The Trump administration's rollout of a federal mandate requiring millions of Medicaid recipients to work or risk losing health coverage is forcing states to abandon months of preparation, according to advocates and consultants. The new regulations, issued June 1 by the Centers for Medicare & Medicaid Services (CMS), dictate detailed rules for verifying work activities and exemptions, creating significant challenges for states that had already begun building systems to comply with earlier expectations.
Under the One Big Beautiful Bill Act, signed into law last July, approximately 18.5 million adults across 42 states and the District of Columbia must prove they are working, volunteering, or attending school for at least 80 hours per month to maintain Medicaid coverage, unless they qualify for an exemption. The verification process relies heavily on state computer systems, often operated by private contractors under contracts worth hundreds of millions of dollars.
These systems have a history of errors that can cut off benefits to eligible individuals.
Kinda Serafi, a partner at Manatt Health, described the new rules as a "significant policy pivot" from what states were expecting. "The administration has actually taken what we know to be a tough situation and has just made it even worse," she said.
States had already committed tens of millions of dollars to adjust their systems, and now they must undo that work to comply with the new federal standards.
One of the most contentious aspects is the "medical frailty" exemption, which allows individuals to claim a health condition prevents them from working. To qualify, a person must fit into one of five categories: blindness or disability, substance use disorder, disabling mental disorder, physical or developmental disability, or a serious medical condition.
States cannot add categories. Under the new regulations, having a medical condition alone is insufficient; states must assess the severity of the condition to determine if it impedes the ability to work.
Homelessness, for example, does not qualify as a medical condition.
Daniel Meuse, deputy director of Princeton University's State Health and Value Strategies program, said states "will have to undo work that they did." The Trump administration acknowledged the cost of upgrading systems, and top CMS officials said contractors like Deloitte, Accenture, and Optum have offered discounts through 2028. However, Heather Howard, director of the program, noted these discounts "may be helpful" in some states but are "not going to be helpful across the board" due to variations in contracts.
Nebraska, which launched its work requirement on May 1, faces immediate issues. The state had released a nearly 300-page list of qualifying medical conditions, including cancer, dementia, autism, epilepsy, HIV, and Parkinson's disease, and did not require proof of severity.
Under the new rules, individuals must demonstrate their illness impedes work ability. Rachel Klein of The Aids Institute called this "a recipe for disaster." Sarah Maresh of Nebraska Appleseed urged the state to refrain from terminating coverage until next year due to the changes.
CMS Administrator Mehmet Oz defended the rules, saying the mantra was "we're forgiving, but we're not foolish." Trump officials argued the requirements have "the potential to empower Medicaid beneficiaries." However, Stephanie Burdick of Protect Medicaid Utah disputed this, saying job and volunteer programs would be more effective than adding administrative burdens.
The nonpartisan Congressional Budget Office estimates 3 million enrollees will become uninsured by 2034 due to the work requirements. Howard warned the new regulations could push that number even higher.