Juliette Palmer serves as Senior Regulatory Intelligence Analyst at Radicle Health, where she helps human services organizations navigate evolving regulations and policy impacts on technology and care delivery.

One of the most consequential changes ever made to the Medicaid program will go into effect in January 2027: work requirements as a condition for receiving benefits.

Historically, Medicaid didn’t cover non-disabled, childless adults. Under the ACA in 2010, the “Medicaid Expansion” added roughly 20 million non-disabled, working-age adults to the program, leading some policymakers to question whether there should be additional requirements for these recipients.

Although there have been two state attempts to impose work requirements on Medicaid benefits, working has never been a condition for receiving Medicaid nationwide. As of July 4, 2025, H.R. 1. made the requirements mandatory nationwide for the first time, and they’ll be enforced beginning January 1, 2027. That means another compliance task to track, another potential source of client attrition, and another risk to revenue if eligibility is lost.

The challenge isn’t that Medicaid recipients aren’t working. As of 2023, about 64% of adult Medicaid beneficiaries were already employed. The real challenges are twofold:

• Helping clients navigate confusion about their enrollment status
• Keeping up with the documentation and verification required to prove eligibility

 

For Medicaid providers, the stakes are high: According to Congressional Budget Office (CBO) estimates, the proposed Medicaid policy changes could lead to 10.3 million fewer people enrolled in Medicaid, with 7.8 million becoming uninsured over the next decade.

At Radicle Health, we spend a lot of time thinking about what policy changes like this mean for behavioral health and human service providers. We’ve taken a close look at how Medicaid work requirements are likely to affect you and your team and where operational pressure points are most likely to emerge.

In the following article, we break down what providers should expect and how to prepare, including:

• The policy context
• Key timelines and implementation guidance
• Verification requirements, system updates, and operational changes
• What agencies should prepare for
• Why some client populations will face greater eligibility risk
• Why patient engagement matters more than ever
• Tools that help agencies track eligibility, reduce churn, and protect revenue

 

How Medicaid Work Requirements Can Lead to Coverage Loss

Many of your clients will qualify for Medicaid work requirement exemptions. People with disabilities, children and parents of young children, seniors, and other categories provide automatic exemption. But even people who qualify for a Medicaid work requirement exemption may not realize it or may be confused about their eligibility.

For providers, that aggravates a familiar operational problem: coverage churn. Whether your clients lose eligibility due to the new requirements, or disengage because they assume they’re no longer eligible, they could (even temporarily):

• Delay their care
• Disengage from treatment
• Re-engage when their conditions worsen or they’re faced with a crisis

 

Research shows that nearly 1 in 4 Medicaid enrollees experience coverage churn each year, often because of administrative reporting or documentation requirements rather than true eligibility changes. Adding an entirely new category of eligibility requirement—work or community participation—can be expected to compound the problem of administrative churn. Frustration is only part of the outcome. Individuals could lose their coverage and not receive the care they need as a result. The big question is how new systems and policies being implemented today can protect against coverage churn instead of exacerbating it.

Federal oversight from the Centers for Medicare & Medicaid Services exists, but your organization’s expectations will ultimately be guided by your state’s rules and implementation.

A number of states even applied for Medicaid waivers to roll out their own work requirements, and two states implemented work requirements in their Medicaid programs within the last decade. In both of these states, administrative complexity and recipient confusion led to significant coverage loss, even among Medicaid recipients who were exempt from the work requirements.

According to Healthcare Dive, researchers analyzed eight Medicaid performance indicators to evaluate how well states serve beneficiaries. They found that 29 states exhibited red flags for at least half of the eight metrics, indicating widespread operational challenges across the country.

According to the same research, call center wait times and abandonment rates have already been high. A significant share of Medicaid renewals remained pending at the end of each month during the first quarter studied, suggesting applications may be backlogged. In one state, 71.4% of renewals were still stuck in “pending” status.

These red flags pointed to persistent issues in areas such as:

• Access to care
• Quality of services
• Administrative efficiency

 

Bottom line? If state Medicaid offices struggle to keep all the administrative balls in the air on a normal day, they’re unlikely to be prepared for the level of demand on their systems and employees when 20 million people become uncertain about their Medicaid eligibility.

“Restricting access to Medicaid through work requirements jeopardizes health for millions of people and places a massive burden on states, which would be forced to administer these incredibly complex regulations with increasingly tight budgets and limited staff.” — Katherine Hempstead, senior policy adviser at the Robert Wood Johnson Foundation (RWJF)
Source: TechTarget

Looking ahead, the projected effects of Medicaid work requirements are substantial. And the resulting churn will have a direct impact on your organization’s finances.

In addition to the millions disenrolled and uninsured, the losses stand to hit providers hard. According to The Commonwealth Fund, Community Health Centers could lose up to $32 billion within 5 years of the work requirement implementation. And they’re not alone — many other providers have a similarly heavy Medicaid payer mix.

Federal and State Timelines for Implementation

Federal Guidance

• The bill requires the Secretary of Health and Human Services (HHS) to provide implementation guidance to states by June 1, 2026, including definitions and clarification of the standards outlined in the legislation.
• The Centers for Medicare & Medicaid Services (CMS) released initial guidance on December 8, 2025, with additional guidance expected throughout 2026 as states prepare for implementation.

 

State Implementation

• States must implement Medicaid work requirements by January 1, 2027. That said, states can move sooner by pursuing Section 1115 waivers that allow earlier rollout.
• Some states may be going this route: Nebraska has announced an early implementation date of May 1, 2026.

 

Possible Extensions

• The legislation allows the HHS Secretary to grant extensions for states that demonstrate a good-faith effort to meet the requirements, pushing the deadline as far out as December 31, 2028.

 

Regardless of the exact timeline in your state, the direction is clear: these requirements are coming, and preparation can’t wait.

What We Know About Medicaid Work Requirement Rules

Ex Parte Eligibility Requirement

States must maintain the ability to automatically renew eligibility for clients who continue to meet basic criteria, without additional paperwork. The ex parte verification will involve the Medicaid system receiving electronic data from other systems of record, such as state tax data, Social Security or unemployment income databases, or SNAP and other public benefits databases.

Important to note: This ex parte process must occur before states start to reach out to recipients for paperwork to document their eligibility status.

Recognizing this added lift, the legislation does include some funding to support system upgrades.

System Upgrades and IT Readiness

States will need to update or modernize eligibility and case management systems to meet the ex parte verification requirement as well as to document Medicaid work requirement exemptions and recipients’ ongoing participation in work or community engagement.

H.R. 1 includes $200 million in implementation funding to be distributed across all states and the District of Columbia. It also provides a 90% federal match for the cost of designing, building, and upgrading IT systems, along with an ongoing 75% match for system maintenance.

Even with these provisions, it’s clear that the total cost of implementation will far exceed the allotted funding. States will still face significant financial pressure to design, build, and sustain the systems required to meet new requirements.

Key actions include:

• Linking eligibility portals with client participation data (work, school, or exemption status).
• Implementing Consent Based Verification (CBSV), which allows individual recipients to grant the state access to their personal income data from multiple sources (useful to determine income and work hours for non-traditional workers — like part-timers and gig workers).
• Handling recipient communication and outreach.
• Managing reminders for redetermination periods.
• Changing application and renewal documents, both paper and electronic systems, to capture data such as volunteer hours and enrollment in substance use treatment programs.
• Securing documentation of client activity and exemption claims.

 

Ongoing Verification

Agencies should anticipate managing ongoing verification, including client outreach, staff follow-ups, and interaction with state portals to track eligibility and exemptions.

Taken together, these requirements represent a meaningful operational shift for states and providers on the front lines.

How Providers Should Prepare for Medicaid Work Requirements

You’ll need to make some key adjustments to intake, thread eligibility verification into daily practice, and incorporate pre-billing verification into your billing cycle. And you’ll need your staff to stay on the chase to make sure your clients stay covered.

Workflow and Staff Training

Staff will need training to navigate new reporting requirements, exemptions, and documentation standards.

You can expect workflow changes such as:

• Updating intake forms and verification checklists
• Clarifying responsibilities for tracking, documentation, and client support

 

Planning for Coverage Gaps

Even with ex parte processes and outreach, some clients may experience temporary coverage loss or delays in eligibility confirmation.

You should prepare for:

• Incorporating eligibility checks into the course of daily operations
• Claim denials due to coverage gaps
  • Establish processes to quickly identify and reprocess denied claims when coverage is reinstated. Tracking these denials separately can help staff resolve them faster and maintain visibility into clients whose eligibility status has changed.
• Referral pathways for clients needing workforce support or social services

 

Checklist: Official Paperwork & Process Requirements

✔️ Verify you have the correct forms for documenting eligibility, adherence to work requirements, and exemptions.

✔️ Ensure staff are connected to the portal(s) where eligibility must be checked.

✔️ Document client participation in:

• • Work-related activities (≥80 hours/month)
  • School attendance (half-time or more)

✔️ Maintain documentation for Medicaid work requirement exemptions, including:

• • Parents of dependent children
  • Individuals who are medically frail:
    • Individuals with disabilities include developmental disabilities, substance used disorder, or “disabling” mental health condition.

✔️ Update forms and flows in time for Summer/Fall 2026 (aligned with your state’s updates).

✔️ Prepare operational processes for when work requirements go into effect January 2027.

More info about reducing coverage loss from the Center on Budget and Policy Priorities here.

But meeting these requirements on paper is only part of the equation. How you operationalize them day to day will make the real difference.

Checklist: Operational / Planning Considerations

✔️ Account for clinician or staff time spent helping clients track coverage or understand options.

✔️ Plan for claim denials related to clients who lose coverage; categorize and track follow-up.

✔️ Assign staff responsible for calling MCOs or payers to challenge coverage decisions or correct errors.

✔️ Assess percentage of clients at risk of losing coverage.

✔️ Identify and track referral opportunities in your area for individuals who need assistance entering the workforce. This could include:

• • Workforce development programs
  • Job training and placement agencies
  • Community-based support programs
  • Apprenticeship or internship opportunities

✔️ Plan for program-level impacts if census shrinks:

• • Open hours
  • Staffing needs
  • Service delivery adjustments

✔️ Hold internal discussions now to strategize coverage changes and operational impacts.

And at the center of all these planning efforts is one critical factor: staying connected to your clients.

Patient Involvement Paves the Path to Continuous Coverage

Staying connected to clients is now essential for protecting your clients’ coverage and access to services, the relationships you’ve built, and your revenue.

As eligibility requirements become more complex, client engagement becomes part of the eligibility process itself. Providers who can maintain regular contact with clients will be better positioned to help them respond to requests for documentation, complete verification steps, and address issues before coverage lapses occur.

Organizations should ensure their systems support structured outreach, reminders, and follow-up. Having clear visibility into who needs documentation, who is approaching redetermination, and who may be at risk of losing coverage can make the difference between a temporary paperwork issue and a disruption in care.

How the Right Technology Can Help Connect the Dots

New employment verification hurdles will not affect every client equally. For some individuals, documenting work activities will be straightforward. For others, especially those facing housing instability, inconsistent employment, or limited access to communication tools, the requirements may create additional barriers.

Providers should expect that already-vulnerable people will be at greater risk of coverage loss, and the risk of coverage gaps and service interruptions will be on the rise.

Understanding how to meet people where they are is what providers do best, so be sure to plan a variety of support strategies for the people you serve, to meet different life circumstances. The goal is twofold: persistent documentation and strong visibility into risk.

This is where having the right systems in place can turn a complex requirement into a manageable process.

Radicle Health platforms like AWARDS and AxiomEHR, and SaraWorks are designed to support this kind of coordination.

Both AWARDS and AxiomEHR enable teams to track work participation, documentation, and eligibility status in one centralized client record, with tools to collect verification materials. They also support reporting, workflows, and audit trails to help organizations coordinate follow-up and maintain compliance. Participation data can be connected to other services and care work, giving teams better visibility into client progress and potential gaps.

SaraWorks provides HIPAA-compliant, automated outreach to clients to obtain their latest work and training updates.

With the right technology at work behind the scenes, providers can focus on delivering quality care without too many disruptions.

The Bottom Line: Eligibility Is Now a Moving Target

Agencies that successfully incorporate eligibility tracking and outreach into their workflows and audit trails will be in good shape to protect their clients. It isn’t “set-it-and-forget-it,” but it should not feel like an ad hoc, highly manual process either. Knowing what’s on the horizon and having the right systems in place will save your sanity, your roster, and your revenue.

If you’d like to see how Radicle Health products are already helping providers and their clients navigate this new requirement with confidence, grab 15 minutes on our calendar.

We’re always here to talk you through it.