The Centers for Medicare & Medicaid Services (CMS) recently issued an Interim Final Rule with Comment (CMS-2454-IFC) implementing the Medicaid Community Engagement Requirement established under Public Law 119-21, referred to by CMS as the Working Families Tax Cut (WFTC) legislation. Beginning no later than Jan. 1, 2027, certain adults ages 19 through 64 will be required to complete at least 80 hours per month of qualifying activities, including employment, education, job training, or community service, as a condition of Medicaid eligibility.
While much of the public discussion surrounding Medicaid work requirements has focused on employment, the more significant operational questions may center on implementation, verification, and access to care. For healthcare organizations, the issue is less about whether beneficiaries should work and more about how states and providers will determine eligibility for work.
The rule applies to non-pregnant adults between the ages of 19 and 64 who are not entitled to Medicare and receive coverage through Medicaid expansion populations or certain Section 1115 demonstrations.
Individuals may satisfy the requirement through multiple pathways. In addition to qualifying activities, beneficiaries may demonstrate compliance through earnings equal to at least 80 times the federal minimum wage, which equates to approximately $580 per month in 2026. Activities may be combined to meet the monthly threshold. States are required to verify compliance with application and renewal. If compliance cannot be verified, states must provide notice and allow beneficiaries 30 calendar days to demonstrate compliance or establish that they qualify for an exemption before denying or terminating coverage. Failure to do so may result in disenrollment, although individuals may reapply at any time.
At initial application, states may require individuals to demonstrate compliance during one to three months preceding enrollment. At renewal, beneficiaries must show compliance for one or more months during the prior eligibility period. These lookback periods introduce an entirely new layer of eligibility complexity.
Who is Exempt?
Congress excluded several populations from the requirement, including pregnant and postpartum individuals, indigenous peoples, certain caregivers, individuals already satisfying Supplemental Nutrition Assistance Program (SNAP) or Temporary Assistance for Needy Families (TANF) requirements, and persons considered medically frail. States may also grant temporary hardship exceptions for individuals receiving inpatient hospital services, traveling for specialized medical care, residing in areas experiencing nationally declared disasters, or living in counties with high unemployment.
Who Determines Medical Frailty?
Perhaps the most important question raised by the rule is not who must work, but who determines when someone is unable to.
The Interim Final Rule requires states to use all available reliable information, including adjudicated claims and encounter data from the previous 12 months, before requesting additional information from beneficiaries. States must verify not only that a diagnosis exists, but that the condition significantly impairs the individual’s ability to comply with the community engagement requirement. Beginning Jan. 1, 2028, self-attestation for medical frailty may generally be used only once, when claims data are unavailable. Subsequent determinations may require additional documentation. This distinction is critical.
According to the ruling, possessing a diagnosis alone does not automatically establish medical frailty. The rule requires evidence that the condition meaningfully limits the person’s ability to meet the requirement. Consequently, physicians and other clinicians may increasingly be asked to certify not simply the presence of cancer, chronic pain, depression, substance use disorders, or cognitive impairment, but the functional consequences associated with those conditions. This would likely be similar to disability determinations and Family and Medical Leave Act (FMLA) certifications, wherein providers may find themselves completing forms, supplying medical records, and responding to requests from state agencies.
Healthcare organizations are already facing increasing administrative responsibilities; the addition of Medicaid work requirement exemptions introduces another layer of documentation and additional risk of administrative burnout.
Providers may be asked to certify medical frailty or functional limitations, verify temporary inability to work following hospitalization, respond to state requests for information, and/or participate in appeals processes when eligibility is denied. These responsibilities are unlikely to generate reimbursement and may disproportionately affect safety-net hospitals, rural providers, and organizations serving large Medicaid populations.
Access to Care Concerns
Although CMS has committed approximately $200 million in grants and announced more than $600 million in private-sector technology support to assist implementation, this is going to be a significant lift to operationalize. Perhaps the greatest concern associated with work requirements is not whether beneficiaries are employed, but whether otherwise eligible individuals may lose coverage because of administrative complexity.
Past experiences with Medicaid work requirements demonstrated that coverage losses often occurred because individuals could not navigate reporting requirements, not because they failed to satisfy them. Individuals with behavioral health conditions, unstable housing, low health literacy, transportation challenges, or limited access to technology may encounter difficulties complying with complex documentation requirements, even when they qualify for exemptions.
Coverage interruptions may result in delayed care, medication nonadherence, increased emergency department utilization, avoidable hospitalizations, and rising rates of uncompensated care for providers.
CMS views the Community Engagement Requirement as a pathway toward economic independence and poverty reduction. Whether these goals are achieved will depend not only on employment opportunities, but also on how effectively states and healthcare systems operationalize the requirements without creating unintended barriers to care.
