What Are the New Work Requirements for Medicaid?

Medicaid was created alongside Medicare in 1965. While Medicare was intended to offer affordable health care for seniors, the goal of Medicaid was to provide care for people who could not otherwise afford it—those with low incomes, with disabilities, or both. Some people may even be eligible for both programs.

Medicaid has undergone changes over the years, most notably with the Affordable Care Act in 2010, more commonly known as Obamacare. Starting in 2014, states had the choice to accept additional federal funding in the short-term to pursue Medicaid expansion. Now, it seems ever more sweeping changes may come to pass.

On January 11, 2018, the Centers for Medicare and Medicaid Services, under CMS head Seema Vera, encouraged states to design pilot programs that impose work or job training requirements on Medicaid recipients. The goal, she claimed, was to improve the quality of life for people on Medicaid. States can make their proposals through waivers, but they must then get federal approval.

The issue is far more complex than CMS leads you to believe.

Work and Wellness

In all likelihood, the issue is less about health and wellbeing than about dollars and cents. After all, the Trump administration did try to cut hundreds of millions of dollars from Medicaid in 2017 with the failed American Health Care Act/Better Care Reconciliation Act.

Instead of matching spending with the states, the law would have used block grants or per capita limits to fund Medicaid programs. Most states would be unable to make up for the shortfall and would need to reduce benefits, create waiting lists, require people to pay for coverage, or impose other cost-cutting changes.

Work requirements would reduce the number of people eligible for Medicaid and would decrease overall enrollment in the program. The overall effect would be to decrease Medicaid spending and to shift care towards employer-sponsored health plans.

There have been no studies to show that working requirements in and of themselves improve quality of life. To the contrary, there are studies that show that Medicaid expansion has improved both health outcomes and community involvement.

A 2015 study in the journal PLoS One compared more than 16,000 low-income adults in states with and without Medicaid expansion. The researchers found that not only were low-income individuals more likely to be black or rural residents, but they were also more likely to have better health outcomes if they lived in states that had Medicaid expansion.

When it comes to community involvement, states with Medicaid expansion have shown an increase in volunteerism from their Medicaid recipients. This is shown in a 2017 study in the journal Socius. Whether volunteering was formal through an organization or informal within neighborhoods, rates were notably increased, especially within minority groups.

Able-Bodied Americans and Medicaid Work Requirements

In 2016, 72.2 million people were enrolled in the program. Generally speaking, around 40% of Medicaid recipients are children. Once children, the elderly, and people on Supplemental Security Income (SSI) are excluded, 24.6 million adults remain.

Of that group, 60% (14.8 million) were working—42% full time (at least 35 hours per week) and 18% part-time. Of those not working (9.8 million), 14 percent had an illness or disability, 12% were involved in caregiving, 6% were in school, and 7% were not working for other reasons.

People who qualify for Social Security Disability Insurance (SSDI) also qualify for Medicaid. However, having a disability recognized by these programs is not always easy. The criteria are strict and the majority of cases are denied. According to the most recent data, 1,677,057 people applied for disability benefits in 2018 but only 32.6% were approved. That leaves a lot of people with impairments without access to these programs.

CMS specifically states that work requirements should only be considered for able-bodied candidates, but they don't define what that means. Each state will need to set its own guidelines for what it deems to be "able-bodied."

Satisfying the Medicaid Work Requirement

Eight states had their waivers approved for Medicaid work requirements. They included Arizona, Georgia, Indiana, Nebraska, Ohio, South Carolina, Utah, and Wisconsin. Only Indiana and Utah implemented them. Seven other states were pending approval.

Altogether, Kentucky and 18 other states applied for waivers. Arizona, Arkansas, Georgia, Kentucky, Michigan, Montana, Nebraska, Ohio, Oklahoma, South Carolina, South Dakota and Wisconsin would require 80 hours of work per month; Indiana up to 20 hours per week; Alabama, Idaho and Mississippi 20 hours of work per week; New Hampshire 100 hours per month; and Utah three consecutive months of job search/training unless they are working 30 hours per week.

What constitutes "work" also varies by state. Activities include caregiving, drug treatment, education, employment and volunteerism.

Exemptions From Medicaid Work Requirements

Not everyone will be faced with a Medicaid work requirement. Each state that applies for a waiver specifies who is exempt from the requirement. For each exemption category, a state may require that different criteria be met.

The most common exemption is age. All states excuse anyone 65 years and older from these work requirements. Some states allow more flexibility. Arizona, Arkansas, Ohio and Wisconsin exempt people 50 years and older; Montana 55 years and older; and six states 60 years and over.

Caring for children 6 years and younger or for a dependent disabled child or adult generally makes one exempt as well. Some states may extend this to older children and even foster care.

Although hours spent in drug treatment meets the work requirement in some states, it is considered an exemption in others. Students are also excluded from the requirement. However, the age of the student and the number of hours of school attendance may come into play. Being on unemployment compensation could make you exempt in some states.

The Debate on Medicaid Work Requirements

Those who support Medicaid work requirements argue it will save money for the states. However, it may also lead to more spending. In 2018, when the Medicaid waivers were first approved, only 33 states, including the District of Columbia, had pursued Medicaid expansion. By 2021, 39 states had expanded Medicaid.

A number of law suits fought against Medicare work requirements, claiming they changed the intended purpose of Medicaid which is to provide health care for the poor. Federal district courts blocked the requirements from taking effect in Arkansas, New Hampshire, Kentucky, and Missouri. Indiana subsequently withdrew its work requirements due to the political climate.

Under the Biden administration, the Centers for Medicare and Medicaid Services has sent letters to the eight states previously approved for work requirements as well as the four states where the courts had temporarily halted them. The letters state "CMS may withdraw waivers or expenditure authorities if it “finds that a demonstration project is not likely to achieve the statutory purposes" and that "CMS has preliminarily determined that allowing work and other community engagement requirements to take effect ... would not promote the objectives of the Medicaid program".

A Word From Verywell

Medicaid could undergo some major changes. Starting in 2018, states applied to add work requirements to their Medicaid programs. To date, four programs have been waived by the courts. Others have been approved but not implemented. Ten are pending.

While some people may be exempt from these work requirements based on age, caregiving, disability, or for being an active student, many won't. Whether or not you are for or against Medicaid work requirements, more states may choose to expand Medicaid as a result.