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CMS announced a new final rule will go into effect January 1, 2027 regarding Medicaid beneficiaries. States will be required to enforce an 80 hour per month work requirement except in certain circumstances.
These rules were announced in the One Big Beautiful Bill, but were not finalized until now. Some states, like Georgia, already have this requirement, and Montana will be implementing it in July. But for many states, including Michigan, this will be a new requirement. What will enforcement of these requirements look like, and how will this new rule affect your agency?
What is changing?
All states must enforce what is being dubbed as Medicaid community engagement as a requirement to be eligible to receive Medicaid benefits. Applicable individuals aged 19-64 must demonstrate at least 80 hours of:
- Employment
- Work program participation
- Community service
- Education program participation
Hours spent in these activities may be combined together to meet the requirement. Those who are seasonally employed must have a monthly income 80 times above the minimum wage to meet the threshold. For those keeping score at home, that means they're likely to have worked at least 80 hours.
Does this apply to all Medicaid beneficiaries?
Not technically, no. Beneficiaries can get an exemption from the community engagement requirement if they are:
- Pregnant or postpartum
- Formerly in foster care
- American Indian or Alaskan Native
- Caregiving for a dependent child 13 or younger or a disabled individual
- Veterans with 100% disability rating
- Considered medically frail or having special medical needs as determined by the state
- Meet TNAF work requirements
- Receiving SNAP benefits and are not exempt from the SNAP work requirements
- Participating in a drug or alcohol rehab program
- Incarcerated
Short-term holds on the requirement can be issued by the state for reasons such as an emergency or disaster, an unemployment rate higher than 8%, or traveling for the medical care of themselves or a dependent.
How will this requirement be enforced?
States will ask applicants and those renewing to provide proof of their community engagement for the month previous to their coverage’s start date. The state will also get to choose how many months of verification are necessary and how often they will require verification of that requirement.
What if a beneficiary cannot be verified?
States must give the beneficiary 30 days to provide evidence of their community engagement or prove they are exempt from the requirement. If neither occurs, that beneficiary will be disenrolled. They will then have to reapply for Medicaid once they can provide the proper documentation.
What should we expect in the coming months?
States will be contacting their Medicaid recipients this summer to let them know about the new requirements, and they will be expected to meet the requirements for January 1. So beneficiaries will have to provide work requirements at least for the month of December.
This move is expected to reduce Medicaid spending by $344 billion dollars over the next decade, and disenroll about 4.8 million people from Medicaid due to a failure to meet this requirement.
Georgia has had their version of this program, Pathways to Coverage, for two years. In that time, 54% of Georgians interested in Medicaid eschewed applying due to these requirements, and 11% of applications were denied due to the work requirements.
What does this mean for your agency?
Medicaid recipients will have questions about all these changes, and they will look for an expert. Of course, they will not know you that you don’t make commission off those plans, but what they do know is you are a top insurance mind.
As for that 4.8 million who might get disenrolled from Medicaid? They could be potential prospects. So getting your knowledge out there, even if you aren’t a Medicaid expert, could wind you up with a few extra sales. Some might just need a temporary solution as they job hunt, and others might look for some ancillary coverage they can afford. Even if newly disenrolled Medicaid beneficiaries aren't getting APTCs, they still will have a need to get some sort of coverage.