Centers for Medicare & Medicaid Services Issues Interim Final Rule Clarifying Medicaid Work Requirements for 2027

On June 1, 2026, the Centers for Medicare & Medicaid Services (CMS) released an Interim Final Rule (the Rule) that would impose work requirements on certain Medicaid participants. The Rule’s comment period will close as of July 31, 2026, on which date the Rule will become effective. The Rule implements portions of the 2025 budget reconciliation bill, signed into law on July 4, 2025, that initially introduced new work requirements for certain Medicaid enrollees. States are required to implement this requirement no later than January 1, 2027.

The Rule, CMS-2454-IFC, will impose an 80-hour-per-month work requirement as a condition of eligibility for Medicaid for certain individuals. This condition applies to individuals in the adult group (which comprises adults with an income of up to 133% of the federal poverty level) who are between the ages of 19 and 64, are eligible for or enrolled in Medicaid, and are not entitled to or enrolled in Medicare, with exceptions for pregnant and postpartum people, people with disabilities, and certain other groups. The Rule will apply to the 43 states (and the District of Columbia) that have elected to provide Medicaid coverage to the adult group.

States will be required to verify individuals’ compliance with the work requirement at application and renewal for Medicaid — and more often at the state’s discretion. If an individual fails to verify compliance with the work requirement, the state will be required to send the individual a notice of noncompliance. The individual will then be given 30 calendar days to demonstrate compliance or demonstrate that they are not subject to the requirement (or risk having their application denied or being disenrolled from Medicaid).

Affected individuals can satisfy the work requirement for a given month via: (1) 80 hours of work, community service, or participation in a work program; (2) enrollment in a half-time or more educational program; (3) a combination of the first two options; or (4) a demonstrated monthly income that is at least equivalent to the federal minimum wage multiplied by 80 hours (i.e., $580 for 2026).

Under the Rule, states are permitted to offer short-term hardship exceptions for individuals who are subject to the work requirement. Situations that would qualify for a short-term hardship exception, should a state choose to offer them, include individuals who are in a county with an unemployment rate at or above 8%, individuals who need to travel outside of their community to receive certain medical care for themselves or a dependent, or individuals receiving certain medical services, such as inpatient care.

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The Goodwin Healthcare team will continue to monitor developments related to Medicaid work requirements and the Medicaid program more broadly. For more information on the issues discussed in this alert, please contact the authors or reach out to Goodwin’s Healthcare Regulatory and Compliance group or the Goodwin lawyer with whom you typically consult.

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