The Clock is Ticking on Medicaid Work Reporting Requirements Implementation

Authors: Elizabeth Dervan and Kinda Serafi
Editors: Patti Boozang and Amanda Eisenberg

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tl;dr

• Nine months into the 18‑month window set by H.R. 1, states are racing toward a Jan. 1, 2027, deadline to build brand‑new Medicaid eligibility, reporting and verification systems for Medicaid work reporting requirements — yet many remain in early operational stages.

• The Centers for Medicare and Medicaid Services (CMS) has not issued implementing regulations or substantive guidance, forcing states to design in regulatory limbo. This raises the likelihood of costly rework, delays and improper coverage losses.

• Final federal policy and state design choices — especially how medical frailty is defined and verified, and whether verification relies on connected data and reasonable self-declarations versus documentation — will largely determine whether eligible people keep coverage.

• Transparency is a must: Standardized public reporting on enrollment outcomes, exemptions and procedural (paperwork-driven) terminations — along with lessons from early launches in Nebraska, Montana and Arkansas — will be key to spotting implementation failures and correcting course before 2027.

The 80 Million Impact

We are halfway to go-live for Medicaid work reporting requirements — and nowhere near ready.

Nine months into the 18-month implementation window created by H.R. 1, states are racing toward a January 2027 deadline to stand up one of the most complex eligibility changes in Medicaid’s history. Millions of people will soon be required to prove that they are working, volunteering, in school, participating in a work program or otherwise exempt to keep their coverage.

States must implement these requirements by Jan. 1, 2027, though some are trying to move faster. Nebraska is set to become the first state to launch work requirements on May 1, followed by Montana and Arkansas on July 1. For thousands of people, new work reporting eligibility requirements are imminent.

The stakes are high. The Congressional Budget Office estimated that 5.3 million people — about a quarter of Medicaid expansion enrollees — could lose their health coverage, with about half losing coverage because of administrative barriers and red tape. And it’s not because they aren’t eligible. That’s the core implementation risk: not whether people meet the requirements, but rather if the system can reliably identify who does.

Here’s where implementation stands today and our take on the key policy and operational challenges that lie ahead.

Implementation So Far: Complex and Uneven

State Medicaid agencies are deep into building systems to track information never collected in Medicaid before, such as hours worked, education and veteran status. This shift requires extensive changes to eligibility policy, IT systems, beneficiary communications and frontline eligibility operations.

States’ progress varies widely. There are a few early adopters like Nebraska, Montana and Arkansas that will provide early test cases of state readiness. But the vast majority of the country is targeting the January 2027 statutory deadline. Many states have signaled concern that the timeline is unrealistic — particularly as states await needed guidance from the federal government.

Federal Guidance: The Critical Missing Piece

Nine months after the law’s enactment, states are still building without rules. CMS has not yet issued implementing regulations or substantive public guidance. A December 2026 informational bulletin largely restated the statutory language without addressing major operational and policy questions. CMS is also providing technical assistance to states through discussions that are neither public nor final. In practice, this means that states are designing systems based on informal, non-binding guidance. Key policy decisions may need to be revamped once the interim final rule required by H.R. 1 arrives. The lack of guidance has also meant stakeholders — including beneficiaries, advocates, providers and managed care plans — have no visibility into the federal government’s evolving approach to these major changes.

Medical Frailty: The Most Important Safeguard

H.R. 1 includes a mandatory exemption from work reporting requirements for individuals who are medically frail or have special health needs, defined as people with a disability, substance use disorder, disabling mental health condition, or serious or complex medical condition. It’s a strong protection on paper but could be a fragile one in practice if not implemented well. Our work with states tells us that the medical frailty exemption is among the most complex aspects of work requirements implementation, particularly given H.R. 1’s short implementation timeline and the lack of formal guidance. CMS’ preliminary direction appears to give states flexibility in how they implement this exemption. It will be critical for formal guidance to reflect this flexibility, and for states to adopt clinically informed and comprehensive definitions of medical frailty that accurately capture individuals with significant health needs.

The Importance (and Limits) of Data and Technology

As required by H.R. 1, many states are pursuing data-driven strategies to verify compliance and exemptions. States are leveraging medical claims and encounter data, for instance, to identify people who are medically frail. States’ ability to successfully use and connect data sources across different sectors and programs will profoundly shape how accurate, efficient, and easy-to-navigate their systems will be for people seeking Medicaid coverage. For example, states may be able to leverage existing data from the Supplemental Nutrition Assistance Program to verify certain exemptions on the Medicaid side.

New federal technology initiatives could play an important role. CMS is in the process of developing technological tools (the “eligibility made easy,” or Emmy program) to help individuals report and states verify information related to work requirements. These tools can help modernize and improve the eligibility process, though they are in early stages of development. It’s unknown when such tools will be broadly available to states.

Data and technology gaps are inevitable. People without recent health care engagement may not appear in the data, and individuals with behavioral health conditions or intellectual and developmental disabilities may be “under coded.” Some data is not systematically tracked at all, like information on volunteering. In light of these gaps, CMS has preliminarily indicated that states may accept auditable self-declarations in certain circumstances during the first year of implementation, consistent with longstanding Medicaid eligibility policy.

Despite this practical flexibility, some states are planning to rely on documentation requirements instead. As is well-documented in Medicaid and other social programs, when eligibility depends on paperwork, eligible people lose coverage. For example, some states are considering requiring provider certifications of medical conditions. In addition to the paperwork burden imposed on providers, a person applying for Medicaid may be unable to find a timely appointment to secure the paperwork, particularly if they live in a rural area, face language barriers or require specialty care. Additional documentation requirements also increase the workload and complexity for state eligibility workers.

Open Questions Remain

As implementation moves ahead, several major questions will define the next nine months.

First, there is the looming question of how closely CMS rules will hew to the advice their staff has been giving to states to date on federal work requirements policy. Rules that are closely aligned with verbal CMS guidance to date will be critical if states have any chance at successful, on time implementation.

Also in CMS’ court, whether the agency will grant “good faith” waivers, as allowed under H.R.1, permitting states to delay implementation when severe or unexpected challenges arise. Given the scale of required operational changes — and the possibility that forthcoming regulations alter states’ current expectations — some states may need to request delayed or phased-in implementation. Whether CMS will approve such requests remains unclear.

Another unresolved question is whether policymakers and the public will have sufficient visibility into the impact of these policy changes. During the Medicaid unwinding period, states were required to report, for the first time, detailed data on renewal outcomes, including procedural disenrollments and ex parte renewal rates. Similar reporting would allow policymakers and the public to understand how work requirements are unfolding on the ground. Absent standardized reporting, policymakers and stakeholders will lack the information needed to identify system failures or prevent improper coverage loss.

The Bottom Line

The next several months are pivotal. Without clear federal rules, states are building high-stakes eligibility and verification systems in a moving regulatory environment — raising the risk of costly rework, implementation delays, and, most importantly, avoidable coverage losses for eligible people. Final federal policies and state choices — especially around how medical frailty and other exemptions are defined and verified, and whether processes rely on documentation versus data-driven verification and reasonable self-declarations — will determine whether work requirements function as intended or become a paperwork trap.

Transparency is the other nonnegotiable. Standardized public reporting on enrollment outcomes, receipt of exemptions, and procedural (paperwork-driven) terminations is essential to detect system failures early and correct course. Nebraska, Montana and Arkansas’ early launches will offer the first real-world signals of readiness. It will also offer a chance for other states, CMS, and stakeholders to learn fast and fix fast before January 2027 — or take more time to ensure the new policy’s implementation doesn’t push eligible people out of Medicaid.

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