Labor & Employment Law Daily Wrap Up, BENEFITS NEWS—CMS releases final guidelines for Medicaid work requirements, (Jun 3, 2026)

By Sheila Lynch-Afryl, J.D., M.A.

The One Big Beautiful Bill Act added Medicaid “community engagement” requirements beginning January 1, 2027.

CMS issued an interim final rule detailing Medicaid work requirements under the One Big Beautiful Bill Act (OBBBA), Pub. L. No. 119-21 (2025). CMS described how states should implement eligibility determinations, exemptions, and verification, as well as state reporting requirements. CMS Administrator Dr. Mehmet Oz said, “This rule helps Americans build skills and independence through work, education, job training, or community service, creating new opportunities for themselves and their families.”

The OBBA requires expansion states to institute work requirements as a condition of Medicaid eligibility beginning January 1, 2027. Under section 71119, adults aged 19 to 64 must “demonstrate community engagement,” which includes working 80 hours a month, volunteering 80 hours a month, or attending school half time. Exceptions apply for specific classes, including pregnant women, disabled veterans, the medically frail, and caregivers of disabled individuals or children aged 13 and under. States may allow exceptions for short-term hardship events, such as when an individual receives certain inpatient services or resides in an area with a declared emergency.

CMS defined a “medically frail” individual as an individual whose physical, mental, or other behavioral health condition significantly impairs the individual’s ability to comply with the community engagement requirement and who is blind or disabled; with a substance use disorder; with a disabling mental disorder; with a physical, intellectual, or developmental disability that significantly impairs their ability to perform one or more activities of daily living; or with a serious or complex medical condition. Nebraska, which is the first state to begin implementing work requirements under the statute, listed specific conditions that qualify a person as medically frail.

More than 5 million people will lose insurance by 2034 due to the work requirements, according to the Kaiser Family Foundation. Rep. Frank Pallone (D-NJ) urged CMS to withdraw the rule, arguing that it is “onerous by design” and will “force people to jump through so many hoops that it will be virtually impossible to get and keep their health care.”

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