H.R.1, signed into law by President Trump on July 4, 2025, requires that states implement work reporting requirements for adults ages 19 through 64 who are enrolled through Medicaid expansion or expansion-like coverage under a section 1115 demonstration. The effective date of work reporting requirements is January 1, 2027, though the statute establishes an option for states to request a good faith waiver to delay implementation for up to two years, through December 31, 2028, subject to approval by the Secretary of Health and Human Services.1 The statute requires the Secretary to release an interim final rule with details on how states will need to implement work reporting requirements no later than June 1, 2026.
States will need to proactively prepare for the implementation of mandatory Medicaid work reporting requirements by developing comprehensive policy and operational plans that align with federal guidelines while addressing state-specific needs. This preparation will require the development of a central governance structure and strong coordination across state agencies. To facilitate a smooth transition, states will want to establish clear policies on compliance activities, exemptions, reporting processes, and consequences for non-compliance, while also investing in outreach, training, and support systems to assist individuals in understanding and meeting the new requirements. Operationally, states will need to upgrade information technology (IT) systems, streamline data sharing across agencies, and build robust monitoring and appeals mechanisms to safeguard coverage for eligible individuals and minimize administrative errors. States will be developing these new policies and operational processes while also planning for the implementation of new federal requirements for six-month renewal processes for expansion adults, which are also effective January 1, 2027.
It is therefore critical for states to identify opportunities to gather insights and input from the individuals and communities that will be affected by the implementation of work reporting requirements. Under the Ensuring Access to Medicaid Services final rule (the "Access Final Rule"), states are required to establish Beneficiary Advisory Councils (BACs) and Medicaid Advisory Committees (MACs). The BACs and MACs are tasked with advising states on the effective administration of the Medicaid program and they provide states with opportunities to directly engage Medicaid enrollees and community members in ways that build and maintain trust, ultimately strengthening the Medicaid program. Engaging the BAC and MAC early and intentionally in the planning and implementation of work reporting requirements allows states to better anticipate and avoid administrative hurdles, while also identifying opportunities to reduce burdens for both agencies and enrollees. State officials should coordinate with colleagues supporting the BAC and MAC to engage these bodies in the design and implementation of Medicaid work reporting requirements.
The table below outlines the key implementation milestones that it is anticipated states will need to meet to launch work reporting requirements and a timeline for doing so—by January 1, 2027. To implement by this date, states need to begin policy and operational design immediately if they have not already started. Given the extensive policy, operational, and IT systems changes required, any state implementing work reporting requirements by January 1, 2027—less than 18 months from now—faces a significant risk that it will struggle to do so in full accordance with H.R.1, risking coverage loss for eligible individuals who meet or are exempt from the work reporting requirements and high Payment Error Rate Measurement (PERM) program error rates that could result in substantial fiscal penalties. Even if they work diligently and rapidly, many states will face substantial challenges in meeting this timeline simply because of the complexity of the task, including securing financing, designing policy and operations, hiring vendors and eligibility staff, testing and verifying the accuracy of their systems, and establishing the IT verification systems mandated by statute. Given competing eligibility and enrollment changes such as six-month renewals and an aggressive timeline that would be unrealistic for states to achieve for even smaller projects, it is reasonable to expect that states will seek good faith waivers, as allowable under the statute. States may also wish to work with the Centers for Medicare & Medicaid Services (CMS) to highlight what would be a minimum viable product to go live by January 1, 2027, in order to mitigate against the risk of unintended coverage loss and sizable PERM penalties.
These milestones and timelines are subject to change as states begin to move forward with their implementation, and the table will be updated accordingly.
Footnote
1. Per H.R.1, in determining whether a state is demonstrating a good faith effort, the Secretary will take into account: (1) any actions taken by the state towards complying with implementation; (2) any significant barriers or challenges in meeting those requirements including challenges related to funding, design, development, procurement or installation of necessary systems or resources; (3) the detailed plan and timeline for achieving full compliance (including any milestones, as defined by the Secretary); and (4) any other criteria determined appropriate by the Secretary.
To view the full article, click here.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
