Millions of Americans carry a health insurance card they barely think about – until a policy change makes it clear just how fragile that coverage can be. The federal Medicaid program has quietly become the backbone of health coverage for tens of millions of low-income adults, and for many of them, it is the only thing standing between manageable health care and financial catastrophe. Right now, that backbone is being reshaped.
New federal rules are introducing medicaid work requirements on a scale the country has never seen before. For the vast majority of Medicaid enrollees, those requirements may be largely a paperwork exercise. But for a subset of patients – people living with serious, complex, or rare medical conditions – the concern is not whether they qualify for an exemption. The concern is whether the systems being built to verify that exemption will actually work in time.
That question is now at the center of a rapidly accelerating policy debate, as patient advocates, state governments, and health policy researchers race to understand what the rules will mean in practice, not just on paper
A Quick Overview:
On July 4, 2025, President Trump signed into law a sweeping budget reconciliation package, known widely as the One Big Beautiful Bill Act, which includes significant changes to the Medicaid program. Among those changes are mandatory Medicaid work requirements that will apply nationally starting in 2027. The Congressional Budget Office (CBO) estimates the Medicaid work requirement provisions in the passed budget reconciliation law will be the largest source of Medicaid savings, reducing federal spending by $326 billion over ten years. The projected savings, however, come largely from coverage losses, and health policy organizations warn that the administrative machinery required to implement these requirements could strip coverage from people who are, by law, entitled to keep it.
The National Organization for Rare Disorders (NORD) has warned that the work requirements could cause “avoidable” harm to the 30 million Americans living with rare diseases. Their concern: that without careful system design, eligible patients will lose coverage not because they failed to qualify, but because the verification process failed them.
The Law: What the Work Requirements Actually Say
The 2025 budget reconciliation bill (H.R. 1), signed into law on July 4, 2025, introduces new work requirements – also referred to as community engagement requirements – for certain Medicaid enrollees, making continued eligibility contingent on participation in work or other qualifying activities.
The law mandates that Medicaid members aged 19 to 64 who are covered through the Affordable Care Act’s Medicaid expansion or through an 1115 demonstration waiver that provides minimum essential coverage must engage in employment, education, a work program, or community service to maintain their Medicaid eligibility. To meet those requirements, enrollees must complete 80 hours per month of one or more qualifying activities, including employment, participation in a work program such as job training, enrollment in an educational program at least half-time, or community service.
There is also an income-based route to compliance. The law conditions Medicaid eligibility for adults in the ACA Medicaid expansion group both at application and following enrollment. According to CMS guidance published in December 2025, an individual earning at least $580 per month – equivalent to 80 times the federal minimum wage – is also considered compliant, regardless of documented activity hours.
People who lose or are denied Medicaid coverage due to failure to meet work requirements will also be ineligible for premium tax credits to purchase coverage through the ACA Marketplaces – meaning they won’t be able to easily shift to a subsidized private plan as a fallback.
Scale and Timeline: Who Is Affected
The scale of the policy is hard to overstate. Currently, 41 states (including Washington, D.C.) have expanded their Medicaid programs under the ACA. As of June 2024, over 20 million people were enrolled through Medicaid expansion, representing nearly a quarter of total Medicaid enrollment across all states.
A total of 43 states will be required to implement work requirements, including the 41 states and D.C. that have adopted Medicaid expansion, plus Georgia and Wisconsin, which have implemented partial expansion waivers. According to the Commonwealth Fund, an estimated 18.5 million adults will be subject to the new requirements and will have to regularly demonstrate compliance.
On timing, states are required to implement work requirements by January 1, 2027, though they may choose to do so sooner through 1115 waivers. The legislation also permits the Secretary of Health and Human Services to grant extensions until December 31, 2028 for states that can demonstrate a good faith effort to meet the requirements. Some states are already moving ahead of the federal deadline. On May 1, 2026, Nebraska became the first state to implement Medicaid work requirements after Congress passed the One Big Beautiful Bill Act. Montana has indicated it will begin enforcing work requirements on July 1, 2026, and Iowa will implement on December 1, 2026.
The law requires the Secretary of Health and Human Services to provide implementation guidance to states by June 1, 2026. The Centers for Medicare and Medicaid Services (CMS) issued initial guidance in December 2025, with additional guidance expected throughout 2026.
The Coverage Loss Projections
The fiscal math behind the law and its human consequences are difficult to separate. Of the Medicaid provisions included in the enacted reconciliation package, CBO estimates implementing work requirements will account for the largest share of federal Medicaid savings. Over ten years, work requirements are estimated to reduce federal Medicaid spending by $326 billion, representing the largest share of the estimated $911 billion in total Medicaid cuts included in the law.
Those savings translate directly into people losing coverage. Earlier CBO analysis estimated that by 2034, federal Medicaid coverage will decrease by an estimated 5.2 million adults, with work requirements ultimately increasing the number of people without health insurance by 4.8 million in 2034.
A key tension in the policy debate is that most Medicaid adults are already working, or have legitimate reasons why they are not. According to a 2026 KFF analysis, 92% of Medicaid adults were either working full or part-time, or were not working due to caregiving responsibilities, illness or disability, or school attendance – reasons that counted as qualifying exemptions from work requirements under previous policies. Only 8 percent fall outside those categories – and even those in that 8 percent may have circumstances that simply haven’t been formally documented. There has been widespread concern that the requirements will push eligible enrollees off the program because of the complex administrative burden they impose.
This is not a hypothetical concern. The evidence from the only prior real-world implementation at scale points in one direction.
Lessons from Arkansas: What Happens When the System Fails
Arkansas was the first state to implement Medicaid work requirements, briefly doing so in 2018 under a federal waiver. The results were closely studied and widely cited. More than 18,000 people lost coverage, or about 25% of the population subject to the requirement, primarily due to failure to regularly report work status or document eligibility for an exemption.
Research published in Health Affairs found that work requirements did not increase employment over eighteen months of follow-up. What they did do was cause immediate financial harm to those who lost coverage. People in Arkansas ages 30 to 49 who had lost Medicaid experienced serious consequences: 50 percent reported serious problems paying off medical debt, 56 percent delayed care because of cost, and 64 percent delayed taking medications because of cost. These rates were significantly higher than among Arkansans who remained covered.
The reason most people lost coverage was not that they were failing to work. Researchers found work and reporting requirements in Arkansas were associated with losses in Medicaid coverage, an increase in the percentage of adults who were uninsured, and no significant change in employment – as nearly everyone targeted by the policy met the requirements already or qualified for an exemption. In other words, the system failed the people it was supposed to screen in.
Survey research revealed that the reporting process was a major driver of coverage losses: many Medicaid enrollees who were subject to the work requirements found the reporting process confusing or inaccessible, and nearly a third of the target population was unaware of the policy altogether. That kind of administrative confusion, at scale, is exactly what patient advocates fear will repeat itself nationally.
The Center on Budget and Policy Priorities notes that only 11 percent of the people who lost Medicaid coverage in 2018 regained it in 2019. A survey of Arkansas residents who disenrolled found that 26 percent were uninsured in late 2019.
In a statement issued on July 3, AMA President Bobby Mukkamala, MD, said that the law’s provisions mean “care will be less accessible, and patients may simply forego seeing their physician because the lifelines of Medicaid and CHIP are severed,” calling it “devastating for the estimated 11.8 million people who will have no health insurance coverage as a result of this bill.” The full statement is available on the AMA’s federal advocacy page.
The Rare Disease Risk: A Population With the Most to Lose
For patients with rare diseases – conditions that individually affect fewer than 200,000 Americans, but collectively touch a vast population – the stakes are particularly acute.
NORD estimates that rare diseases affect nearly 1 in 10 Americans, with public programs such as Medicaid and Medicare covering more than 70 percent of adult rare disease hospital stays. This is a population that depends on Medicaid not just for routine care, but for access to specialized diagnostics, expert providers, and treatments that may be available at only a handful of centers nationwide. Rare disease patients often have to travel hundreds of miles for knowledgeable care, shouldering large out-of-state costs, and navigating complex barriers. The burden of Medicaid changes, NORD argues, “falls most heavily on those with the fewest options.”
The issue is not primarily about exemptions on paper. Rare disease patients, those with serious disabilities, and adults who are medically unable to work are largely covered under the law’s exemption categories. Exemptions include individuals receiving Medicaid for pregnancy or postpartum coverage, Medicaid enrollees who are aged, blind, disabled, or have a serious or complex medical condition, parents and caretakers of disabled individuals or dependent children aged 13 and under, and foster care and former foster care youth under the age of 26.
The problem is implementation. NORD expects “a seismic cascade of state legislative and regulatory activity” after CMS releases additional guidance to states by June 1 regarding the Medicaid work requirements. States will have to decide how exemptions are defined and operationalized, what documentation is required to demonstrate eligibility or exemption, and how frequently compliance is verified.
For someone with a recognized disability or an obvious qualifying exemption, that process is straightforward enough. But for people with rare diseases, many of whom have conditions that are difficult to diagnose, poorly understood by general practitioners, and not yet formally classified within standard administrative systems, proving an exemption may be anything but straightforward. The Medicaid expansion population includes adults without dependents as well as many parents and people with disabilities or chronic conditions who do not receive SSI. These are exactly the patients most at risk of slipping through administrative gaps.
NORD has been explicit about what can go wrong. The organization stressed that verification processes must be “reasonable” and not so “burdensome as to effectively deny the protection the law requires.”
How States Are Preparing
With the January 1, 2027 implementation deadline approaching, states are making a wide range of choices about how to structure their compliance systems. To implement Medicaid work requirements, states will need to make important policy and operational decisions, implement needed system upgrades, develop new outreach and education strategies, and hire and train staff, all within a relatively short timeframe.
On verification frequency, KFF’s 2026 survey of state Medicaid officials found that thirty-four states reported they will verify compliance with work requirements every six months at renewal, while two states, Indiana and New Hampshire, will verify compliance quarterly.
Nebraska’s early move is being watched closely. Beginning May 1, 2026, Medicaid expansion members in Nebraska are required to work, attend school or an apprenticeship, participate in a work program, or volunteer for 80 hours per month unless they have an exemption. Opponents of the requirements have expressed concerns about the fast implementation timeline and the possibility of eligible people losing coverage due to an inability to prove an exemption or navigate the various requirements.
NORD’s guidance is direct on this point. The organization advised that states use the full implementation timeline available, rather than seeking early implementation before the January 1, 2027 deadline, in order to properly test systems, plan, and ensure readiness. Moving fast may serve a political or fiscal agenda, but it increases the probability that administrative failures translate into coverage losses for people who were never supposed to lose their coverage.
There is also a downstream economic risk that goes beyond individuals. Researchers have noted that hospitals already at risk of closing will face an uphill battle when patients lose coverage. The Rural Health Transformation Program included in the law is designed to offset some of these effects, but analysts note it is quite small relative to the projected financial impact of coverage losses on rural providers.
Read More: 5 Medicare Changes for 2027 That Will Directly Affect Your Coverage and Costs
The Compliance Architecture: Exemptions, Verification, and Gaps
Understanding who is exempt, and how exemptions are actually processed, is central to the harm reduction conversation. The law’s exemption list is extensive on paper, but the machinery for verifying those exemptions across 43 states – each building their own systems – is where the concern lives.
States will be required to notify enrollees if they are out of compliance, and individuals will have 30 days to correct the issue before being disenrolled. These notices will be sent by mail and at least one other method such as text or email. For rare disease patients who may be frequently hospitalized, traveling for specialized care, or managing cognitive or physical impairments that limit their ability to respond to administrative notices, a 30-day window for correcting a compliance flag may not be enough.
The Center for Health Care Strategies (CHCS) has recommended that Medicaid agencies partner with existing workforce systems, including labor departments and community organizations, to streamline access to employment supports and reduce administrative burdens. Whether states adopt that kind of integrative approach will vary widely.
People with rare and complex conditions who rely on Medicaid are also, by definition, among the highest-cost and most medically dependent members of the Medicaid population. Losing their coverage does not save money in a vacuum – it shifts costs to emergency departments, safety net hospitals, and charity care systems, while simultaneously causing real patient harm.
What This Means for You
The Medicaid work requirements signed into law in July 2025 represent the most consequential structural change to the Medicaid program in decades. The core mechanics are clear: Medicaid enrollees in the expansion population who don’t qualify for an exemption must complete at least 80 hours monthly of combined work, community service, work program participation, or educational enrollment to keep their coverage. The fiscal stakes are equally clear, with $326 billion in projected federal savings over ten years, almost all of it coming from coverage reductions.
What is less clear, and what patient advocates are urgently trying to shape, is whether the implementation infrastructure being built by 43 states will be accurate enough to protect eligible people from wrongful disenrollment. The Arkansas experience offers a sobering reference point: a majority of people who lost coverage there were not failing to meet the work requirement. They were failing to navigate the reporting system. At national scale, that administrative failure would affect not thousands, but potentially millions of people.
The warning from NORD is precise and practical: the most medically vulnerable people in the Medicaid system – those with rare diseases, complex conditions, and limited capacity to manage bureaucratic paperwork – are disproportionately exposed to coverage losses that are both avoidable and harmful. If you or someone you care for is enrolled in Medicaid expansion, the most important step right now is finding out whether your state has published its exemption and verification process, and whether you are already documented as qualifying for one. Don’t wait for a disenrollment notice. The 30-day correction window is a short one, and for people managing serious health conditions, time is not a resource to spare.
For patients in that category, the most important variable right now is not the law itself – it is whether their state chooses to build a careful, tested, properly resourced exemption verification system, or a fast one.
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AI Disclaimer: This article was created with the assistance of AI tools and reviewed by a human editor.
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