prove they’re logging a minimum number of hours at a job or school, or else qualify for one of the few exemptions. But now, states that jumped ahead need to ensure their proposals, which require federal approval, don’t stray too far from Trump’s law.

“The statute sets both the floor and ceiling” for work requirements, said Sara Rosenbaum, a health law and policy professor with George Washington University. South Dakota, for example, announced in July that it would not submit an application for work requirements as previously planned amid concerns that the state’s laxer rules would not be allowed under the new federal law. The state’s Department of Social Services secretary had warned that working on a state proposal while the federal rules are being hashed out could be “an exercise in futility.” Arkansas’ plan, on the other hand, is more stringent than the federal law. There are no exemptions to its work requirements in the application, which is pending with the Centers for Medicare & Medicaid Services. Arizona’s proposal also includes something that’s not in the federal law: a ban on “able-bodied adults” receiving Medicaid benefits for longer than five years total in their lives.

Arkansas and Arizona government officials said they were working with federal officials to square their plans with the new standards. Andrew Nixon, a spokesperson for the US Department of Health and Human Services, said the department is analysing how the new federal standards interact with state waivers. The federal health department must release rules by next June that outline how states are to implement work requirements, according to Elizabeth Hinton, who has been tracking such waivers as part of the Program on Medicaid and the Uninsured at KFF, a health information nonprofit that includes KFF Health News.

“We don’t exactly know what that will cover,” Hinton said. It’s unclear how federal officials will respond to the states’ requests, she added, but “we are aware that some folks think there is no wiggle room here.” States can tweak their Medicaid programs through what are known as demonstration waivers, which are subject to federal approval. The waivers are designed to test new ideas in policy gray areas. The states that have filed or plan to file such applications with work requirements include Arizona, Arkansas, Georgia, Idaho, Indiana, Iowa, Kentucky, Montana, New Hampshire, North Carolina, Ohio, South Carolina, South Dakota, and Utah. Congressional Republicans who passed the budget reconciliation bill left room for states to use waivers to fast-track the national standards. Tara Sklar, a professor leading the University of Arizona’s Health Law & Policy Program, said she expects states seeking certain stricter requirements to have a chance of approval, while more lenient ones may face denials.

Federal officials may look favorably on Arizona’s plan, Sklar said, as a five-year lifetime Medicaid limit is different from work requirements. Even if the federal government greenlights stricter work requirements than the federal law calls for, those programs are likely to face legal challenges, she added. The federal law includes an 80-hour-per-month minimum for work or education, with exemptions for certain adults, including people who are medically frail and parents with young, dependent children.

Montana is the first state to draft a waiver application since Congress finalised national work requirements. State lawmakers first approved work requirements — called “community engagement” standards under the state plan — in 2019, but the state’s application stalled through the end of the first Trump term and the Biden administration. After Trump was elected again, Montana lawmakers lifted the 2025 expiration date of its Medicaid expansion program, making permanent the program that covered more than 76,000 adults in April, with the expectation that the Trump administration would approve work requirements. In mid-July, state officials released their draft plan to make that a reality “as soon as is practicable.”

The Montana plan largely aligns with the federal law, but it would create additional exemptions, including for people who are homeless or fleeing domestic violence. Republican state Sen. Gayle Lammers said work requirements that also protect such people who need Medicaid were a big part of persuading legislators to keep the expansion program. At the time, officials didn’t know where the federal government would land on work requirements. And now, Lammers said, it makes sense for Montana to stick to its plan. “The state should have a say,” Lammers said. “We’re very independent, and everyone is different.” In South Carolina, state officials are seeking to roll out work requirements for a limited number of newly eligible Medicaid beneficiaries. South Carolina is one of 10 states that has not expanded Medicaid eligibility under the Affordable Care Act, and yet the state submitted a request with the federal government in June for a partial Medicaid expansion that includes a work requirement component that largely reflects the new federal standards. In a letter to Health and Human Services Secretary Robert F. Kennedy Jr., South Carolina Gov. Henry McMaster, a Republican, called South Carolina’s proposal “a state-specific solution.”

The only state with an active work requirement program now wants to scale it back and awaits federal approval to do so. “Georgia Pathways to Coverage” expires at the end of September unless CMS greenlights an extension of the program with a key change: requiring enrollees to document once a year that they’re working, not monthly. That’s a pivot away from the program’s initial design but also differs from the new federal rules, which call for checks every six months.

Fiona Roberts, a spokesperson for Georgia’s Medicaid agency, said the state is still waiting to hear whether it needs to alter its plan. So Georgia is among the states in limbo, awaiting guidance from the federal government.