CMS Announces New Policy Guidance for States on Medicaid Work Requirements

January 24, 2018|4:21 p.m.| Emily Moore

On Jan. 11, 2018, CMS announced new policy guidance allowing states to test participation in work or other community engagement as a requirement for continued Medicaid eligibility or coverage for certain Medicaid adult beneficiaries through demonstration projects authorized under section 1115 of the Social Security Act.

Historically, CMS has not approved provisions of Section 1115 waiver applicationsi that included work requirements as a condition of eligibility and coverage for Medicaid, citing that conditions of eligibility were codified by statute alone. However, new policy guidance detailed in the Jan. 11 letter to state Medicaid directors reverses this position and invites waiver applications that seek to test work requirements. Examples of work or community engagement activities provided in the letter include skills training, education, job searching, caregiving, and volunteering.

Ten Things S/THOs Need to Know About Medicaid Work and Community Engagement Requirements:

  1. Emphasis on Flexibility: Overall, the letter emphasizes flexibility in designing requirements based on states’ specific populations and resources. Beyond encouraging states to consider aligning Medicaid requirements with other programs (such as TANF or SNAPii) and prioritizing the needs of their jurisdictions, CMS will leave it to states to determine many aspects of their proposals, including: identifying eligibility groups subject to a demonstration; defining protections for those unable to meet the requirements; designing allowable activities; permitting changes in requirements due to economic or environmental factors; outlining enrollee reporting requirements; and identifying the availability of work support programs.

  2. Impact on Specific Populations:
    1. Disabled individuals: While the policy guidance applies to adults who are eligible for Medicaid on a basis other than disability (i.e., classified as “non-disabled”), CMS notes that these individuals may have illnesses or disabilities recognized by federal statutes that may limit their ability to meet any requirements. States will be required to comply with all applicable federal civil rights laws and must have a process to evaluate individuals’ ability to participate with reasonable modifications available to those who need them.
    2. Pregnant women: CMS states that individuals eligible for Medicaid as pregnant women would be exempt from this policy.
    3. Substance-involved individuals: In light of the opioid epidemic, CMS requires states to create processes that ensure eligible individuals with substance use disorders have access to appropriate Medicaid coverage and treatment and make reasonable modifications for these individuals. Examples of suggested modifications include counting time spent in medical treatment or exempting those participating in intensive medical treatment. These modifications will need to be described in any demonstration application.
  3. Some Individuals Will Lose Coverage: A 2017 Medicaid and CHIP Payment and Access Commission (MACPAC) report on work requirements as a condition of Medicaid eligibility discusses the potential implications of these requirements. One study cited in the report estimated that approximately 60 percent of non-disabled adults with Medicaid are employed on a full- or part-time basis. In other words, 40 percent may be subject to work requirements. As work requirements for Medicaid have not yet been tested, states have only been able to estimate of the number of individuals who will lose coverage after work requirements are applied. Previously, Indiana estimated that 25 percent of the population subject to the work requirement would choose not to participate and therefore be disenrolled. Kentucky estimated in its initial application that the requirements would reduce adult enrollment by 15 percent over the five-year project.

  4. Evidence on Work and Community Engagement Requirements: While CMS cited evidence on the health benefits of employment, the evidence on work and community engagement requirements is mixed. Imposing work requirements in TANF resulted in some gains in work activity and labor participation after welfare reform. However, these gains varied among single mothers regardless of how stringent state work requirements were and other studies suggest the effects of TANF work requirements were not sustained over time. 

  5. Alignment with SNAP and TANF programs: CMS recommends that states make a “reasonable effort to align” work requirements with SNAP and TANF programs that may already require employment or community engagement requirements, when appropriate. While CMS notes that alignment with these programs would be considered in evaluating the state’s application, the language used indicates that alignment with TANF and SNAP rules is non-binding. 

  6. Evaluation and Reporting: CMS will evaluate each demonstration proposal on its own merits, rather than set evaluation criteria, as part of its emphasis on flexibility. CMS notes that defined populations and rationale, planned processes for determining eligibility, and reasonable modification should be detailed in any waiver application. However, CMS does not describe what level of detail is required in the application, what should be reported to CMS as part of implementation, and how states are expected to evaluate their demonstration projects.

  7. Limited Funding: While states will be required to describe strategies to help beneficiaries meet work and community engagement requirements, federal funding to finance these services will not be provided, as there are no changes in the types of services eligible for Federal match. States will need to fund these work supports themselves and/or bolster current activities from state employment and human service agencies. It is unclear whether CMS would approve applications that describe strategies to link beneficiaries without additional resources for job coaching and other services.

  8. Administrative Capacity: Implementing work and community engagement requirements will require administrative capacity and infrastructure technology to accurately track how different populations are fulfilling these requirements. The MACPAC report noted that three-quarters of states experienced at least a moderate degree of difficulty in implementing the necessary IT systems to track beneficiary work activities and hours in TANF. Careful selection of measures (e.g., focus on job placement and retention rather than actual activity hours) and alignment with SNAP and TANF may help reduce some burden on states in coordination across agencies and with employers.

  9. Current State Efforts: Many states already have experience supporting employment as a benefit provided through home and community based waivers under the 1915(c) and 1915(i) authorities. This experience in providing prevocational and supported employment services (e.g., job coaching, training, and monitoring) is primarily for those with disabilities, however they can inform how waiver programs could incorporate community engagement for identified adults.

  10. Informal Guidance vs. Rulemaking: By issuing this policy change as informal guidance, CMS did not provide the opportunity for public comment, with final policymaking decisions tied to an administrative record. While each 1115 waiver will be subject to public notice and comment individually in each state and at the federal level, the informal guidance does not include many details that would be expected in rulemaking, largely leaving decisions to states on designing these programs.

Kentucky HEALTH and Forthcoming State Applications

On Jan. 12, 2018, Kentucky became the first state to receive approval from CMS for conditioning continued eligibility for Medicaid coverage on work requirements.

CMS approved Kentucky’s Section 1115 demonstration project, “Kentucky Helping to Engage and Achieve Long Term Health (KY HEALTH).” In this program, non-pregnant, non-disabled, working-age adults covered through Medicaid expansion must participate in at least 80 hours per month of work requirements, which can also be satisfied through volunteering and job training activities. Individuals will have their eligibility suspended for failure to comply, but will be able to reactivate their eligibility on the first day of the month after they complete 80 hours of community engagement in a 30-day period or a state-approved health literacy or financial literacy course. More than ten states are expected to follow in Kentucky’s footsteps.

In addition to several forthcoming state applications, there may be legal challenges arguing that work requirements do not promote the Medicaid program’s objectives because they present barriers to coverage.

S/THOs should engage with their Medicaid counterparts on Section 1115 waiver applications to provide a population health perspective. Reviewing evidence on supporting vulnerable populations and maintaining access to coverage and treatment will be helpful when advising on potential policy changes.

Learn more about CMS Section 1115 demonstration waivers and direct questions to Deborah Fournier (, ASTHO’s senior director of clinical to community connections.

i Section 1115 waivers provide states a mechanism to expand Medicaid eligibility to individuals who are not otherwise eligible, provide services not typically covered by Medicaid, and/or test innovative approaches for improving the health and wellness of vulnerable and low-income individuals and families by waiving certain federal provisions and Medicaid requirements. States negotiate specific waiver provisions with CMS and approval is contingent on the demonstration projects meeting criteria to promote the Medicaid program’s objectives.

ii The Supplemental Nutrition Assistance Program (SNAP, formerly the Food Stamp Program) and Temporary Assistance for Needy Families (TANF) cash assistance programs are two programs available to low income individuals who meet federal poverty level criteria to provide resources for food cash benefits, respectively.

Emily MooreEmily Moore, Director, Clinical to Community Connections helps manage ASTHO’s work on payment and delivery reform, developing cross-sector partnerships to advance population health, and innovations in care delivery. As part of this work, she leads ASTHO’s portfolio in telehealth.