New guidance from the Centers For Medicare & Medicaid Services (CMS) has tightened how states determine whether Medicaid beneficiaries qualify for a “medically frail” exemption from upcoming federal work requirements, prompting concerns from patient advocacy groups.
The guidance is part of the agency’s implementation of Medicaid work requirements set to begin in 2027.
Under the guidance, having a serious illness or medical condition alone may not be enough to qualify for the exemption. Beneficiaries must also show that the condition significantly limits their ability to work, attend school, volunteer or otherwise comply with the federal requirement.
Conditions that may qualify include cancer, behavioral health conditions, mental health disorders and substance use disorders. States will be responsible for assessing whether beneficiaries meet the exemption criteria.
Work Rules
Earlier this month, CMS released implementation rules for the Medicaid work requirement program created under President Donald Trump‘s One Big Beautiful Bill Act.
Under the policy, certain Medicaid expansion enrollees ages 19 to 64 must work, volunteer, attend school or participate in job training activities for at least 80 hours per month unless they qualify for an exemption.
The requirements are scheduled to take effect on Jan. 1, 2027. CMS has said the policy is intended to promote self-sufficiency while protecting vulnerable beneficiaries. The Congressional Budget Office previously estimated that 7.5 million people could lose Medicaid coverage by 2034 as states implement the requirements.
State Impact
Patient advocacy groups and health policy experts criticized the guidance. Jocelyn Guyer, senior managing director at Manatt Health, told CNN the stricter interpretation could make it harder for people with serious medical conditions to maintain coverage.
CMS officials defended the policy, saying the exemption is intended to protect beneficiaries who cannot meet the work requirement while preserving program integrity. It added that states may use health claims data and other documentation to determine whether beneficiaries qualify for the exemption.
A coalition of 48 organizations, including the American Lung Association, the Crohn’s & Colitis Foundation and the National Alliance on Mental Illness, said the policy could increase paperwork and verification requirements for patients and providers.
The guidance also creates new implementation challenges for states that are already building systems to comply with the federal work mandate. Beginning in 2028, Medicaid beneficiaries will face additional limits on self-attesting that they qualify for certain exemptions.
The policy arrives as health coverage remains a key issue nationwide. CDC data released in May showed about 28 million Americans were uninsured in 2025, including roughly 4 million children.
Healthcare affordability pressures have also intensified. About 14% of Affordable Care Act enrollees failed to pay their first monthly premium this year after enhanced federal subsidies expired. A recent KFF report projected ACA marketplace enrollment could fall to about 17.5 million in 2026 from 22.3 million in 2025 after enhanced federal subsidies expired and insurance costs increased.
