The Centers for Medicare and Medicaid Services’ long-awaited rule implementing the Medicaid work requirements Congress passed last summer will make it much tougher for people with disabilities to qualify for benefits. But the rules provide some surprising flexibility for low-income family caregivers who are at risk of losing their own benefits if they must reduce work hours to care for loved ones.

The 387-page CMS rule imposes new paperwork burdens that will drive many people with disabilities out of Medicaid even if they are eligible. Starting no later than January 1, 2027, beneficiaries must show, at least twice a year, that they work a minimum of 80 hours a month, are in school, or doing community service. The new rules apply to the more than 40 states that expanded Medicaid under the 2010 Affordable Care Act.

People who cannot prove they either are working or are exempt from the work requirement will lose their Medicaid benefits. States may require recipients to recertify what CMS calls “community engagement” even more frequently than semi-annually.

As many as 10 million people could lose Medicaid benefits due to the work requirement, according to the Urban Institute. Many of those still would be eligible for benefits but will lose coverage because they will be unable to manage the paperwork.

Who Is Exempt?

Because the 2025 budget bill that cut Medicaid left many key issues unresolved, CMS had to fill in the legal blanks. One of the biggest: Who is exempt from the work requirement?

In general, people are excused if they meet certain conditions including being pregnant or disabled, are medically frail, parents of young children, or caregivers of people with disabilities. Children and people age 65 and older also are freed from the new mandate. But what does “medically frail” mean? And who are caregivers of people with disabilities?

For 2027, Medicaid beneficiaries will be able to assert they meet one of these categories without providing documentation. But beginning in 2028, they’ll be able to self-attest only one time. After that, they’ll need to produce paperwork to prove they still are eligible for Medicaid.

CMS excepts states to determine whether people are eligible by using existing records, such as medical claims. But when there are gaps in that information, and there inevitably will be, new rules put the burden on applicants and current beneficiaries to regularly prove they are eligible. To do that, they may need to have letters from doctors or insurance records.

Many states expected CMS to, in effect, approve a list of medical conditions that would exempt people from the work requirement if those conditions were likely to worsen without access to medical care.

Instead, CMS adopted a much more restrictive rule. Beneficiaries must not only prove they have a specific listed condition but also that it causes such severe physical or cognitive impairment that they cannot work at least 80 hours a week.

Family Caregivers

In contrast to the stringent work requirements for care recipients, CMS is much more flexible when it comes to family caregivers. Here is why that issue is so important:

Imagine a woman working at a low-wage job who is caring for her mother. Both the daughter and mother are on Medicaid. As mom becomes more frail and needs additional assistance, her daughter must cut her work hours or stop paid work entirely. Recent studies show this happens to roughly one-in-four family caregivers, many of them low-income.

CMS acknowledged that caregiving may, “meaningfully limit a family caregiver’s ability to participate in work or other community engagement activities.” As a result, it exempts them from the work requirement if they provide a broad range of assistance “on a regular basis” to a person with a disability of any age, including frail older adults. Multiple family members caring for the same relative may be exempt from the work requirement.

Defining Care Needs

But they still must be assisting someone with care needs. What does that mean?

For the purposes of deciding whether a family caregiver is exempt from work requirements, CMS said the person receiving care must meet the definition of disability under the American with Disabilities Act, which uses a very broad standard.

The ADA applies to anyone who “has a physical or mental impairment that substantially limits one or more major life activities, has a record of such an impairment, or is regarded as having such an impairment.” Importantly, according to CMS, “These definitions are not tied to work incapacity or eligibility for cash assistance and instead focus on functional limitation.”

It appears that family caregivers can avoid the work requirement by asserting they are caring for a loved one, without providing detailed medical evidence of the care recipient’s need.

However, they still could be tripped up by the work requirement. If they fail to receive a notice that they must reapply, can’t access an online enrollee portal, or make a mistake in the application process, they still could lose benefits.

One odd result of the more liberal standard: A family caregiver may be exempt from the Medicaid work requirement even if they are assisting a relative who is ineligible for Medicaid benefits because the state says they are able to work.

How Will The States Manage?

Another issue is how states, which operate Medicaid, will manage all this new reporting. Many are burdened by insufficient staff and outdated computer systems. CMS says it will help states enhance their systems by providing technical assistance, $200 million in Government Efficiency Grants, and what it promises will be $600 million in support from technology companies.

However, states are likely to spend vastly more than what they’ll get from the feds. North Carolina, for example, reports it will spend more than $30 million annually to enforce the rules but has received only $1.9 million in federal aid.

Two hundred million dollars divided among 40+ states is a drop in the bucket. And the history of Trump Administration promises of private sector support for other efforts has been spotty at best.

The new rules are extremely controversial. Don’t be surprised if CMS is sued over them, in part because the rules appear to divert from the statute in key respects. But, in the meantime, they threaten to further limit the ability of low-income people to get the health care benefits and family support they need.