CMS issues new guidance on Medicaid Community Engagement Requirements

Key Takeaways

On December 8, the Centers for Medicare & Medicaid Services (CMS) released a Medicaid and CHIP Services Informational Bulletin (CIB) directing states on how to implement the Medicaid community engagement requirements enacted under Section 71119 of the One Big Beautiful Bill Act legislation (P.L. 119-21), or H.R. 1. This sweeping reconciliation package included significant changes to the Medicaid program, including the enactment of community engagement requirements, otherwise known as “work requirements”. This change carries significant implications for counties, which play a central role in financing and administering Medicaid, and in delivering healthcare services for residents.

This sub-regulatory guidance does not establish new policy; rather, it clarifies existing policy information that CMS considers relevant for implementation. CMS is required to issue an Interim Final Rule to implement these requirements by June 6, 2026, which will likely include additional operational details and may introduce new policy considerations for states implementing the community engagement requirements. This CIB follows a November 18 Informational Bulletin and is part of a series of CMS documents that will be released as states prepare for implementation.

Watch the Webinar Recording  Read the Guidance

What are community engagement (“work”) requirements

Prior to the passage of H.R. 1, states could impose Medicaid work or reporting requirements only through a Section 1115 waiver. Following enactment of H.R. 1, work requirements are now mandatory for certain Medicaid populations nationwide, effective no later than December 31, 2026. States must condition eligibility for adults ages 19–64 in the expansion population on completing at least 80 hours per month of work, qualifying community activities or part-time schooling. County leaders can learn more about Medicaid Community Engagement requirements in NACo’s recent webinar on H.R. 1 implementation. 

What does the guidance do

CMS’ guidance focuses on who is subject to community engagement requirements, who is excluded and what states must do to implement the policy

Who must meet the requirements

The guidance clarifies that community engagement requirements apply to adults aged 19-64 who are enrolled in Medicaid and either resides in a state that covers the Medicaid expansion adult group or resides in a state that covers a similar adult population through an 1115 demonstration that provides minimum essential coverage. CMS frames this policy as aligning Medicaid with long-standing work and engagement requirements used in other public benefit programs, such as Supplemental Nutrition Assistance Program (SNAP) and Temporary Assistance for Needy Families (TANF).

What qualifies as meeting the requirement

Applicable individuals must demonstrate one of the following for at least 80 hours per month:

• Work
• Community service
• Participation in a work program
• Enrollment half-time in education/career and technical education
• Combination of these
• OR meet the income alternative (≥80 hours × federal minimum wage)

Mandatory exclusions

CMS specifies populations that cannot be subject to community engagement requirements, including:

• 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
• Individuals who are medically frail or have significant medical needs, including substance use disorders or disabling mental disorders
• Individuals already meeting SNAP or TANF work requirements
• Individuals participating in drug treatment programs
• Incarcerated individuals
• Pregnant and postpartum individuals

Optional exceptions states may provide

States may also offer exceptions for certain groups, including:

• Individuals under age 19
• Medicare beneficiaries
• Recently released individuals (within three months of release)
• Individuals experiencing short-term hardship, such as:
  • Hospitalization, nursing facility care or acute treatment
  • Living in a county under a disaster declaration or experiencing high unemployment
  • Required long-distance travel for specialty medical care

State implementation requirements

The guidance outlines several operational expectations for states, including that they must:

• Conduct required outreach explaining who is subject, how to comply and the consequences of non-compliance
• Use available reliable data first before asking beneficiaries for documentation (e.g., payroll, education enrollment, encounter data)
• Issue a non-compliance notice and provide a 30-day period to correct or show exemption
• Continue Medicaid coverage for beneficiaries during the 30-day response period

The guidance also provides some flexibility for states, allowing them to choose to do the following:

• Choose whether applicants must show 1, 2, or 3 months of engagement prior to application
• Define “short-term hardship” exceptions (within federal parameters)
• Verify compliance more frequently than renewal cycles
• Allow beneficiaries flexibility in which months they meet the requirement between renewals
• Implement earlier than 2027 through a state plan amendment or 1115 demonstration

Finally the guidance outlines that state are not permitted to:

• Waive community engagement requirements through 1115 waiver authority
• Choose specific months for beneficiaries to demonstrate engagement
• Deny or terminate eligibility without giving 30 days to resolve
• Use community engagement non-compliance to deny increased FMAP or allow individuals access to Marketplace PTCs, meaning that individuals remain treated as Medicaid-eligible even if disenrolled for non-compliance

Funding

CMS indicates that federal funds are available to develop systems, support system upgrades and fund operational changes needed for implementation. In total, CMS will award $200 million across all states and Washington, D.C. Half of these funds ($100 million) will be divided equally between the 51 eligible recipients; the other half ($100 million) will be allocated based on the proportion of individuals subject to the work
requirement in each state as of March 31, 2025.

Timeline

States must adopt these requirements by January 1, 2027, though they may implement them earlier. States may also apply for a temporary good-faith effort exemption, which would delay implementation until no later than December 31, 2028.

County Impact

For counties that administer or support Medicaid eligibility and enrollment, CMS’ guidance signals increased administrative responsibilities and costs tied to new verification, documentation and reporting requirements associated with community engagement policies. Counties will likely need to coordinate more closely with state agencies and align workflows across Medicaid, SNAP, TANF and workforce systems, while also helping residents understand and document exemptions or temporary hardships. In addition, if eligible individuals are unable to meet community engagement requirements and lose coverage, counties may face higher uncompensated care costs through county hospitals, health systems and safety-net providers, increasing financial pressure on local health care infrastructure as states move toward the January 1, 2027 implementation deadline. NACo will continue to provide analysis on implementation guidance as more information is made available to help counties partner with states on implementation of community engagement requirements.