Understanding Medicaid Work Requirement Interim Final Rule (IFR)

On June 1, 2026, the Centers for Medicare & Medicaid Services (CMS) issued an Interim Final Rule (IFR), implementing new Medicaid work requirements, or “community engagement requirements.” The new rule will go into effect on January 1, 2027.

Who is exempt from work requirements?

While the Interim Final Rule (IFR) includes exemptions for many people with disabilities, not all will be automatically exempt. Some groups of people without disabilities also qualify for certain exemptions. Exempt groups include individual who:

• Are under age 19 or over age 64
• Have a serious or complex medical condition
• Receive Supplemental Security Income (SSI)
• Receive Social Security Disability Insurance (SSDI)
• Are entitled to or enrolled in Medicare
• Are receiving Supplemental Nutrition Assistance Program benefits and are NOT exempt from the SNAP work requirements
• Already meet the work requirements in the Temporary Assistance for Needy Families (TANF) program
• Have a substance use disorder
• Are in a substance use disorder treatment program
• Are blind
• Are pregnant or receiving postpartum Medicaid coverage
• Provide caregiving for children under 14 or for other disabled people
• Are veterans with a total disability rating from the Department of Veterans Affairs
• Are former foster youth under the age of 26
• Have been recently incarcerated within the last three months
• Have physical, intellectual, or developmental disabilities that significantly impair their ability to perform one or more activities of daily living
• Have what CMS calls “disabling mental disorders” – this likely means disabling mental health disorders, but you will need to check how your state defines this exemption
• Are Indigenous people, Native Americans, Alaska Natives, members of federally recognized tribes, or individuals who qualify for healthcare through Indian Health Service (the IFR refers to individuals in all of these groups as “American Indians”)

Who does the rule apply to?

Medicaid work requirements only apply to the “Medicaid expansion population” – adults aged 18-64 in the 41 states that expanded Medicaid under the Affordable Care Act. Medicaid expansion insures many people with disabilities.

Individuals living in Alabama, Florida, Kansa, Mississippi, South Carolina, Texas, and Wyoming are not affected by the work requirements. The requirements also do not apply to Alaska Natives, Native Americans, or those residing in US territories.

Key change from H.R.1 Work Requirements

Medically Frail

The IFR creates five categories to qualify as “medically frail:

• Disability – definition is SSA-based and distinct from other IFR disability standards
• Substance Use Disorder – limited to 5 years of recovery, determined “stable recovery”
• Disabling Mental Health
• Activities of Daily Living (ADL) Needs
• “Serious or complex” – based on the 1999 Institute of Medicine (IOM) definition
  1. “…a medical condition that is life threatening, seriously disabling without necessarily being life threatening, causing significant pain or discomfort that can cause serious interruptions to life activities, requiring a major time or effort commitment from caregivers for a substantial period of time, requiring frequent monitoring, associated with severe consequences or negative consequences for someone else, affecting multiple organ systems, requiring management to tight physiological parameters, requiring coordination of multiple specialties, requiring treatment that carries a risk of serious complications, or requiring adjustment in non-medical environments.”

Additionally, the IFR add the requirement that the condition must “significantly impair” work reporting requirement compliance. However, the IFR leaves it up to states to determine what “significant impairment” means.

Starting January 1, 2028 states may only accept self-attestation as “medically frail” once. After that, they must verify with data or documentation starting at the next renewal.

Next Steps for Implementation of the IFR

Public Comment

While the IFR is final, there is a 60-day public comment period. CMS is accepting comments on the IFR until July 31, 2026.

State Implementation

States and their Medicaid agencies will begin designing and planning how they will implement the new guidance and requirements for the work requirements. Federal law and CMS regulations require that states directly outreach to Medicaid recipients about the work requirements at least three months prior to implementation. This means, they must start no later than Fall .

Additional Resource

For additional questions, please refer to the American Association of People with Disabilities (AAPD) Frequently Asked Questions (FAQ).