New Medicaid Work Requirements Under the One Big Beautiful Bill Act, by Henry Norwood, Esq., 1-8-2026

The One Big Beautiful Bill Act (H.R. 1), signed into law on July 4, 2025, establishes mandatory “community engagement” requirements for certain Medicaid enrollees.

The law conditions continued Medicaid eligibility for affected individuals on participation in work or other qualifying community engagement activities. These provisions represent a significant change to Medicaid eligibility policy for states that have adopted the Affordable Care Act (ACA) Medicaid expansion and for certain states covering similar populations under approved Section 1115 demonstration waivers.

Overview of the Requirements

H.R. 1 requires states to implement Medicaid community engagement requirements no later than January 1, 2027, subject to federal rulemaking and guidance from the U.S. Department of Health and Human Services (HHS).

The requirements generally apply to non-exempt adults ages 19–64 who are enrolled in Medicaid through the ACA expansion population or through a comparable coverage group authorized under a Section 1115 demonstration that provides minimum essential coverage.

To maintain Medicaid eligibility, affected individuals must complete at least 80 hours per month of qualifying community engagement activities. Permissible activities may include employment, participation in a job training or workforce development program, enrollment in an educational program (at least half-time), community service activities, or a combination of these activities, as further defined by federal guidance. For more on the requirements, see this helpful summary.

Exemptions

The statute establishes several mandatory exemptions from the community engagement requirements, including:

• Pregnant and postpartum individuals
• Individuals who are incarcerated or recently released from incarceration, as defined by HHS
• Individuals participating in a qualifying substance use disorder (SUD) treatment program
• Parents or caregivers of dependent children age 13 or under, or of individuals with disabilities
• Individuals who are medically frail or who have qualifying disabilities or serious medical conditions, including individuals who are blind or disabled, have a substance use disorder, a serious mental illness, a physical, intellectual, or developmental disability, or a serious or complex medical condition
• Certain disabled veterans
• Former foster care youth under age 26
• Individuals who already satisfy work or participation requirements through other programs, such as the Supplemental Nutrition Assistance Program (SNAP) or Temporary Assistance for Needy Families (TANF)

States may also adopt temporary hardship exemptions, consistent with federal standards and guidance, for circumstances such as natural disasters or other qualifying disruptions.

Administration and Enforcement

States are required to establish systems for verifying compliance with the community engagement requirements and must provide beneficiaries with notice and an opportunity to demonstrate compliance or qualify for an exemption before Medicaid coverage is denied or terminated.

The bill requires that HHS provide implementation guidance to states by June 1, 2026, including definitions and clarifications of standards mentioned in the bill text. On December 8, 2025, the Centers for Medicare & Medicaid Services (CMS) issued initial guidance and CMS is expected to issue additional guidance in 2026.

Consequences for Non-Compliance

• Notice of non-compliance: States must issue notice of non-compliance (via mail and at least one other form of contact) to the Medicaid member or applicant if verification fails.
• Disenrollment: After receiving a notice of non-compliance, members have 30 days to show compliance before disenrollment.

Next Steps

States, providers, beneficiaries, and other stakeholders should closely monitor forthcoming HHS rulemaking, CMS guidance, and state implementation decisions, which will determine the specific scope, timing, reporting requirements, exemptions, and enforcement mechanisms associated with the new Medicaid community engagement requirements.

Author: Henry Norwood is Of Counsel in KD’s San Francisco office