Medicaid HR1 Work Rules Create Concerns for People with Disabilities

The new Medicaid HR1 work rules have created concerns for thousands of people with disabilities who rely on Medicaid to work, live in the community and manage complex health needs. 

Medicaid recipients – and those who regulate and administer Medicaid – are looking at big changes as the work requirements in the H.R. 1 2025 budget reconciliation bill begin to roll out. This is the first time that Medicaid has included a work requirement.  

These requirements apply to adults ages 19-64 who receive Medicaid coverage from the Affordable Care Act expansion or via a section 1115 demonstration waiver that provides minimum essential coverage. The requirements call for 80 hours per month of work-related activity, also referred to as “community engagement,” which, according to Federal guidelines, can include employment, education, a work program or community service.

Medicaid recipients ages 19-64 include nearly all individuals who fall within the Medicaid income eligibility guidelines and the 138% of the Federal Poverty Level guidelines adopted by states under the Medicaid Expansion program. Each state may define work or community engagement in its own way. The law, signed on July 4, 2025, requires each state to prepare the new requirements by July 1, 2026, and implement them by January 1, 2027. Extensions to these dates may be approved by the Secretary of Health and Human Services.

Disability-Related Concerns 

Although people with disabilities and those who are “medically frail” are technically exempt from work requirements, some may struggle to provide the necessary documentation. Each state is responsible for defining exemption criteria related to chronic illness, mental health and substance-use disorders. This could lead to vastly different exemption criteria from state to state. For example, a person with a disability who has been receiving Medicaid based on a low income will now need to understand and complete the process of documenting their disability. 

Medicaid Work Rule Exceptions

There are several categories of exemption; some relate directly to disability, but others do not. The new Medicaid work rules do not apply to a person who is:

• A disabled veteran with disability “rated” by the Veterans Administration.
• A “Medically Frail Individual.” This includes people who are blind or disabled; have a substance-use disorder; a disabling mental disorder; a physical, intellectual or developmental disability; or a serious or complex medical condition.
• Receiving Medicaid based on qualifying for Supplemental Security Income (SSI).
• Receiving Medicare. For a person who has applied for Social Security Disability Insurance (SSDI), which provides Medicare after a 24-month waiting period, the statute does not clarify if the work requirement is waived during the waiting period.
• Pregnant or postpartum during the twelve-month Medicaid expansion.
• Experiencing short-term hardship, such as by living in an area of high unemployment, being hospitalized, or being admitted to a nursing facility, psychiatric facility or other intensive care setting.
• Already complying with the work requirements of another program, such as Temporary Aid to Needy Families (TANF) or Supplemental Nutrition Assistance Program (SNAP).
• An Indian Health Service Member (if from a recognized Tribe or Alaska Native).
• Participating in a qualifying substance-use disorder treatment program.
• Incarcerated or recently released (within three months of release).
• A foster care youth under age 26.
• A caregiver of a dependent child 13 years or younger, or of a disabled individual.

New Verification Process

When a state receives a Medicaid application, the state must do a “look back” to determine whether the applicant has met these work requirements for at least one month, or up to three months, prior to the application date. 

States must complete ongoing verification to ensure that each recipient meets the work requirements for at least one month during each of the six months they receive Medicaid.

New Noncompliance Notification Process

If a state believes a Medicaid recipient is out of compliance with the work rules, the state must send the recipient a notice of noncompliance (via mail and at least one other form of contact). The recipient then has a 30-day period to show compliance before the state can disenroll them.

What to Expect

There are significant definitional (or lack thereof) issues pending instructions from the Centers for Medicare & Medicaid Services (CMS) to the states. Then, of course, there will likely be further issues upon the issuance of rules and regulations by each state. 

Staying Up to Date in Your State

Resources for learning about a state’s Medicaid work requirements include:

• The local Legal Services Corporation office.
• The state Medicaid agency – agency names are different in each state; for example, New York State Department of Health, California Department of Healthcare Services, Ohio Department of Medicaid and New Mexico Health Care Authority.

About the Yang-Tan Institute

Providing practical information to policymakers, employers, educators and others who assist people with disabilities is a core focus for the Yang-Tan Institute, which is part of Cornell’s ILR School. The institute’s mission is to advance knowledge, policies and practices that enhance equal opportunities for all people with disabilities. Its research, training and technical resources expand knowledge about disability inclusion, leading to positive change.

The institute leads many grant-funded projects, including the Northeast ADA Center and the Employer Assistance and Resource Network on Disability. The institute also receives funding via a New York state legislative appropriation to assist with disability-related initiatives, and it offers a variety of professional education opportunities.

Edited by Tonya Engst and Julie Greco

Photo Credit: anyaberkut