CMS Releases Interim Final Rule on Medicaid Work Requirements
The Centers for Medicare & Medicaid Services (CMS) recently released an interim final rule implementing the new Medicaid work requirements. The rule implements the work requirements that were mandated by H.R.1, also referred to as the “One Big Beautiful Bill Act”, that imposes work reporting requirements on certain adults age 19 to 64 applying for or renewing Medicaid coverage. New York is required to implement these new requirements by January 1, 2027.[1]
In New York, the rule will mainly affect adults age 19 to 64 enrolled in Medicaid through the NY State of Health. These adults will need to complete 80 hours per month of qualifying activities or earn the equivalent of 80 hours at the federal minimum wage, $580 per month in order to maintain or be eligible for Medicaid. The work reporting requirement can be met in multiple ways: work, education, training, community service, or a combination of these activities.
While many older adults (those ages 65 or older) will not be subject to the work requirements, and there are exemptions and exclusions, we are concerned that individuals who should be exempt and individuals who are otherwise eligible (i.e. meet the work requirements) will still lose coverage due to burdensome paperwork requirements and other administrative barriers.
New York is required to implement these new eligibility requirements by January 1, 2027, unless a good faith waiver is granted. The following provides a summary of the medical frailty exclusion, and the exclusion for Parents, Guardians, Caretaker Relatives, and Family Caregivers as set forth in the CMS rule.[2] The New York State Department of Health is actively working to implement these new requirements. For more information and when the changes to Medicaid will start: https://info.nystateofhealth.ny.gov/stay-covered
Medical Frailty Exclusion
The medical frailty exclusion is intended to protect individuals whose health condition(s) make it unreasonable or unsafe to comply with the work requirements. However, the CMS rule narrows the medical frailty exclusion by requiring both a qualifying condition and proof that the condition significantly impairs the individual’s ability to comply with the work requirement.
To qualify for the medical frailty exclusion, an individual must meet at least one of the following criteria:
Blindness or disability status meeting SSI/SSDI criteria
Substance use disorder (SUD), except where the individual has been in stable recovery for 5 or more years
A “disabling mental disorder”
A disability that significantly impairs one or more Activities of Daily Living (ADLs). CMS explicitly excludes Instrumental Activities of Daily Living (IADLs) from consideration.
A serious or complex medical condition[3]
New York must develop a list of diseases, diagnoses, disorders, or other health conditions to identify individuals who are medically frail in accordance with the above listed categories. In addition, New York must have a reasonable process and criteria in place for individuals to request consideration for the exclusion due to a condition not on the list.
If the individual meets one of the above criteria, then the individual must separately demonstrate the condition significantly impairs their ability to meet the work requirements. This adds an additional layer of qualification and administrative barrier to the individual. CMS is allowing for states to accept self-attestation by individuals to demonstrate this new and more restrictive requirement through 2027. However, starting in 2028 the verification rules become more strict. In 2028 New York will only be able to accept self-attestation once, then at the individual’s next redetermination, New York must verify medical frailty with documentation. In addition, New York is required to verify medical frailty status at least every 12 months. There is no option for an individual to gain long-term medical frailty status.
Parents, Guardians, Caretaker Relatives, and Family Caregivers Exclusion
Parents, caretaker relatives, guardians, and family caregivers of dependent children under age 14 and disabled individuals are excluded from the work requirements. CMS defines these individuals:
Parent: individual with the legal status of a mother or father who provides some level of care.
Guardian: an adult appointed by a court for an individual.
Caretaker Relative: a parent or relative (by blood, adoption, or marriage) who lives with and has the primary responsibility for a dependent child under age 14, or disabled individual’s care. States have the flexibility to expand who counts as a caretaker relative so long as it is consistent.
Family Caregiver: an adult family member or other individual who has a “significant relationship” with and provides care within a broad range of assistance, to a disabled individual or dependent child under age 14. If the caregiver is unrelated to, and does not live with, the care recipient they must provide at least 80 hours of care per month. If they work less than 80 hours, those hours may count toward the work requirement.
Disabled Individual: an individual who meets the Americans with Disabilities definition.[4] This is a more expansive definition than “medical frailty” and an individual does not need to be eligible for Medicaid or other federal programs on the basis of a disability in order to be considered a “Disabled Individual” exclusion.
New York will be required to establish processes to verify eligibility and exemptions, including the caregiving exemption. States must first use available reliable data, for example existing administrative records, and verify eligibility or exemptions without requiring unnecessary documentation from the individual.
Work requirements do not apply to people age 65 or older, but they do apply to adults age 19 to 64. In September, notices will be sent to current Medicaid enrollees whose coverage is up for renewal in January. New York will provide additional guidance in the coming months on how to meet the new requirements, who is excluded, who qualifies for an exemption, and how to apply for an exemption. CELJ is available to answer questions and offer community presentations. Please call our office at: 716-853-3087.
References
[1] For more information: https://www.kff.org/medicaid/tracking-the-medicaid-provisions-in-the-2025-budget-bill/
[2] CMS is accepting public comments on the rule through July 31: https://www.federalregister.gov/documents/2026/06/03/2026-11094/medicaid-program-community-engagement-requirement-for-certain-individuals
[3] Defined by CMS as “A medical condition that is life threatening, seriously disabling without necessarily being life threatening, causing significant pain or discomfort that can cause serious interruptions to life activities, requiring a major time or effort commitment from caregivers for a substantial period of time, requiring frequent monitoring, associated with severe consequences or negative consequences for someone else, affecting multiple organ systems, requiring management to tight physiological parameters, requiring coordination of multiple specialties, requiring treatment that carries a risk of serious complications, or requiring adjustment in non-medical environments. CMS’s definition is from 1 1999 Institute of Medicine report (pg 19): https://www.nationalacademies.org/read/9695/chapter/1
[4] 28 CFR. 35.108: https://www.ecfr.gov/current/title-28/chapter-I/part-35/subpart-A/section-35.108
