For the first time in the program's 60-year history, millions of adults will soon have to prove they work, study or volunteer to keep their Medicaid coverage. The requirement, created by the 2025 budget reconciliation law known as the One Big Beautiful Bill Act, takes effect nationwide on January 1, 2027. But a handful of states have moved early, and the first results are now coming in.
What the law requires
The work requirement, which the law calls a "community engagement" requirement, applies to adults ages 19 through 64 who are covered through the Affordable Care Act's Medicaid expansion [2][3]. To qualify, they must show at least 80 hours a month of work, schooling, volunteering, participation in a work program or some combination of those activities [3]. People can also qualify through earnings, such as a monthly household income of at least $580 [1]. CMS estimates that 43 states and the District of Columbia will need to implement the requirement because they cover the expansion population [3]. The law lists groups that are excluded, including pregnant and postpartum people, American Indians and Alaska Natives, parents and caregivers of children under 14 or of a person with a disability, disabled veterans and people who are "medically frail" [1]. States can temporarily delay implementation if they show a good-faith effort to comply, but any such extension expires no later than December 31, 2028 [3].
The federal rulebook
On June 1, 2026, the Centers for Medicare & Medicaid Services (CMS) released an interim final rule laying out how states must run the program [2]. Because the law directed CMS to use an interim final rule, the regulation took effect on July 31, 2026, the same day public comments were due, and the agency is not required to revise it before states begin enforcement [4]. The rule tells states to be "data first," meaning they should check existing government records such as wage data before asking enrollees for paperwork [4]. States may accept people's own statements, known as self-attestation, through 2027, but starting in January 2028 they generally must request documentation when they lack data on file [1]. "We're forgiving, but we're not foolish," CMS Administrator Dr. Mehmet Oz said of self-attestation on a June 1 press call [4]. The most closely watched part of the rule is its definition of medical frailty. According to HFMA, the rule says conditions such as asthma, hypertension, obesity, anemia and diabetes generally will not qualify for the exemption on their own, because they usually do not prevent people from working [2]. The rule also includes CMS's own estimate that 7% of people who actually meet the requirement or qualify for an exemption will nonetheless lose coverage because of administrative or paperwork problems [2]. Hospital groups objected. "CMS' proposal for implementing community engagement requirements goes beyond what Congress intended," said Jennifer DeCubellis, president and CEO of America's Essential Hospitals [4].
Nebraska goes first
Nebraska became the first state to enforce the new requirements on May 1, 2026, about eight months ahead of the federal deadline [1]. The state's Medicaid director, Drew Gonshorowski, told the nonprofit news outlet Tradeoffs that roughly 70,000 people in Nebraska are subject to the rules and that the state can confirm compliance for about three-quarters of them without asking for additional information [6].
A September 29 KFF analysis of data presented at Nebraska's Medicaid Advisory
Committee offers the first detailed look at outcomes [1]: • Among 4,089 new applications that required a work-requirement decision between May and August, 46% of applicants met the activity requirement, 39% qualified for an exclusion, 2% received a short-term hardship exception and 14% were denied.
•
Among 7,280 renewals processed between July and mid-August, 34% met the activity requirement, 57% qualified for an exclusion, 2% received a hardship exception and 7% lost coverage. The most striking detail is why people were denied or removed. Of the 557 denied applications, 84% were rejected because the applicant did not respond to requests for more information. Of the 533 people who lost coverage at renewal, 92% did not respond to verification requests, while only 8% were affirmatively found not to meet the rules [1]. KFF cautions that it remains unclear whether those people were actually ineligible, did not know they needed to respond or had trouble providing documents [1]. Advocates in Nebraska have reported practical problems, including phone wait times of up to 90 minutes on the state help line [5]. CMS has also notified Nebraska that it must change how it verifies medical frailty, which KFF says could reduce the number of people who qualify for that exclusion over time [1].
Other early states
Montana began enforcing work requirements on July 1, 2026, and Iowa plans to start on December 1, 2026 [7]. Arkansas launched a "soft" implementation in July without disenrollments, but it notified nearly 64,000 people that they were not in compliance, and penalties begin in January 2027 [7]. Most other states are using existing vendors to update their computer systems on a tight timeline, according to a KFF survey of state Medicaid officials [7].
The debate
Supporters argue that work requirements encourage employment and help people move out of poverty, and they point to major federal savings, estimating that the policy will save the federal government about $325 billion over 10 years, largely through reduced enrollment [6]. Critics point to evidence that most Medicaid adults who can work already do, and to a 2023 Congressional Budget Office analysis finding that work requirements reduce Medicaid enrollment without significantly increasing employment, leaving most people who lose coverage uninsured [7][8].
Why it matters
Nebraska's early numbers suggest that most enrollees can show they are working or exempt, especially while self-attestation is allowed. They also show that paperwork, not ineligibility, is the leading reason people are losing coverage so far. As tens of millions of enrollees in dozens of states face the requirement in 2027, and as documentation rules tighten in 2028, the gap between those two findings will shape how many people lose Medicaid.
Sources
- 1. Amaya Diana, Anna Mudumala and Jennifer Tolbert, "Early Medicaid Work Requirement Insights From Nebraska," KFF, September 29, 2026. https://www.kff.org/medicaid/early-medicaid-work-requirement-insights-from-nebraska/
- 2. "Medicaid work requirement rule adds significant wrinkles to program eligibility criteria," HFMA, June 2,
- 2026. https://www.hfma.org/payment-reimbursement-and-managed-care/medicaid-work-requirement-rule/
- 3. "CMS drops interim final rule implementing Medicaid work requirements," McDermott+, June 5, 2026. https://www.mcdermottplus.com/?p=160419
- 4. "CMS' Medicaid work rules: What's in, what's out," Becker's Payer Issues, June 2026. https://www.beckerspayer.com/payer/medicaid-work-rules-whats-in-whats-out-and-where-hospitals-stand/
- 5. "Health advocates raise alarms about Nebraska's 'rushed' implementation of Medicaid work requirements," Nebraska Examiner via WOWT, August 3, 2026. https://www.wowt.com/2026/08/03/health-advocates-raise -alarms-about-nebraskas-rushed-implementation-medicaid-work-requirements/
- 6. "In Nebraska, Americans begin to lose Medicaid under Trump's work rules," Tradeoffs/NPR, July 31, 2026. https://npr.org/2026/07/31/nx-s1-5913947/medicaid-trump-work-requirements-big-beautiful-bill-nebraska
- 7. "Medicaid work requirement" (state status), healthinsurance.org, 2026. https://www.healthinsurance.org/glossary/medicaid-work-requirement/
- 8. "An Early Look at Policy Decisions as States Get Ready to Implement Work Requirements," KFF, April 30,
- 2026. https://www.kff.org/medicaid/an-early-look-at-policy-decisions-as-states-get-ready-to-implement-wor k-requirements/ Information in this article is current as of October 9, 2026. Bracketed numbers refer to the sources listed above.