States Move to Implement Medicaid Work Requirements

For the first time, beneficiaries in some states may be required to work as a condition for continued Medicaid coverage

17 Min Read

Jul 31, 2018


Linda J. Sheppard, J.D.,

Lawrence John Panas, Ph.D.


Key points

    • In January 2018, the federal government officially signaled its willingness to approve the implementation of work or community engagement requirements in the Medicaid program.
    • Since January, Medicaid work requirements have been approved for four expansion states: Arkansas, Indiana, Kentucky and New Hampshire.
    • Most proposals to implement work requirements apply to able-bodied adult enrollees, age 19-64, but states have also identified a number of exempted populations.
    • States have proposed requiring either traditional work or community engagement activities, such as job training, education or community service.
    • A federal court voided CMS approval of Kentucky’s work requirements program on June 29, 2018.
    • CMS has expressed concerns about the implementation of work requirements in states that have not expanded Medicaid.
    • The KanCare work requirements proposal was submitted to CMS in December 2017 and is awaiting approval.
    • A recent survey found that, of Kansans currently enrolled in Medicaid or uninsured and presumably eligible for Medicaid if it were expanded, 49 percent said they were already working, another 34 percent had a disability that prevented them from working, and 17 percent were otherwise not working.


In January 2018, the federal government officially signaled its willingness to approve the implementation of work requirements in the Medicaid program. As a result, states now have a new Medicaid eligibility option that previous administrations, both Republican and Democratic, were unwilling to approve.

The option is based on Section 1115 of the Social Security Act, which gives the federal government authority to waive certain provisions of federal Medicaid law to allow states to undertake demonstration projects—such as work requirements—in their Medicaid programs, as long as the projects further program objectives.

Work Requirements

Federal Actions

On January 11, 2018, the Centers for Medicare and Medicaid Services (CMS) sent a letter to all state Medicaid directors that provided policy guidelines for submitting Section 1115 demonstration proposals to implement work or community engagement requirements—such as community service, caregiving, volunteer service, education and job training—for some adult enrollees as a condition for continued Medicaid eligibility or coverage. In the letter, CMS encouraged states to submit proposals designed to “promote health and well-being” and to “help individuals and families rise out of poverty and attain independence” consistent with Medicaid program objectives.

On the following day, January 12, CMS approved the Section 1115 demonstration proposal submitted in July 2017 by Kentucky, a Medicaid expansion state. The Trump administration has stated that Kentucky’s program is an experiment designed to promote the health of the state’s expansion population.

Since January, CMS has approved Section 1115 demonstrations to implement Medicaid work requirements for three additional expansion states: Indiana, Arkansas and New Hampshire. Eight more states, both expansion (Arizona and Ohio) and non-expansion (Kansas, Maine, Mississippi, North Carolina, Utah, and Wisconsin) have submitted Section 1115 demonstration proposals to CMS that include work requirements, and 16 additional states have publicly announced their interest in implementing work requirements for their Medicaid enrollees.

Affected Populations

Most proposals to implement work requirements apply to able-bodied adult enrollees, age 19–64, although some states have proposed lower upper-age limits. A small number of states have included 18-year-olds, while the majority specifically exempt them from the requirements.

States also have identified other exempt populations, including:

Photo: Man holding child
    • Pregnant women, or those who are 60- to 90-days post-pregnancy;
    • Primary caregivers for dependent minor children or disabled adult dependents;
    • Medically frail individuals;
    • Students, full-time or part-time;
    • Individuals already working 20 or more hours per week;
    • Individuals with a certified temporary illness or incapacity;
    • Individuals in active substance use disorder treatment;
    • Former foster children under age 26;
    • Chronically homeless individuals;
    • Individuals who already meet or are exempt from work requirements for the Supplemental Nutrition Assistance Program (SNAP) or the Temporary Assistance for Needy Families (TANF) program;
    • Individuals who are medically certified as physically or mentally unfit for employment;
    • Individuals diagnosed with a mental illness;
    • Individuals receiving Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI);
    • Individuals receiving or applying for unemployment insurance;
    • Individuals participating in state-certified drug court programs;
    • Native Americans;
    • Individuals receiving long-term care;
    • Individuals enrolled in or on waiting list for certain Home and Community-Based Services programs;
    • Victims of domestic violence; and,
    • Individuals recently impacted by a catastrophic event, such as a natural disaster.

For details on each state’s proposed exempted populations, please refer to the supplemental document posted online at

Work/Community Engagement Activities

Almost all states considering the requirement propose requiring non-exempt individuals to perform at least 20 hours of work or community engagement per week (80 hours per month). In addition to employment, states have proposed alternative community engagement activities, including:

    • Job skills training, vocational education/training or other education related to employment;
    • Job search activities;
    • General education, such as GED programs or community college;
    • Community work or public service;
    • Caregiving services for a non-dependent relative or other person with a chronic, disabling health condition;
    • Accredited English as a Second Language education; and,
    • Volunteering with approved agencies.

For state-specific information on work and alternative community engagement activities, please refer to the supplemental document posted online at

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Penalties for Failure to Comply

In general, states have proposed that the penalty for failure to comply with the state’s work or community engagement requirements is suspension or temporary loss of benefits, termination of or removal from coverage, and lockout from participation in the Medicaid program for some period of time.

Report on Kentucky proposal
Report on Arkansas first state to expand Medicaid
Report: Indiana waiver extension application
Report: submitted an amendment to CMS

The Kentucky Lawsuit—Stewart v. Azar

On January 24, 2018—12 days after CMS approved Kentucky’s work requirements waiver demonstration—15 Kentucky Medicaid enrollees, ranging in age from 20–62, filed a lawsuit in the U.S. District Court for the District of Columbia. That lawsuit, Ronnie Maurice Stewart, et al., v. Alex M. Azar II, et al., challenges the authority of CMS to issue the January 11 policy guidelines and to approve Kentucky’s demonstration project. In addition to U. S. Department of Health and Human Services (HHS) Secretary Azar, the defendants include CMS Administrator Seema Verma and other CMS officials.

Wooden gavel

In their complaint, the plaintiffs asked the court to declare the work requirements policy and Kentucky’s waiver illegal so it cannot be implemented. They assert that HHS “bypassed the legislative process and acted unilaterally to ‘comprehensively transform’ Medicaid” and put them at risk of losing their coverage by creating new eligibility criteria. In its policy guidance issued in January, CMS stated that it was allowing work or community engagement waivers to test whether they will result in more beneficiaries being employed or engaging in other community activities that would produce improved health and well-being. In issuing the work requirements guidance and approving Kentucky’s waiver, HHS relied on its authority under Section 1115 of the Social Security Act, which permits HHS to waive certain provisions of federal Medicaid law to allow states to undertake demonstration projects that the Secretary determines will further program objectives.

In a memorandum filed with the court on April 25, 2018, the federal government argued that Section 1115 gives the secretary broad authority to approve state demonstration projects and that it complied with all required Administrative Procedure Act standards. The government also characterized Kentucky’s program as an experimental project designed to “test innovative methods to promote health” for members of its Medicaid expansion population.

On June 29, 2018, Judge James E. Boasberg issued an opinion in the case and vacated Secretary Azar’s approval of Kentucky’s work requirements program.  In his opinion, Judge Boasberg stated that while the secretary has broad discretion to approve demonstration projects like Kentucky’s, he found that the secretary had not adequately considered whether the project would, in fact, further the objectives of the Medicaid program and help the state furnish medical assistance to its citizens. He also stated that his review of the administrative record showed the secretary had not “adequately considered” how many people might lose coverage if the waiver was approved.  In vacating the waiver, the court remanded, or returned, the waiver to HHS to correct the error and issue a decision supported by the administrative record.  In the meantime, the court’s decision prevents Kentucky from implementing its work requirements program.

HHS and Kentucky have 60 days to appeal Judge Boasberg’s decision and CMS officials have indicated they are conferring with the U.S. Department of Justice about how to proceed.  Although the court’s decision only impacts Kentucky’s waiver, states with pending waiver applications will certainly be watching to see how the case is resolved.

The ‘Subsidy Cliff’

On May 1, 2018, CMS Administrator Seema Verma expressed concerns about individuals who might lose coverage if CMS were to approve work requirements in states such as Kansas that have not expanded Medicaid. She referred to the “subsidy cliff” that would occur if individuals begin to earn enough income to make them ineligible for Medicaid but not enough to qualify for financial assistance (tax credits) on the Affordable Care Act (ACA) marketplaces. In addition to Kansas, the non-expansion states of Maine, Mississippi, North Carolina, Utah and Wisconsin have also submitted proposals for work requirements as a condition of eligibility for their Medicaid programs. While Ms. Verma did not rule out approving work requirement waivers for non-expansion states, she stated that CMS was seeking solutions to address the subsidy cliff.

On May 23, 2018, South Dakota, a non-expansion state, posted a draft proposal on its website to implement a pilot Medicaid work requirements program, entitled the Career Connector program, in two of its most populated counties. However, it appears the state is attempting to address CMS’s concerns about the subsidy cliff by providing “Transitional Medical Benefits” for a period of 12 months to individuals who lose eligibility due to increased earnings. As enrollees make more money, the state would move them into a premium assistance program to help them purchase employment-based insurance or coverage through the ACA marketplace. The program would provide these individuals with coverage assistance until they reach 150 percent of FPL for one year when they would be eligible for both premium tax credits and cost-sharing subsidies for marketplace coverage. The proposal indicates that the state will finance the non-federal share of expenditures using state general funds.

KanCare 2.0

In the KanCare 2.0 renewal application submitted to CMS on December 26, 2017, the state proposed the implementation of work requirements for “some able-bodied” adults on or after January 1, 2019. Unlike the states whose work requirements have already been approved, Kansas has not expanded Medicaid and is proposing to apply its work requirements to some of its otherwise-eligible adults. KanCare members who would not be subject to the work requirements include:

    • Members receiving long-term care, including institutional care and Money Follows the Person;
    • Members enrolled in or on the waiting list for Home- and Community-Based Services waiver programs;
    • Children (age 0-18);
    • Pregnant women;
    • Members who have disabilities and are receiving Supplemental Security Income (SSI);
    • Caretakers for dependent children under 6 years or those caring for a household member who has a disability;
    • Medicaid beneficiaries who have an eligibility period that is only retroactive;
    • Members enrolled in the MediKan program;
    • Members presumptively eligible for Medicaid;
    • Persons whose only coverage is under a Medicare Savings Program;
    • Persons enrolled in Programs of All-Inclusive Care for the Elderly (PACE);
    • Members with tuberculosis, HIV or in the Breast and Cervical Cancer Program;
    • Members who are age 65 years and older; and,
    • Certain caretakers of KanCare members age 65 and older who meet criteria specified by the state.

The state proposes to assess beneficiaries at the point of application or redetermination to determine if they would be required to meet the work requirements. Similar to the requirements already in place for its existing Temporary Assistance for Needy Families (TANF) program, the minimum weekly work requirement would be 30 hours in a one-adult household without children under age 6. Under TANF, the requirement for one-adult households with a child under age 6 is reduced to 20 hours; whereas under KanCare 2.0 the work requirement would be eliminated entirely. Minimum weekly requirements in two-adult households would be 35 hours for households not using subsidized childcare and 55 hours for those that do. For any given individual, the maximum requirement is 40 hours per week.

Activities that would meet the state’s definition of work include:

    • Unsubsidized employment, full or part-time;
    • Subsidized public employment, such as temporary staffing, federal work study, Job Corps, or Workforce Innovation and Opportunity Act paid work experience in which wages are subsidized by TANF or other public funds;
    • Subsidized private employment in which wages are subsidized by TANF or other public funds;
    • Work experience, such as an unpaid, supervised assignment to help the member develop work history, improve work habits and increase self-confidence and esteem;
    • On-the-job training;
    • Supervised community service;
    • Vocational education;
    • Job search/job readiness activities;
    • Job readiness case management (one-on-one services);
    • Job skills training directly related to employment;
    • Education related to employment, including adult basic education, English as a Second Language, and other courses designed to provide knowledge and skills for a specific job; and,
    • Secondary school attendance, including efforts toward GED or completing a high school degree.

Members who fail to comply with the work requirements would be removed from KanCare until compliance is achieved. Disenrollment would occur the first day of the month following the month in which the member was found to no longer meet the work requirements. The disqualification period would continue until the member complies with all work requirements.

The current KanCare program provides for transitional Medicaid coverage, referred to as TransMed, which is designed to provide temporary health coverage to families moving to economic self-sufficiency. Similar to the South Dakota proposal, TransMed provides an additional 12 months of coverage for families who were previously eligible for Medicaid but who lost eligibility due to increased earnings. In the KanCare 2.0 renewal application, the state said it is considering the creation and funding of “Independence Accounts,” a type of health savings account, for adults enrolled in TransMed, to encourage them to maintain employment and transition out of Medicaid into private coverage. Unlike South Dakota’s proposal, the Kansas TransMed program description does not indicate that transitional assistance would remain in place until enrollees reach at least 150 percent of FPL.

Kansas Work Requirements Survey

In late 2017, Commonwealth Fund and REACH Healthcare Foundation commissioned researchers from the Harvard T. H. Chan School of Public Health at Harvard University to conduct a telephone survey of Kansans, ages 19-64, and with family incomes at or below 138 percent of the federal poverty level (who would presumably be eligible if the state expanded Medicaid). When asked about the implementation of work requirements in the Kansas Medicaid program, of those currently enrolled in Medicaid or without any insurance coverage, 49 percent reported that they were already working, 34 percent had a disability that kept them from working, and only 17 percent were otherwise not working. Breaking down the 17 percent who were otherwise not working, 11 percent said they would be more likely to look for work if that was required to obtain Medicaid, and 6 percent said they would not be more likely to look for work even if required.

Opposition to Work Requirements

In addition to the lawsuit filed by Kentucky Medicaid enrollees, numerous national groups and organizations representing health care, disability rights, criminal justice and faith-based organizations have expressed their opposition to work requirements. On February 15, 2018, 160 organizations— including the National Alliance on Mental Illness (NAMI), the Center for Law and Social Policy (CLASP), the American Heart Association/American Stroke Association, the American Lung Association and the American Diabetes Association—sent a letter to HHS Secretary Alex Azar expressing their concerns about the CMS decision to approve work requirements in Medicaid. The most commonly cited concerns included:

Some individuals who do not meet the Social Security disability requirements may have a chronic illness or disability that would prevent them from gaining or retaining employment;

Some individuals with criminal records may not be able to secure employment or even engage in volunteer activities;

Work requirement programs will require significant state investment in infrastructure, will necessitate new administrative processes and programs, and will require considerable financial and human resources;

The effectiveness of work requirements implemented in other social service programs—such as SNAP, TANF and federal housing programs—have not consistently produced an increase in stable employment or financial independence;

Individuals who are no longer eligible for Medicaid will likely wait to seek care until their conditions are more serious and costly to treat; and,

Work requirements could lead to higher uninsured rates and an increase in emergency room visits.


With the Trump administration’s support of Medicaid work requirements, it is likely that the states that have already submitted, or plan to submit, Section 1115 demonstration proposals will soon receive approval for those programs. However, non-expansion states may be asked to modify their proposals to include additional program elements addressing CMS concerns about the “subsidy cliff.” This may prove challenging if these alternative coverage provisions require states to fund additional costs.

About Kansas Health Institute

The Kansas Health Institute supports effective policymaking through nonpartisan research, education and engagement. KHI believes evidence-based information, objective analysis and civil dialogue enable policy leaders to be champions for a healthier Kansas. Established in 1995 with a multiyear grant from the Kansas Health Foundation, KHI is a nonprofit, nonpartisan educational organization based in Topeka.

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