Regulatory NewsBREAK: CMS Issues Interim Final Rule on Medicaid Work Requirements

On June 1, 2026, the Centers for Medicare and Medicaid Services issued an interim final rule (IFR) with comment period to implement provisions in Public Law 119-21 (also known as “H.R. 1” or the "One Big Beautiful Bill Act").  

Beginning January 1, 2027, states must require that certain adults meet a work requirement to enroll in Medicaid or keep their Medicaid coverage on renewal. The work requirement applies to “applicable individuals” or non-pregnant adults between the ages of 19 and 64 who are not entitled to or enrolled in Medicare and are eligible for or enrolled in the Medicaid adult group or in certain section 1115 demonstrations that provide minimum essential coverage to adult beneficiaries. Among the issues this IFR addresses are the following:

• Medical frailty: H.R.1 includes an exemption from work requirements for individuals who are medically frail, defined as those who have a serious or complex condition, substance use disorder (SUD), disabling mental health condition, or a disability. The final rule adds important restrictions and requirements to this exemption, most notably by limiting the exemption to individuals whose disability or condition significantly impairs their ability to comply with the work and community engagement requirement. CMS requires states to develop a list of diseases, diagnoses, disorders, or other health conditions to identify individuals who will qualify for this exemption.
   
• Verification: As a general rule, states must first check data sources to verify information on individuals’ compliance with or exemption from work requirements. Where data are not available, the rule outlines requirements for when states may, or must, require documentation from individuals, and when accepting self-attestation (i.e. self-declaration) may be acceptable.
   
  • For information other than medical frailty:
    • For 2027, if data are not available, states may require documentation or accept self-declaration (consistent with longstanding Medicaid rules at 42 CFR 435.952(c)).
       
    • For 2028 onward, if data are not available, states must require documentation where reasonably available. If documentation is not reasonably available, states may accept self-declaration. Notably, states may not terminate coverage solely because an individual is unable to produce documents that are not reasonably available.
       
  • For medical frailty:
    • For 2027, when no data are available, the state may require documentation or accept self-attestation. States may rely upon an individual’s attestation for 12 months when determining medical frailty in 2027.
       
    • For 2028 onward, an individual may use self-attestation to establish medical frailty once during a period of enrollment. States may reverify medical frailty every 6 or 12 months, at the option of the state; however, states can only rely upon data or documentation (not self-attestation) for a 12-month period. Reliable information for verifying medical frailty includes claims in the preceding 12 months (including claims paid, pended, or denied) and encounter data.
       
• Lookback period. H.R. 1 generally requires individuals to satisfy a “lookback” period at application and renewal to satisfy work requirements, meaning they must demonstrate compliance or an exception for 1-3 months (as determined by the state) before their application and for at least 1 month (as determined by the state) since their last eligibility determination or renewal. This lookback requirement will not apply to “specified excluded individuals,” (such as those who are medically frail, pregnant/postpartum, parents/guardians/caretakers/caregivers, and other specified exclusions) but these individuals must show they met an exception during the relevant lookback period.
   
• Definitions: The rule includes important definitions for exemptions and qualifying activities. Some notable items include:
   
  • Educational programs are defined to include higher education, career and technical training, and high school and GED programs.
     
  • Work is defined to include work in exchange for money as well as in-kind work and unpaid work.
     
  • Period of enrollment is defined as a continuous period of enrollment in coverage under the State plan or waiver without the individual being disenrolled, regardless of the number of consecutive eligibility periods, of redeterminations or renewals, or of transitions between eligibility groups.
     
  • Income for purposes of complying with work requirements is based on an individual’s Modified Adjusted Gross Income (MAGI)-based household income.
     
  • Family caregivers include an adult family member or other individual who has a significant relationship with, and who provides care within a broad range of assistance, to a dependent child or a disabled individual (who meets the Americans with Disabilities Act definition of disability at 28 CFR 35.108). A caregiver must either primarily reside with the person for whom they are caring; be a relative to the individual; or provide no less than 80 hours of assistance per month.
     
  • Multiple individuals in a household may qualify for the parent, guardian, caretaker relative, or caregiver exemption.
     
• Data reporting: States will be required to submit data on enrollment, application and renewal processing and timeliness, outcomes of determinations and redeterminations, and other data specified by CMS. States may be subject to corrective action if reported data are not timely, complete, or of sufficient quality, or if reported data indicate a failure to comply substantially with the federal rules.

Comments are due July 31, 2026.

These regulations are effective on July 31, 2026 and the deadline to implement the work requirements is January 1, 2027.

More on This Topic:

• IFR
• Fact Sheet
• Press Release

For questions, please reach out to Geni Tunstall.