New federal guidance outlines which Medicaid beneficiaries will be exempt from upcoming work requirements under President Donald Trump’s tax and spending law. The policy is expected to affect millions of adults enrolled through Medicaid expansion programs across the United States.
The guidance, released Monday by the Centers for Medicare & Medicaid Services (CMS), clarifies how states should implement the new requirements before they take effect on January 1, 2027. Federal officials say the rules are intended to encourage employment and preserve resources for vulnerable populations, while critics warn that administrative burdens could lead to significant coverage losses.
The work requirement was established through the One Big Beautiful Bill Act, which requires many Medicaid beneficiaries between the ages of 19 and 64 to work, attend school, volunteer, or participate in job training activities for at least 80 hours per month to maintain coverage.
New Guidance Identifies Exempt Groups and Verification Standards
According to CMS, several categories of Medicaid beneficiaries will be exempt from the work requirements. These include pregnant women, parents of young children, caregivers of disabled relatives, veterans with disabilities, people recently hospitalized, and individuals considered “medically frail.”
The guidance states that medically frail individuals may qualify for exemptions if they have conditions that significantly limit their ability to work. According to The New York Times, the final rule specifies that a medical condition must “significantly impair” a person’s ability to meet the work requirement, a standard that narrows interpretations of the exemption previously discussed by some experts.
Federal officials cited examples such as HIV/AIDS, cancer, and end-stage renal disease, noting that these diagnoses alone would not automatically qualify someone for an exemption unless they substantially limit the individual’s ability to work or volunteer.
States will have discretion in determining which medical conditions qualify under the medically frail category. Nebraska, which began enforcing Medicaid work requirements this year, developed a list of qualifying conditions spanning nearly 300 pages of medical codes and technical definitions.
During 2027, beneficiaries claiming exemptions will be allowed to self-attest on Medicaid applications and renewal forms without providing supporting documentation. Beginning in 2028, states will be expected to verify exemptions through claims data and other records. “We’re forgiving, but we’re not foolish,” CMS Administrator Mehmet Oz said during a briefing with reporters.
Debate Continues Over Coverage Losses and Program Goals
The administration argues that the policy will increase workforce participation and reduce dependence on government programs. According to reports, Oz said the initiative is intended to support able-bodied individuals on a path toward employment and employer-sponsored health coverage.
Federal officials also pointed to research from the National Bureau of Economic Research indicating that Americans are working fewer hours than in previous decades. They argued that government benefits can reduce incentives to seek employment.
Critics, meanwhile, continue to raise concerns about the impact of reporting requirements. According to KFF, a nonpartisan health policy research organization, approximately 5 million people could lose Medicaid coverage by 2034, largely because of paperwork requirements and administrative barriers rather than employment status itself.
Larry Levitt, KFF’s executive vice president for health policy, said allowing self-declaration of exemptions during the first year could reduce the number of eligible beneficiaries who lose coverage unnecessarily.
The Congressional Budget Office has similarly estimated that nearly 5 million people could lose Medicaid coverage over the next decade as a result of the work requirement provisions.
The administration’s guidance arrives as states prepare to build eligibility systems, establish verification procedures, and implement reporting mechanisms before the federal deadline. The policy will apply to the 42 states and the District of Columbia that expanded Medicaid coverage under the Affordable Care Act.