June 17, 2026  – The Centers for Medicare & Medicaid Services (CMS) has released new federal guidance outlining how states must implement Medicaid work requirements beginning in 2027, marking one of the most significant changes to Medicaid eligibility in years.

The policy, issued through an interim final rule by the U.S. Department of Health and Human Services (HHS), requires state Medicaid agencies to establish what the federal government calls “community engagement” requirements for certain Medicaid beneficiaries. States must have the new eligibility standards in place by January 1, 2027.

The rule stems from provisions included in the One Big Beautiful Bill Act, signed into law in 2025. Under the legislation, certain adults enrolled through the Affordable Care Act’s Medicaid expansion program will be required to demonstrate participation in qualifying activities to maintain coverage.

Eligible activities include paid employment, education, job training, community service, caregiving responsibilities, or a combination of these activities. In most cases, beneficiaries will need to complete at least 80 hours of qualifying activities per month or meet specified earnings thresholds.

Federal officials say the rule provides states with the framework needed to verify compliance and determine eligibility. While the regulation places primary responsibility on state Medicaid agencies, it also outlines how managed care organizations (MCOs) may participate in supporting implementation efforts.

The policy is expected to have a substantial impact on Medicaid enrollment nationwide. Some analysts have estimated that between three million and seven million people could lose Medicaid coverage by 2028 as a result of the new requirements. Studies have also suggested that many individuals who are already working could still face disenrollment if they are unable to meet documentation requirements or comply with more frequent eligibility reviews.

For managed care organizations, the rule provides long-awaited clarification regarding their role in the process. The rule establishes limits on what managed care organizations can do. Plans cannot collect or monitor members’ day-to-day work activity information, nor can they issue formal notices informing beneficiaries that they are out of compliance. Those responsibilities remain solely with state agencies.

Another key provision protects beneficiaries from losing coverage immediately during eligibility reviews. States must continue providing Medicaid coverage while individuals are given an opportunity to respond to notices of potential noncompliance. Coverage may only be terminated after the state determines the person is no longer eligible.

Individuals who lose coverage under the new requirements will still be allowed to reapply for Medicaid if they later meet eligibility standards. 

Although the rule is currently classified as an interim final regulation, it will take effect while CMS collects public comments through July 31, 2026. Federal officials may revise portions of the policy after reviewing stakeholder feedback.