Federal Medicaid Work Requirements: What States Should Know

On July 4, 2025, President Trump signed the One Big Beautiful Bill Act (OBBBA)  into law. The legislation makes sweeping changes to Medicaid, including new restrictions on eligibility and more frequent renewal requirements. One key provision is a new federal mandate for work and community engagement as a condition of eligibility for certain adult Medicaid enrollees – commonly referred to as “work requirements.” The federal mandate stipulates that all states must implement work requirements no later than December 31, 2026. Prior to OBBBA, states were prohibited from conditioning Medicaid eligibility on work or community service requirements. However, under the previous Trump administration, 13 states received federal approval from the Centers for Medicare and Medicaid Services (CMS) to test work requirements through Section 1115 demonstration waivers. While implementation stalled in many of these states due to litigation, federal policy shifts, and operational challenges, their experience can offer lessons as states consider approaches to meet new federal requirements.

Key OBBBA Work Requirement Provisions

Under OBBBA, all states are required to establish work and community engagement requirements for individuals ages 19 to 64 who are applying for or enrolled in Medicaid. States must condition eligibility on individuals working or participating in qualifying activities for at least 80 hours per month. Certain populations must be exempt from the requirement, including parents of dependent children age 13 or younger and individuals who are medically frail. States will be required to verify that applicants have met the requirement for one or more consecutive months prior to application, and that current enrollees continue to meet the requirement for at least one month.

States must use data matching where available to determine whether an individual meets the requirement or qualifies for an exemption. The legislation explicitly prohibits states from waiving any part of the work and community engagement requirement, including through Section 1115 demonstration authority. While the policy sets a firm implementation deadline of December 31, 2026, the Secretary of Health and Human Services may grant states temporary compliance exemptions, though these may not extend beyond December 31, 2028. CMS is required to issue an interim final rule by June 1, 2026, to guide implementation.

Lessons Learned from Past Implementation Efforts

States that previously pursued Medicaid work requirements through Section 1115 waivers faced significant costs, as well as administrative and operational challenges that may help inform state implementation planning under OBBBA. Estimated costs for state implementation ranged from $6 million in New Hampshire to $86 million in Georgia, with much of the funding dedicated to information system and technology (IS&T) updates.

In Arkansas and Georgia, the two states where full implementation occurred, members experienced significant access barriers due to a range of operational challenges, including system glitches, unclear reporting processes, and limited support options to address member questions and issues. Additionally, staff and training needed to support implementation at scale were underestimated, resulting in service delays and increased burden on frontline workers. Georgia, for example, relied on IS&T workarounds, including new data exchanges and manual tracking of member compliance, to compensate for system and staffing shortfalls, which added significant costs. Arkansas Medicaid partnered with the state’s Temporary Assistance for Needy Families (TANF) program and Department of Workforce Services to build a shared compliance platform to automate the tracking of member compliance and exemptions. Those not auto-determined as exempt had to request an exemption, over half of which were granted due to technical or agency-related issues.

Within the first seven months of implementation, over 18,000 enrollees lost coverage in Arkansas. One study found that many of those disenrolled were likely still eligible but faced administrative hurdles including confusing notices, online-only reporting, and limited customer service support that made it difficult to report compliance or claim an exemption. In 2023 Georgia launched the Pathways to Coverage program (Pathways), the state’s alternative to Medicaid expansion which includes work requirements as a condition of eligibility. As of July, 2025, fewer than 7,500 individuals have enrolled in the Pathways program, out of an estimated 300,000 potentially eligible adults, reflecting the programs narrow eligibility criteria, complex reporting requirements, limited outreach, and lack of support services all of which contribute to low participation. In both states, these outcomes were driven more by procedural and system-level challenges than by member noncompliance, showcasing how these hurdles can result in high disenrollment. Further, at least one study found no measurable increase in employment among targeted enrollees in Arkansas.

Looking Ahead

Lessons from past efforts to establish Medicaid work requirements underscore the need for careful planning to ensure minimal disruptions in coverage for eligible Medicaid members. Implementation will require building systems to track compliance, manage exemptions and appeals, and support targeted member communication. Recent state experience with the unwinding of the Medicaid continuous coverage provision offers additional lessons around the importance of staffing readiness, real-time data sharing, and effective member outreach to prevent procedural Medicaid disenrollments. Aurrera Health recently authored a publication on behalf of the California Health Care Foundation; Lessons from the Medi-Cal Unwinding: How California Protected Coverage and Policy Options to Improve Renewals that offers actionable insights on member engagement and equitable implementation.

Aurrera Health remains committed to advancing access to affordable, comprehensive, high-quality health coverage and care. We provide strategic guidance and technical assistance that helps clients navigate complex policy environments offering support in vision setting, policy development, operational planning, stakeholder engagement, and on the ground implementation. States and other stakeholders interested in tailored support related to implementation of new, federally mandated work requirements are encouraged to contact Lauren Block at lauren@aurrerahealth.com for more information.

This article is the first in a series on Medicaid work requirements. In our next installment, we’ll focus on steps states can take to plan for and support successful implementation.

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Author

Catherine Gekas Steeby [Deputy Director]