Medicaid Work Requirements Start Nationwide January 1, 2027: Nebraska's First Data and 25 States in Court

Nebraska started checking work requirements for Medicaid early. From May 1, 2026, adults applying for coverage under the state’s Medicaid expansion had to show they worked, volunteered or studied at least 80 hours a month. From July 1 the rule applied to people renewing. By the end of September, at least 1,090 people had lost coverage or been denied. Of those who lost coverage at renewal, 92% lost it for procedural reasons, paperwork not filed or not processed, and more than half of new applicants were being denied.

On January 1, 2027, every state with a Medicaid expansion has to do the same.

Photo: Carol M. Highsmith, public domain via Wikimedia Commons

What the law requires

The requirement comes from the July 2025 reconciliation law. It applies to adults aged 19 to 64 in the expansion group. They need 80 hours a month of work, community service, a work program or half-time school, or monthly income of at least 80 times the federal minimum wage, about $580 in 2026. Medically frail people, parents and caregivers, and several other groups are exempt.

CMS issued the rules as an interim final rule on June 3, 2026, effective July 31. States must comply by January 1, 2027, though they can get good-faith exemptions running no later than the end of 2028. Self-attestation is allowed until the end of 2027.

CMS projects about 2.3 million fewer people enrolled in fiscal 2027 and about $660 million in state systems costs. The Congressional Budget Office estimated that work requirements alone would leave 5.3 million more people uninsured by 2034, the largest single coverage effect in the law.

States push back

On June 29, 2026, 25 states and the District of Columbia sued over the rule’s definition of medically frail, which they argue is narrower than the law. On October 1 the governors of Oregon, California, Maine, New Mexico and Virginia asked HHS to delay the January deadline.

Some states moved the other way. Montana and Arkansas began on July 1, Iowa starts on December 1.

Why paperwork drives the numbers

The Nebraska figures point to the central issue. Most coverage losses under work requirements come from people who fail to report, or whose reports aren’t processed, more than from people who don’t meet the hours. Arkansas found the same in 2018, when its earlier work requirement cost about 18,000 people coverage before a court stopped it.

That makes state administration the deciding factor. States that pull data automatically from wage records and other programs will drop fewer eligible people. States that rely on monthly self-reporting will drop more. The interim rule allows look-back periods of one to three months and lets states use existing data, but building those links takes time most states don’t have before January.

The budget logic

For Washington, the requirement saves money mainly by reducing enrollment. For states, it’s a cost: new systems, more caseworkers and, for expansion states, a smaller federal match on a smaller population. It lands alongside the end of new provider taxes and the shift of SNAP costs to states.

The first national data will come in the spring of 2027. Nebraska’s numbers suggest what to look for: how many people lose coverage because they didn’t meet the hours, and how many because the paperwork failed.