Medicaid and Work Requirements: New Guidance, State
Waiver Details and Key Issues
MaryBeth Musumeci, Rachel Garfield, Robin Rudowitz
On January 11, 2018, the Centers for Medicare and Medicaid Services (CMS) issued a State
Medicaid Director Letter providing new guidance for Section 1115 waiver proposals that would
impose work requirements (referred to as community engagement) in Medicaid as a condition
of eligibility. The guidance describes the potential scope of requirements that could be approved and
presents the case for how these policies promote the objectives of the Medicaid program. This action reverses
previous Democratic and Republican Administrations, which had not approved such waiver requests on the
basis that such provisions would not further the program’s purposes of promoting health coverage and access.
The guidance asserts that such provisions would promote program objectives by helping states “in their efforts
to improve Medicaid enrollee health and well-being through incentivizing work and community engagement.”
The guidance invites proposals that are “designed to promote better mental, physical, and emotional health. . .
[or] separately. . . help individuals and families rise out of poverty and attain independence.”
CMS has approved a work requirement waiver in Kentucky, and nine other states have
submitted proposals to CMS. As of mid-January 2018, eight states (AR, AZ, IN, KS, ME, NH, UT, and WI)
have pending waiver requests at CMS that would require work as a condition of eligibility for expansion adults
and/or traditional populations (Mississippi has also submitted a waiver proposal to CMS, but it has not yet
been certified as complete.) Medicaid work requirement proposals generally would require beneficiaries to
verify their participation in approved activities, such as employment, job search, or job training programs, for a
certain number of hours per week in order to receive health coverage. The proposals typically would exempt
certain populations, but little detail is available
about how the policies would be administered and
how the exemptions would be obtained. See Table 1
for a summary of the covered populations, common
exemptions, qualifying work activities and required
hours for each state waiver.
Most nonelderly Medicaid adults already are
working or face significant barriers to work,
leaving a very small share of adults to whom
these policies are directed. Six in ten Medicaid
adults are already working (Figure 1). Among those
who are not working, most report illness or
Figure 1
Working Full Time
42%
Working Part-Time
18%
Not Working Due to
Illness or Disability
14%
Not Working Due to
School Attendance
6%
Not Working Due to
Caregiving
12%
Not Working for
Other Reason
7%
Notes: “Not Working for Other Reason” includes retired, could not find work, or other reason. Working Full-Time is based on total
number of hours worked per week (at least 35 hours). Full-time workers may be simultaneously working more than one-job.
Source: Kaiser Family Foundation analysis of March 2017 Current Population Survey.
Work Status and Reason for Not Working Among Non-SSI,
Nonelderly Medicaid Adults, 2016
Total = 24.6 million
Medicaid and Work Requirements: New Guidance, State Waiver Details and Key Issues 2
disability, caregiving responsibilities, or going to school as reasons for not working. Many of these reasons
would likely qualify as exemptions from work requirement policies. This would leave 7% of the population to
whom work requirement policies could be directed, including those who report they are not working because
they are looking for work and unable to find a job.
It is not clear whether tying eligibility to work promotes health. While there is some research
showing that increased income or employment is associated with improved health outcomes and mortality, it is
difficult to determine the direction of causation—whether income and work lead to better health, or whether
better health facilitates income and work. In addition, research has found some deleterious health effects of
work, particularly for people in shift work positions or those with high job insecurity, and evaluations of
existing work requirements in other programs find weak evidence for an effect on health and well-being. There
is some evidence of positive effects in programs targeted to people eligible for Medicaid on the basis of a
disability, but work is voluntary under those programs, and Medicaid provides a full range of supportive
services to enable individuals to continue coverage as income increases.
Working at minimum wage could make some people financially ineligible for Medicaid in states
with low eligibility levels for adults. Many people working full-time are still eligible for Medicaid,
especially in Medicaid expansion states, because they are working low-wage jobs. For example, an individual
working full-time (40 hours/week) for the full year (52 weeks) at the federal minimum wage ($7.25/hour)
would earn an annual salary of just over $15,000 a year, or about 125% of poverty, below the 138% FPL
maximum targeted by the Medicaid expansion. However, in Kansas and Mississippi (both non-expansion
states with low eligibility levels for parents), meeting Medicaid work requirements through 20 hours of work
per week at minimum wage could lead to loss of Medicaid eligibility. In addition, these jobs are unlikely to have
health benefits. In 2017, less than a third of workers who worked at or below their state’s minimum wage had
an offer of health coverage through their employer, according to a Kaiser Family Foundation analysis.
Work requirements have implications for all populations covered under these demonstrations.
Those who are already working still must successfully document and verify their compliance. Those who
qualify for an exemption also must successfully document and verify their exempt status, as often as monthly.
States would need to pay for the staff and systems to track work verification and exemptions.
Because of complex documentation and administrative processes, some eligible individuals
could lose coverage. There is a real risk of eligible people losing coverage due to their inability to navigate
these processes, miscommunication, or other breakdowns in the administrative process. People with
disabilities may have challenges navigating the system to obtain an exemption for which they qualify and end
up losing coverage. Years of eligibility and enrollment experience with both Medicaid and the Children’s Health
Insurance Program (CHIP) shows that complex enrollment rules and documentation result in barriers to
coverage, while enrollment simplification and streamlining helps promote coverage.
Increased documentation requirements shift Medicaid from a health insurance program for
low-income families back to one that operates under welfare rules. Beginning with children when
Medicaid coverage was de-linked from receipt of cash-assistance, to expanded coverage under CHIP and most
recently to parents and other adults with the ACA, Medicaid has served as a health coverage program with the
Medicaid and Work Requirements: New Guidance, State Waiver Details and Key Issues 3
purpose of promoting access to care. Under the ACA, states were required to develop new systems to
coordinate and streamline enrollment across health care programs. These changes, in conjunction with fewer
and less frequent documentation requirements, resulted in advances in coverage and facilitated integration
with Marketplace coverage. CMS’s work requirement waiver guidance instead explicitly supports alignment of
Medicaid with SNAP or TANF welfare reporting and policies.
Administrative challenges and costs of complex waiver provisions, like work requirements,
make waiver implementation complicated. Some states have decided to not implement waiver
authority that they have received due to administrative costs. For example, Arkansas did not implement its
health savings accounts after considering a number of factors, including the administrative expense of the
accounts and the size of the monthly contributions members would make. Indiana is seeking to amend its
waiver that originally set premiums at 2% of income and wants to change to a tiered structure instead, citing
administrative complexity and costs. Kentucky amended its waiver application seeking to move from a tiered
hour work requirement (depending on length of program enrollment) to a flat hourly requirement, also citing
administrative concerns. Unlike TANF agencies or workforce development agencies, state Medicaid agencies
are generally not currently equipped to develop, provide, and administer work support programs.
The CMS guidance is explicit that states will be required to describe strategies to assist
beneficiaries in meeting work requirements but may not use federal Medicaid funds for
supportive services to help people overcome barriers to work. It is unclear how states will come up
with the additional funds needed to address successfully the multiple barriers (childcare, transportation,
education, training, etc.) that interfere with the ability to work.
There are questions about the public input process and budget neutrality calculations in work
requirement waivers. Public comments are a part of the waiver approval process, but the Kentucky waiver
approval and other pending waivers did not allow for public comments that could take into account the recent
guidance from CMS. Also, the CMS guidance specifies that states will not be permitted to accrue savings from
reductions in enrollment that occur as a result of the waiver; however, a number of pending proposals do point
to reductions in enrollment in the budget neutrality calculations.
Robust independent evaluations, including the impact of these demonstrations on people who
lose coverage for which they remain eligible, will be an important area to watch. The guidance
says that evaluation designs must include a discussion of hypotheses that waivers hope to test, such as work
requirements leading to improved health, well-being, and independence. The evaluation design calls for
surveys of beneficiaries (both those enrolled and no longer enrolled as a result of the waiver) and acknowledges
that evaluations “must be designed to determine. . . the impact of the demonstration on Medicaid
beneficiaries and on individuals who experience a lapse in eligibility or coverage for failure to meet the
program requirements or because they have gained employer-sponsored insurance.”
AR
AZ
KS
ME
MS
NH
UT
WI
Expansion
adults
X
X
X
Traditional
adults*
X
(parents
0-38% FPL)
X
(parents
0-105% FPL)
X
(parents
0-27% FPL)
X
(parents
60-100% FPL;
childless adults
0-100% FPL)
X
(childless
adults
0-100% FPL)
Age
50+
55+
65+
65+
65+
65+
60+
50+
Disability/
medically frail
X
X
X
X
X
X
X
Drug treatment
X
X
X
X
X
X
Students
X
X
X
X
X
Catastrophic
event
X
X
Caregiving
X
X
X
X
X
X
X
X
Unemployment
compensation
X
X
X
X
Employment
X
X
X
X
X
X
X
Job Search
X
X
X
X
X
X
Job Training
X
X
X
X
X
X
Volunteer/
community
service
X
X
X
X
X
Education
X
X
X
X
X
80/month
20/week
20-30/week
20/week
20/week
20-30/week
3 consecutive
months of job
search/training
unless working
30/week
80/month
NOTES: Specific details, such as the criteria to establish disability, type of educational programs permitted, whether caregiving extends beyond dependent children up to age 6, and
qualifications for certain work activities, vary by state. States may provide additional exemptions or work activities. *Other groups, such as Transitional Medical Assistance, family
planning only, or former foster care youth, may be included in some states. **In KY, drug treatment is a work activity, not an exemption. KY enrollees can seek good cause exemptions if
they can verify one of the following in their month of noncompliance: disability, hospitalization, or serious illness of enrollee or immediate family member in the home; birth or death of
family member living with enrollee; severe inclement weather including natural disaster; family emergency or other life-changing event such as divorce or domestic violence. In addition, 1
primary caregiver of a dependent minor child or adult with disabilities per household is exempt, and caregiving for a non-dependent relative or another person with a disabling medical
condition is a work activity in KY. SOURCE: Kaiser Family Foundation analysis of states’ Section 1115 waiver applications posted on Medicaid.gov.
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