CMS Announces Optional 6-Month Delay for Enforcing Medicaid Work Requirements
Acknowledging the challenging timeline states were facing to implement new Medicaid work requirements and the fact that many were not going to be ready to meet the January 1 deadline, on November 13, 2026, the Centers for Medicare and Medicaid Services (CMS) announced it would grant states a six-month delay on enforcing the requirements. According to the letter, states can request this optional “hold harmless” period for up to six months through June 30, 2027. During this time, states will need to verify whether individuals meet the work requirements or qualify for an exclusion as required by the law but can suspend application denials and disenrollments for otherwise eligible individuals who do not “demonstrate that they meet the requirements.” In effect, this means that many individuals who would have been barred from enrolling or who would have lost current coverage due to inability to navigate work requirements will be able to obtain and maintain Medicaid temporarily. Most Medicaid enrollees are working or would likely qualify for an exemption from the new requirements, but could lose coverage because of red tape.
While this optional delay will give states more time to update their systems, refine verification processes, train staff, and conduct additional outreach to enrollees and other key partners, CMS makes clear that states must be moving toward full implementation of the requirements. The letter confirms that the “obligation to work towards full compliance with the statute” does not require states to implement a requirement that individuals prove their health condition limits their ability to work in accordance with a recent court ruling tossing out a key provision in the interim final rule related to the medical frailty exclusion. Instead, states will only need to verify that individuals have a condition that falls into one of the five medical frailty categories specified by the statute to qualify for the medical frailty exclusion.
Prior to this announced delay, CMS had informed states that they would need to adopt mitigation plans to address identified deficiencies in complying with the statutory and regulatory requirements for implementing work requirements. CMS added the hold harmless period option and confirmed that states operating within the parameters of mitigation plans would avoid formal compliance action and penalties for higher eligibility error rates. The reconciliation law increased financial risk for eligibility errors raising concern among states that they would be penalized for inaccurate eligibility determinations related to work requirements. States must notify CMS by December 11, 2026 if they plan to adopt the hold harmless option.
The compressed timeline coupled with unclear policy guidance has created barriers to successful implementation of Medicaid work requirements for states and risks for enrollees. With coverage at risk for millions of people, the optional delay could help (in states that take the option) to ensure that eligible individuals are not denied coverage or disenrolled, at least temporarily, because their state was not ready to implement the changes.