On June 1, 2026, the Centers for Medicare & Medicaid Services (CMS) issued an Interim Final Rule with Comment Period (IFR) establishing binding standards for how states must implement Medicaid community engagement ("work") requirements enacted under the One Big Beautiful Bill Act (P.L. 119-21), also referred to as H.R. 1. States must implement the requirement no later than January 1, 2027, though some states, including Nebraska, have already moved forward with early implementation.

Read the IFR Read the CMS Fact Sheet

What the Rule Mean

Non-pregnant adults ages 19–64 enrolled in Medicaid expansion—a provision of the Affordable Care Act (P.L. 111-148) that allows states to extend Medicaid coverage to most low-income adults with incomes up to 138 percent of the federal poverty level—must demonstrate at least 80 hours per month of qualifying activities as a condition of eligibility in 43 expansion states and Washington, D.C. Qualifying activities include one or a combination of the following:

Employment
Community service
Participation in a work program
Half-time enrollment in an educational or career and technical education program
Monthly income of at least $580 (equal to the federal minimum wage multiplied by 80 hours, as of 2026)

Key exemptions include former foster youth, American Indians and Alaska Natives, parents or caregivers of children age 13 or younger or of a disabled individual, veterans with a total disability rating, medically frail individuals, those already meeting Supplemental Nutrition Assistance Program (SNAP) or Temporary Assistance for Needy Families (TANF) work requirements, individuals in drug or alcohol treatment, incarcerated individuals and pregnant or postpartum individuals.

If a state cannot verify compliance, it must issue a noncompliance notice and allow 30 days for the individual to demonstrate compliance or establish an exemption before coverage is denied or terminated.

What This Means for Counties

The IFR carries significant implications for counties, which play a central role in financing and administering Medicaid and in delivering health care services to residents.
For counties that administer or support Medicaid eligibility and enrollment, the rule signals a substantial increase in administrative responsibilities. Counties will likely need additional staff capacity to manage new verification workflows, process documentation of exemptions and hardship exceptions, issue and track noncompliance notices and coordinate across Medicaid, SNAP, TANF and workforce systems. These operational demands will require close coordination with state partners and may require investment in updated eligibility systems and staff training ahead of the January 1, 2027 deadline.

For all counties, the rule raises concerns about rising uncompensated care costs. When eligible individuals are unable to meet community engagement requirements and lose Medicaid coverage, they do not disappear from the health care system — they seek care through county hospitals, community health centers and safety-net providers, who are often required to provide care regardless of ability to pay. As coverage losses grow, the financial pressure on county-supported health infrastructure will likely increase, particularly in communities with higher rates of low-income residents.

NACo will continue to monitor implementation of the IFR and provide analysis as additional guidance is released. NACo will also work with federal partners and advocate for counties to have the resources and support needed to manage increased administrative and financial demands as states move toward the January 1, 2027 implementation deadline.

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