Federal Changes to Medicaid Work Requirements Limit State Flexibility

In August 2025, significant updates to federal Medicaid work requirements have been announced, limiting the flexibility states previously had to craft their own policies. President Donald Trump signed legislation introducing new work mandates for certain Medicaid recipients, thereby restricting how states can design their programs. While Georgia currently stands as the only state with an active Medicaid work requirement, many others have sought to implement similar policies over the years. However, efforts in states like South Dakota were halted due to concerns that their proposed rules would not align with the new federal standards.

States such as Arkansas have proposed stricter work requirements than those mandated federally, with no exemptions, and are awaiting approval from the Centers for Medicare & Medicaid Services. Arizona's plan notably includes a unique five-year lifetime limit on Medicaid benefits for certain able-bodied adults, a provision not in federal law. Several states are working closely with federal officials to ensure their proposals meet the new guidelines, which now set clearer boundaries for work mandates.

The Department of Health and Human Services is expected to release detailed rules by mid-2026 to govern state implementations. These regulations will define how states can proceed with demonstration waivers, a key tool for testing policy innovations. States like Montana and South Carolina are already working on such waivers, with Montana aiming to incorporate additional exemptions for vulnerable populations.

Congressional Republicans' recent budget laws facilitate the use of waivers to expedite stricter requirements, but experts warn these programs may face legal challenges. The federal law currently requires a minimum of 80 hours of work or education per month, with exemptions for medically frail individuals and parents of young children.

Overall, the evolving federal stance is narrowing the scope for states to independently formulate work requirements, emphasizing a more standardized national approach while leaving some room for state-specific modifications. The outcome of this policy shift will influence Medicaid access and coverage in multiple states across the country.