CHICAGO—States are racing the clock to implement new Medicaid eligibility requirements that come into effect on Jan. 1, 2027, state Medicaid officials said on July 27.
Thousands of legislators and aides were gathered at the National Conference of State Legislators’ annual convention, where officials spoke on the challenges of implementing the changes mandated last year by the One Big Beautiful Bill Act.
“The implementation timeline is lightning fast,” Kathryn Costanza, a health fellow at the National Conference of State Legislators, told attendees.
Costanza compared the effort to installing a new computer system in a large corporation.
“Now imagine that it’s being rolled out across the entire state with very high stakes for a lot of people,” she said.
Here’s what’s changing—and why that’s putting pressure on some states to meet the implementation deadline.
Community Engagement
Starting in January 2027, all states must ensure that certain Medicaid beneficiaries are engaging with their community. This can be done either through work or taking part in education, job training, or volunteer activities for at least 80 hours per month.
This applies to able-bodied people aged 19 to 64, though there are exceptions.
While the requirements may seem straightforward, communicating them to the beneficiary population can be a challenge, said Janet Mann, secretary of the Arkansas Department of Human Services.
Arkansas briefly implemented work requirements in 2018. They were later disallowed by a federal judge.
“One of the lessons learned was you cannot overcommunicate with the beneficiaries for compliance,” Mann told state leaders.
In Arkansas, that includes communications through beneficiary statements, social media, call centers, and even billboards.
The many exemptions make both communicating and implementing the community engagement rule more complex.
The Centers for Medicare and Medicaid Services lists 10 exemptions from the rule, plus at least three hardship exceptions.
The exemption drawing the most attention is arguably the most vague: medical frailty.
The definition extends to any individual who is blind or disabled, or has a substance use disorder; a disabling mental disorder; a physical, intellectual, or developmental disability that significantly impairs their ability to perform any activity of daily living; or a serious or complex medical condition.
That has left some states scrambling to figure out which beneficiaries qualify.
“It’s hard to put people in boxes,” Amir Bassiri, Medicaid director for the State of New York, said, noting that every individual’s medical condition is unique. “Data is not going to determine who is exempt in each and every circumstance.”
New York’s Medicaid office has tried various strategies to identify which of its 7.5 million beneficiaries qualify as medically frail. That includes partnering with other state health agencies and checking to see whether they fit one of the other exempt categories, such as foster youths or pregnant or postpartum moms.
State Rep. Sean Hornbuckle, a Democrat and minority leader of the West Virginia House of Representatives, said the community engagement requirements will still pose a hurdle for some beneficiaries.
“It’s a detriment to rural communities because of transportation issues,” Hornbuckle told The Epoch Times.
More Eligibility Checks
The new law also requires beneficiaries to verify their eligibility every six months, and requires states to check beneficiary addresses against a reliable data source and ensure that deceased people are not enrolled.
That presents a significant challenge for some states having outdated computer systems.
Bassiri said the new rules have required significant tech modernization for his department.
“We are in the middle of modernizing our eligibility system,” Bassiri said. “It’s something we’ve all wanted to do for a super long time. We’re doing it now.”
Mann said the eligibility checks require careful timing as well, since the checks on families with school children will have to fit around their school enrollment deadlines.
“We’re working with our Department of Education on matching who’s in school and who’s not,” Mann said. “That takes a different match because a school semester or a quarter runs at a different time.”
Getting the enrollment data right is vital for states because an error rate above 3 percent could result in the federal government recouping Medicaid payments from a state.
“Missing documentation is the largest contributor to errors,” Constanza said. “And boy, do work requirements require a lot of documentation.”
Administrative Expense
“It’s costly,” Hornbuckle said of the administrative expense of overseeing the new work requirements.
Estimates for the administrative cost of implementing the work requirements alone range from $6.1 million in New Hampshire to more than $270 million in Kentucky, according to the Congressional Budget Office.
The federal government is providing some support. That includes $200 million in government efficiency grants for system modernization and administrative expansion.
Another $600 million has been committed by private-sector technology vendors to help in updating eligibility and enrollment systems and for beneficiary outreach, according to the Centers for Medicare and Medicaid Services.
The Government Accountability Office estimated that Medicaid alone accounted for around $37 billion in improper payments in 2025.
Successes
Despite the challenges, some states are ahead of schedule.
Nebraska implemented the work requirements on May 1. Montana’s requirements began on July 1.
Costanza noted several examples of states designing ways to administer the work requirements.
Minnesota established a healthcare eligibility oversight unit to monitor compliance and provide technical support. Kentucky created a community engagement program to be implemented by Volunteers of America.
New Jersey passed a bill to direct the state’s office of volunteerism to help residents find volunteer opportunities, which will include a mobile-friendly app.
Mann and Bassiri both said they are treating the Jan. 1 deadline as nonnegotiable, despite the many challenges.
“There are a lot of hardworking people in these agencies with a lot to do—with both ongoing operations and a lot of changes,” Mann said. “We want everyone to know what we’re doing, and that we’re doing it to the best of our ability.”
