The Trump administration's rollout of a federal mandate requiring millions of Medicaid recipients to work or risk losing health benefits is forcing states to abandon months of preparation, according to advocates and consultants. The regulations, issued June 1 by the Centers for Medicare & Medicaid Services (CMS), dictate detailed requirements for how states must verify work participation and process exemptions.
Starting next year, President Donald Trump's One Big Beautiful Bill Act could require roughly 18.5 million adults across 42 states and the District of Columbia to prove they are working, in school, or performing community service to maintain coverage, unless they qualify for an exemption. The verification process will rely heavily on state computer systems, often built and operated by private contractors under contracts worth hundreds of millions of dollars, which have a history of errors that can cut off benefits for eligible individuals.
States had been communicating with federal regulators and rushing to upgrade their systems for months, said Kinda Serafi, a partner at Manatt Health. The new rules represent a "significant policy pivot" from what states expected, making a difficult situation worse.
States have already committed tens of millions of dollars to contractors for system adjustments. A key issue is the "medical frailty" exemption, which allows individuals to claim a health condition prevents them from working at least 80 hours per month.
To qualify, a person must fit into one of five categories: blind or disabled; have a substance use disorder; a disabling mental disorder; a physical, intellectual, or developmental disability that significantly impairs daily life; or a serious medical condition. States are not allowed to add categories.
Under the new regulations, having a medical condition alone is not sufficient. States must assess "the severity of an individual's condition" to determine eligibility, a standard that makes it harder for enrollees to qualify.
CMS officials did not list specific qualifying conditions but stated that homelessness cannot be used as a reason for exemption because it is not a medical condition. States will have to "undo work that they did," said Daniel Meuse of Princeton University's State Health and Value Strategies program.
The Trump administration acknowledged the cost of upgrading systems, and in January, CMS officials said contractors like Deloitte, Accenture, and Optum promised discounts through 2028. However, Heather Howard, director of the program, noted that discounts "may be helpful" in some states but are not a universal solution due to contract variations.
States had prepared lists of conditions and diseases to qualify people for exemptions, but verifying illness is challenging because Medicaid eligibility systems often do not communicate with medical claims systems. There is no standardized code for "too sick to work," making it a subjective assessment, said Rachel Klein of The Aids Institute.
The new standards pose immediate issues for Nebraska, which launched its work requirement on May 1, eight months before the federal deadline. Nebraska had released a nearly 300-page list of qualifying conditions, including cancer, dementia, autism, epilepsy, HIV, and Parkinson's disease, and did not require proof of severity.
Under the new rules, individuals must show their illness impedes their ability to work. Nebraska will now have to reassess all cases, and Medicaid enrollees could start losing coverage this summer under the state's early rollout.
Sarah Maresh of Nebraska Appleseed urged the state to delay terminations until next year, as residents are already confused and scared.
Starting in 2028, the new standards will limit self-attestation of medical frailty and require documentation, another unexpected change. More than two dozen states had planned to allow self-declaration.
CMS Administrator Mehmet Oz said the rules aim to balance flexibility, stating, "We're forgiving, but we're not foolish." Trump officials wrote that work requirements have the potential to empower beneficiaries by helping them escape isolation and dependency. Stephanie Burdick of Protect Medicaid Utah disputed this, arguing that true empowerment would come from job programs, not administrative burdens.
The nonpartisan Congressional Budget Office estimates that 3 million enrollees will become uninsured by 2034 due to the requirements, and Howard warned the new regulations could push that number even higher.