With the January 2027 deadline for implementing Medicaid work requirements looming, states are taking different approaches, with some being more restrictive than others, according to a new KFF analysis.
As part of the One Big Beautiful Bill Act (OBBBA), 43 states (including Washington D.C.) that have expanded Medicaid or participated in a partial expansion waiver program will have to implement Medicaid work requirements starting on January 1, 2027. States have some flexibility in how they do this, including by beginning work requirements earlier than required, taking more restrictive approaches and using different data sources to verify requirements or exemptions have been met.
According to KFF, states are all over the map in terms of how they're approaching implementation.
Variable approaches to work requirement enforcement
Foremost, the majority of states are waiting to begin work requirement enforcement on the January 1, 2027, start date, save for a few exceptions. Iowa, Montana and Nebraska said they will implement work requirements early. Meanwhile Arkansas said it will soft-launch the requirements, stressing it will not disenroll those who do not meet the requirements.
In terms of actual work requirement enforcement, most states are taking a more lenient approach.
For example, most states (34) said they will require members to verify that they have met work requirements only every six months. Indiana and New Hampshire will both require members to report quarterly.
Additionally, most states will only ask members for a one-month look-back on compliance, meaning members will only need to verify that they have met work requirements for one month prior to enrollment or an eligibility check. Indiana and Idaho will require a three-month look-back period.
Finally, most states plan to adopt all four hardship exemption options – living in an employment desert, living in an area that's experienced a natural disaster, being admitted to a hospital or nursing facility or needing to travel out-of-state to obtain care for themself or a dependent. Two states said they will not adopt any hardship exemptions, while three said they will adopt some exemptions, but not all four.
States tap different data sources for verification
Nearly every state said it will use new data sources to automate the work requirement verification process, including the National Student Clearinghouse, the VA Benefit Summary Letter and data from the state's Corrections Agency.
These sources will help verify certain exemptions to Medicaid work requirements, such as being a student, a veteran, or an individual recently released from incarceration.
Claims data will also be essential as states determine medical frailty, although the report noted that states are still awaiting an exact definition as states have different descriptions of what constitutes medical frailty. Lacking a standard definition could result in uneven access to exemptions.
Most states (32) plan to use claims data to verify medical frailty, while 1 will not and 10 are undecided. Some states said they'd allow self-attestation but are unsure whether this will be allowed under federal rules.
AI, health IT are important to streamline implementation
Most states agreed they'll need updates to their Medicaid software suites to support work requirement verification. Although most states said they will continue to work with their current vendors, six are considering innovations such as AI to help implement the requirements.
Indeed, the technological aspect of implementing Medicaid work requirements has presented a challenge, the data indicated.
Many vendors have new solutions to help facilitate the process, but procurement processes take time, and states said they've mostly worked within their existing vendor relationships to ensure they meet requirement deadlines. There are also concerns about adopting untested tools.
States are mixed on how they will optimize staff workflows, with 14 saying they plan to take action to increase staff capacity. However, 20 states are undecided in this area as they navigate new best practices to support agency staff.
States urge CMS to offer guidance
As states finalize their plans, they still need guidance from CMS, the report underscored.
In addition to more clarity defining medical frailty, states said they need guidance on what qualifies as community service, how to calculate half-time school attendance and what is considered a "significant relationship" to qualify for the caregiver exemption.
Guidance around acceptable verification methods -- particularly in terms of data sources and self-attestation -- will also be essential, states said.
Despite the need for clarity, states told KFF they have moved forward due to the tight turnaround time for the Medicaid work requirements.
"Participants acknowledged that there were risks to making systems changes based on working assumptions of policy before guidance has been finalized, and many said they were developing contingency plans for making adjustments if federal policies are different from what they expected," KFF said. "Participants also noted that making changes after starting development increases costs and time."
Sara Heath has reported news related to patient engagement and health equity since 2015.
