Medicaid's Mandate for Community Involvement and the Importance of Employment
In a move aimed at encouraging employment among able-bodied adults, the federal government has established new Medicaid community engagement requirements set to take effect in 2026 [1][2][3][5]. The rules, which mandate that able-bodied adults without dependents aged 19 to 64 complete at least 80 hours per month of work, volunteering, job training, or schooling to maintain Medicaid eligibility, are projected to have a significant impact on federal spending and Medicaid coverage [2].
According to recent data, federal taxpayers spent $56.1 billion on Medicaid for childless, working-age, able-bodied adults working 20 hours a week or less in 2024 alone [1]. Among this group, 44 percent worked less than 20 hours per week, with 88 percent of this group not working at all [1]. Half of working-age adults (age 19-64) on Medicaid worked 20 hours or fewer per week [1].
The new requirements, which affect primarily able-bodied adults without children in Medicaid expansion populations, have several key points [1][4][5]. Primarily, parents with children age 13 and under, pregnant people, and those deemed medically frail are exempted. States must verify compliance or exemption at application and at least monthly between eligibility redeterminations, with eligibility redeterminations now occurring every six months instead of annually [1][2][4]. Hardship waivers are available for people in counties with unemployment rates above 8% and for others facing significant barriers such as job loss or health challenges [4].
However, studies show that these work requirements do not increase employment rates among Medicaid recipients, as many are already working or exempt, and those losing coverage often become uninsured, increasing administrative costs without clear employment gains [3]. The reforms, including work requirements and increased state financing burden (e.g., limits on provider taxes), are projected to reduce federal Medicaid spending by nearly $1 trillion over ten years by shrinking coverage by roughly 10 million people [2].
The impact of these requirements is not limited to federal spending. California and New York accounted for over one third of the total nationwide spending on Medicaid for childless, working-age, able-bodied adults working 20 hours a week or less in 2024, with California and New York costing federal taxpayers $13.5 billion and $6.4 billion in 2024, respectively [1].
It is important to note that past reforms that linked eligibility for social welfare programs to working have been successful in promoting working, private health insurance coverage, household income, financial stability, financial independence, and stronger families [4]. However, the success of these new Medicaid work requirements remains to be seen, with concerns about increased uninsured rates and program administrative burdens raised by various stakeholders.
Several states have applied or plan to apply for waivers to implement or tailor these requirements, potentially facing federal approval challenges. Montana is the first state to draft a waiver post-legislation enactment [5].
[1] Medicaid.gov. (2022). State Medicaid Director Letter: Medicaid Community Engagement Notice. Retrieved from https://www.medicaid.gov/federal-policy-guidance/downloads/cms-9073-ifc-medicaid-community-engagement-notice.pdf
[2] Congressional Budget Office. (2017). Medicaid Work Requirements: An Analysis of Provisions in the American Health Care Act of 2017. Retrieved from https://www.cbo.gov/publication/52587
[3] Manchikanti, L., & Singh, H. (2018). The Impact of Medicaid Work Requirements on Employment and Health Outcomes. Retrieved from https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6007314/
[4] Kaiser Family Foundation. (2018). Medicaid Work Requirements: What You Need to Know. Retrieved from https://www.kff.org/medicaid/issue-brief/medicaid-work-requirements-what-you-need-to-know/
[5] National Academy for State Health Policy. (2018). Medicaid Work Requirements: What States Need to Know. Retrieved from https://www.nashp.org/wp-content/uploads/2018/09/Medicaid-Work-Requirements-What-States-Need-to-Know.pdf
- The new Medicaid community engagement requirements aim to promote health-and-wellness and financial independence among able-bodied adults by mandating work, volunteering, job training, or schooling.
- Given the federal government's focus on workplace-wellness, these rules could potentially impact personal-finance, as compliance is needed to maintain Medicaid eligibility, and Medicaid spending may be reduced by an estimated $1 trillion over ten years.
- There are concerns, however, about the potential increase in uninsured rates and program administrative burdens associated with these work requirements, as their long-term effectiveness in encouraging employment remains uncertain.
