CMS To Roll Out New Income Verification App For States To Use Alongside $200M Implementation Fund For Incoming Medicaid Work Requirements
By Jalen Brown / September 12, 2025
The Trump administration is rolling out new support to help states implement the One Big Beautiful Bill Act’s Medicaid work requirement, including a federally built income-verification app that’s even designed to capture gig-economy wages, alongside the $200 million in implementation funding provided under the statute.
Caprice Knapp, acting director of the Center for Medicaid and CHIP Services, said during a KFF webinar Thursday (Sept. 11) that CMS is piloting an income-verification tool with Louisiana and Arizona through the U.S. Digital Service. The app would connect directly to payroll and gig-economy data, enabling states to confirm eligibility without requiring beneficiaries to submit paperwork.
“We are piloting this out with two states now, and we have more states that are interested.” Knapp said. “We think it will be a more cost-effective way for states to verify income.”
Demonstrations for all interested states are planned this October, Knapp announced during the webinar.
Republicans’ community engagement law requires Medicaid expansion adults to work, volunteer or participate in other qualifying activities for at least 80 hours per month starting Jan. 1, 2027. States must verify compliance at application and renewal, a process that has raised red flags among officials who warn system glitches or delays in accessing payroll or school records could wrongly strip eligible people of coverage. CMS’ early moves highlight how much is at stake if states are not fully equipped to manage this sweeping shift in Medicaid policy.
The OBBB statute also sets aside $200 million to support implementation of the community engagement requirement, with half to be divided equally among states and half distributed based on the number of enrollees subject to the mandate.
CMS also plans to fast-track approval of states’ advanced planning documents, giving them quicker access to enhanced federal matching funds for eligibility and IT system upgrades.
Knapp also outlined the law’s tight timeline during the webinar. CMS must issue an interim final rule by June 1, 2026, establishing federal regulations for how states will implement the work requirement. States must begin outreach to beneficiaries by September 2026, since December 2026 will serve as the “first lookback month.” This is because when applicants seek coverage starting Jan. 1, 2027, states must verify whether they met the work requirement in the prior month, and potentially up to three months earlier, before approving coverage.
Knapp noted that some states are looking to move faster on implementation. Montana and two other states have already signaled interest in pursuing Section 1115 waivers, which allow states to test Medicaid policy changes outside standard rules, in order to begin earlier than 2027, according to the CMS official.
At the same time, she said states that can demonstrate a “good faith” effort toward compliance may request extra time, but emphasized that any extensions cannot go beyond Dec. 31, 2028 and would require quarterly progress reports to CMS.
State Medicaid directors on the panel welcomed the federal support but cautioned that weaving payroll, education, volunteer and health system data into existing eligibility systems will be a major challenge. They also flagged the risk that confusing notices or unclear instructions could cause eligible people to miss deadlines, while low-income or medically fragile individuals may struggle to provide paperwork within short windows -- especially if they move, change jobs, or lack reliable internet access.
The Congressional Budget Office estimates the work requirement will reduce federal Medicaid spending by $326 billion over 10 years, while leaving 5.3 million more people uninsured by 2034.