CMS Explains Hardship Exemptions In Medicaid Work Requirements

By Dorothy Mills-Gregg / December 1, 2025

States will have some flexibility in requiring Medicaid beneficiaries enrolled in the expansion population to meet the new work requirements, CMS says in its initial guidance on provisions of the GOP megabill, which also allocated $200 million in Government Efficiency Grants to help states implement the new community engagement requirements.

The latest guidance CMS released Nov. 18 details which Medicaid beneficiaries will be exempted either permanently or for the month or partial month from the work requirements, which go into effect Jan. 1, 2027 and apply to the Medicaid expansion population in all states, not the territories.

Among the completely exempted beneficiaries are former foster care children, pregnant women, certain native populations, inmates, caregivers of a 14-year-old or younger, beneficiaries diagnosed with special medical needs, and Temporary Assistance for Needy Families and Supplemental Nutrition Assistance Program enrollees. Beneficiaries enrolled in certain substance use disorder treatment and rehabilitation programs are also exempt.

But some beneficiaries might be exempted for only part of a month to a month. This includes Medicaid enrollees younger than 19 years old or who are also enrolled in Medicare Part A or Medicare Part B.

“Additionally, individuals are excepted for a month in which they are otherwise required to demonstrate community engagement, if, at any point during the three-month period ending on the first day of that month, they were an inmate of a public institution,” the guidance says.

States will have the option to exempt beneficiaries from work requirements if they meet “certain short-term hardship events.” These are “receiving inpatient hospital services or certain other types of medical care; residing in a locality where there is a Presidential declaration of a disaster or emergency; residing in a locality with an unemployment rate over certain thresholds; or needing to travel outside of their community for an extended period of time, for themselves or their dependents, to receive treatment of a serious or complex medical condition where such treatment is not available within the individual’s community of residence.”

Medicaid beneficiaries can be required to meet work requirements for at least one month, but no more than three consecutive months before they apply, CMS reminds states.

Meanwhile, states only have to provide written notice of initial enrollment denials and fair hearing rights before dropping the beneficiary from coverage at the end of the 30-day period.

Outreach

The deadline for states to begin beneficiary outreach on the new program will depend on how long state officials decided to require beneficiaries to have demonstrated they meet the new work requirements.

“States must provide outreach about the requirements to enrolled applicable individuals several months prior to December 31, 2026, or, if the state selected an earlier implementation date, several months prior to that date,” the guidance says.