The Trump administration is giving states an optional six-month grace period for enforcing new Medicaid work requirements, which were due to go into effect January 1.
The Centers for Medicare & Medicaid Services (CMS) announced Friday an optional “hold harmless” period through June 30, 2027, to give states a transition period to further modernize systems, improve processes and streamline the applicant and beneficiary experience.
During the “hold harmless” period, states will still assess whether Medicaid applicants and beneficiaries meet the work requirements or qualify for an exclusion, but otherwise eligible people will not lose or be denied coverage solely because they fail to meet the requirement, CMS said.
CMS says the transition is intended to give states time to improve eligibility systems, automate verification, train workers and improve the beneficiary experience.
“States have made real progress, and they’ve been clear with us about what it takes to get this right for beneficiaries—at scale and for the long term,” Dan Brillman, Deputy Administrator and Director of the Center for Medicaid and CHIP Services, said in a statement. “If the state can use data to show that someone is working or qualifies for an exclusion, that person should not have to track down paperwork to prove it. And when someone needs support, they should know exactly what to do, when to do it, and where to go. That’s how we build a Medicaid program that works better for people, connects them to work, education, and training opportunities, and supports paths to prosperity.”
During the six-month enforcement pause, CMS encourages states to use existing data to automatically verify qualifying activities and exemptions before requesting additional information from beneficiaries.
States are also encouraged to simplify notices and make the process easy to navigate so beneficiaries understand what the state has already verified, what information is still needed and how to respond or get help. States should also test eligibility systems end-to-end, particularly how the systems handle missing, outdated or conflicting information, to resolve operational issues and minimize inappropriate coverage disruptions.
CMS also called on states to coordinate with community partners to connect applicants and beneficiaries who need assistance with opportunities for employment, education, job training and volunteering.
The work requirements were established as part of last summer’s massive H.R. 1 legislation, or the One Big Beautiful Bill Act. Under the mandate, certain Medicaid applicants and beneficiaries ages 19 to 64 must meet a statutory work requirement, unless excluded. There are exemptions in place for the medically frail, disabled and others who are unable to meet the mandates.
CMS’ June 2026 interim final rule outlines qualifying activities, including 80 hours per month of work, community service or participation in a work program; enrollment in an educational program at least half-time; a combination of qualifying activities totaling at least 80 hours per month; or meeting the specified monthly income threshold.
State Medicaid administrators, health insurers, physicians and hospitals have pushed back on the Medicaid work requirements, citing concerns about financial and operational challenges, a spike in uncompensated care and the rule’s strict “medical frailty” exemptions.
Industry groups argue the requirements impose onerous documentation burdens. The Alliance of Community Health Plans said that the final rule adds documentation requirements and tightens criteria for exemptions to the requirements, which will make it harder for individuals who need coverage to secure exemptions they may qualify for.
The organization also noted that most individuals enrolled in Medicaid are already working or in school.
Jennifer Tolbert, deputy director of the program on Medicaid and the uninsured at KFF, said in a quick take post back in June that “the rule adopts a restrictive definition of medical frailty that differs from states’ early expectations.”
“Given the complexity of the provisions in the rule, states will likely face significant challenges in operationalizing the requirements in the next six months,” Tolbert wrote. “With the short implementation timeline, states were already making implementation decisions that may not align with the rule.”
Studies estimate that between 5 million and 10 million people could lose Medicaid coverage in 2028 following the rollout of new work requirements.
The Trump administration’s tight definitions of medical frailty and documentation burdens have triggered multiple lawsuits from states, medical organizations and advocacy groups. A coalition of 26 states sued the Trump administration over its rollout of Medicaid work requirements. arguing that key provisions could cause eligible people to lose coverage and disrupt states’ implementation efforts. The states argue CMS’ new definition of who qualifies as “medically frail” is too restrictive and could make it harder for people with serious health conditions to receive exemptions.
In October, a Massachusetts judge sided with the states and rejected the Trump administration’s definition of “medical frailty” for critical exemptions.
A group of physician groups, individual Medicaid enrollees and the city of Columbus also sued the federal government to challenge the work requirements.
State Medicaid agencies have warned that the accelerated IT and administrative build required by January 1, 2027, is putting severe pressure on local welfare offices and safety-net hospital operating margins, as Senior Writer Anastassia Gliadkovskaya reported.