CMS Issues Initial Guidance on Work Reporting Requirements
By Kinda Serafi and Elizabeth Dervan, Manatt Health / December 2025
Background
On December 8, the Centers for Medicare & Medicaid Services (CMS) issued a Center for Medicaid & CHIP Services (CMCS) Information Bulletin (CIB) providing initial guidance to states as they implement section 71119 of H.R.1 (P.L. 119-21), which requires states to impose work and community engagement reporting requirements as a condition of eligibility for Medicaid expansion and expansion-like programs beginning January 1, 2027. Although the guidance generally tracks the requirements of H.R.1 and incorporates several important clarifications, it remains high-level and stops short of addressing the many operational questions states must resolve as they implement these major changes to Medicaid.
Several critical open questions include:
What verification standards apply when data cannot confirm compliance or exemption at renewal?
Whether lookback periods apply to medically frail and other “specified excluded individuals”?
Whether long-term medically frail exemptions will be allowed for individuals with stable or lifelong medical conditions?
How will CMS define community service and calculate part-time education?
What types of challenges would meet CMS’ standard for granting good faith waivers?
States and people with Medicaid coverage continue to face significant uncertainty as states work to stand up these new requirements and redesign systems and processes under very compressed timelines. Notably, in November, CMS shared preliminary verbal guidance on work reporting requirements implementation with states during the National Association of Medicaid Directors (NAMD) conference that went beyond the information provided in the CIB. CMS is expected to issue additional guidance in the future.
Key Takeaways
States and Populations Subject to Work Reporting Requirements
Under H.R.1, only certain Medicaid populations are subject to work reporting requirements. Consistent with the statute, CMS’ CIB confirmed that work reporting requirements will apply to individuals applying for or enrolled in either: (1) Medicaid expansion programs or (2) expansion-like coverage provided through a waiver—specifically, Medicaid coverage that qualifies as minimum essential coverage for adults ages 19 to 64 who are not pregnant, not entitled to or enrolled in Medicare Part A or B, and not otherwise eligible under the state Medicaid plan.
Notable Guidance: In its CIB, CMS clarified that H.R.1’s work reporting requirements will apply to some states that have not expanded Medicaid under the Affordable Care Act. CMS confirmed that individuals applying for or enrolled in family-planning only coverage through a section 1115 waiver would not be subject to work reporting requirements, as such services do not qualify as minimum essential coverage. CMS is continuing to evaluate which state section 1115 waiver populations will be subject to section 71119.
Qualifying Activities
To demonstrate compliance with work reporting requirements, H.R.1 outlines certain qualifying activities, including work, community service, participation in a work program, enrollment in an educational program, or a minimum monthly income. In the CIB, CMS describes these activities by echoing the statute and confirms that the minimum monthly income based on the statute would be $580 per month.
Open Questions: CMS did not provide additional detail or guidance for the qualifying activities terms, leaving open key questions as states consider how to define and track these activities. These open questions include, for example, how states should verify self-employment, whether minimum income includes both earned and unearned income, and how to define community service and calculate part-time education.
Excluded and Excepted Individuals
H.R.1 applies work reporting requirements to “applicable individuals.” By statute, certain individuals are not subject to work reporting requirements in a given month, including individuals who qualify as “specified excluded individuals.” Specified excluded individuals are, for example, individuals who are medically frail, parents of children 13 years of age and under, American Indians or Alaska Natives, among others.
Notable Guidance: The CIB states that “specified excluded individuals” are excluded from the applicable individual definition altogether—raising potential questions about whether requirements for applicable individuals apply to specified excluded individuals, including people who are medically frail.
The implications could be significant. For example, under H.R.1, applicable individuals must demonstrate compliance with work reporting requirements in the month immediately before their application in order to receive coverage the month in which they apply. This could delay coverage for people with sudden and significant medical needs. As an example, if an individual is uninsured, receives a sudden diagnosis or experiences an accident, and then immediately applies for Medicaid, a lookback requirement could mean they cannot receive coverage until the month after they apply (and, thus, the month after their diagnosis or accident). If people who are medically frail and other specified excluded individuals are not subject to this lookback requirement, those individuals would be able to receive coverage the month of their application without needing to show medical frailty in the prior month. CMS will need to confirm its interpretation here.
Open Questions: Important questions remain, including, for example, whether states may be able to provide longer-term or permanent exemptions for individuals whose circumstances are unlikely to change (e.g., due to an intellectual or developmental disability or complex chronic illness). CMS provided initial verbal guidance at the NAMD conference indicating states may be able to provide exemptions up to 12 months in certain circumstances. It is unclear that 12 months will provide individuals with meaningful protection in light of these new reporting requirements, making this a key issue as CMS continues implementation planning.
Additionally, in the CIB, CMS expressly noted that it will address how states should approach H.R.1’s exemption for individuals who are subject to work reporting requirements under the Supplemental Nutrition Assistance Program. Additional guidance on this and other exemptions is forthcoming.
Timing for Demonstrating Compliance
H.R.1 outlines specific requirements for when individuals must demonstrate compliance when applying for Medicaid and when renewing their coverage. Individuals are subject to a “lookback period” at application and renewals.
At application, consistent with the statute, CMS confirmed that applicable individuals must demonstrate compliance with work reporting requirements in the month immediately preceding their application for coverage to be effective the first of the month in which they apply. States may elect to require an individual to demonstrate compliance for up to three months immediately preceding their application. At renewal, per the statute, individuals must demonstrate compliance for one or more months, whether or not consecutive, between renewal periods.
Notable Guidance. In the CIB, CMS included important guidance related to the lookback requirement for individuals renewing coverage. CMS clarified that states cannot dictate the specific month(s) in which an individual must demonstrate compliance (i.e., a state cannot require the individual to demonstrate compliance in the second month of a six-month period). While states can require multiple months of compliance, they cannot require those compliant months to be consecutive.
CMS also clarified that an individual will be considered compliant if, at any point during their eligibility period, they meet the required number of months of work or community engagement. This suggests that, for example, if an individual’s renewal period runs from January to July and they submit proof of compliance after July during the request for information period, they will still be deemed compliant as long as they remain enrolled during that eligibility period.
Open Question: As noted above, it is possible that the lookback period at application or renewal does not apply to specified excluded individuals, including people who are medically frail. CMS will need to confirm this interpretation.
Verifications
CMS restated H.R.1’s requirement that states use ex parte processes, explicitly reminding states that they may not request additional information or documentation unless a state first attempts to verify compliance or exemptions using reliable available information.
Open Questions: CMS did not provide additional information on state verification requirements or flexibilities when data sources are unable to verify a person’s compliance or exemption. Specifically, the CIB did not include the guidance CMS verbally communicated to states during the NAMD conference that they may use a medically frail screener at application but will be required to confirm medically frail exemptions using data or documentation within six months after enrollment. Notably, the preliminary approach CMS communicated to states at NAMD appears potentially to diverge from the statutory flexibility provided under H.R.1 that permits states to “not require an individual to verify information” related to mandatory exemptions, including exemptions for “specified excluded individuals” such as medical frailty.1
Without certain flexibilities, it is highly unlikely that states will be able to verify—or that exempt individuals will be able to demonstrate—their exemptions within a six-month window, especially given delays in claims data, barriers to accessing providers, and the reality that many medically frail conditions do not require regular interaction with the healthcare system and therefore may never appear in claims data at all. CMS noted in the CIB that additional guidance on verification requirements is forthcoming.
Outreach
H.R.1 requires states to conduct outreach to applicable individuals enrolled in their Medicaid programs no later than the summer of 2026, with the specific deadline dependent on the length of the lookback period the state selects for applicants. CMS confirmed the timing in its CIB, noting that states will also be required to conduct periodic outreach to applicable individuals at least once every six months after implementation.
Open Question: CMS did not clarify whether states will be expected to conduct outreach to all applicable individuals in their programs or only individuals up for renewal in January 2027, when work reporting requirements take effect.
Role of Managed Care Plans
H.R.1 restricts states from using Medicaid managed care organizations, prepaid inpatient health plans, prepaid ambulatory health plans, or other contractors with direct or indirect financial relationships to plans, to determine individuals’ compliance with work reporting requirements.
Notable Guidance: In helpful clarifying guidance, CMS’ CIB emphasizes that states can choose to delegate other activities to managed care plans “to support successful implementation.” Based on states’ previous experiences partnering with managed care plans during “unwinding,” this could potentially include asking plans to conduct outreach and enrollment and assist individuals in submitting requested compliance or exemption information at renewal. CMS expects to issue additional guidance on this topic.
Good Faith Waiver
H.R.1 allows states to request a good faith waiver from the Secretary of Health and Human Services to ask to delay implementation upon demonstrating a good faith effort at compliance. CMS noted in the CIB that it anticipates approvals will be limited to states that are making meaningful efforts towards implementation and experience severe and/or unexpected issues that hinder their progress. What issues will qualify for these standards is unclear.
Funding for Information Technology (IT) Systems
Acknowledging that section 71119 will require significant changes to Medicaid IT systems, CMS reminded states that enhanced funding is available for certain efforts related to their systems, including a 90% federal match for design, development, and implementation activities and a 75% federal match for maintenance and operations.
Additional Topics
In addition to the topics above, CMS addressed other areas of H.R.1 by largely echoing the provision, including prohibitions on individuals’ access to premium tax credits through the Marketplaces if they do not demonstrate compliance with work reporting requirements and forthcoming implementation grants for states.
Looking Ahead
Important questions remain, particularly regarding how CMS will require states to verify individuals’ information. As work reporting requirements introduce significant administrative burdens for both individuals and states, timely CMS guidance—and the ability for states to adopt streamlined flexible approaches—will be essential for effective planning and implementation and for ensuring that eligible individuals can enroll in and maintain coverage.
CMS is anticipated to issue more detailed guidance in the coming weeks and months and must issue an interim final rule by June 1, 2026, as required by H.R.1.