A federal district judge largely blocked an attempt by the Trump Administration to add further limits on Medicaid eligibility beyond the strict curbs Congress adopted in 2025’s HR 1. If the ruling is upheld by higher courts, it could allow beneficiaries and applicants for Medicaid long-term services and supports a bit of flexibility when HR1’s strict work requirements begin to take effect next year.

Under the 2025 law, younger people with disabilities, or even their family caregivers, are at risk of losing their Medicaid if they do not work, go to school, or perform community service at least 80 hours -a-month.

The law exempts people age 65 and older from the work requirements but not younger people with disabilities. It also excludes people with certain medical conditions who are defined as being medically frail or whose disability limits their ability to perform a specified daily activity, such as bathing or dressing.

However, last summer the Trump Administration added another layer to that exemption. Under its new rules, not only do you have to meet the HR 1 requirements, you also have to show proof you are so “significantly impaired” you cannot work.

The Court Case

On Oct 29, a federal district court judge in Massachusetts ruled that Congress did not authorize Medicaid to add that test. As long as beneficiaries are frailty as the law defines it, Medicaid cannot also require them to prove they can not work as condition of receiving benefits, according to the decision.

The court concluded that imposing the significant impairment requirement was unlawful and blocked it.

The case was brought by 26 states that opposed that extra test. Under the judge’s order, they’ll get an extra six months to implement the more lenient version of the work requirement. This is important because some of these states already were changing their computer systems to comply with the stricter test.

If it is upheld, the court decision likely applies to all states. But it is not clear what happens if a state chooses to implement the stricter test on its own. Another lawsuit similar to the Massachusetts case is pending in a federal court in Maryland.

The judge did not strike down the main provisions of the work requirement, which still would begin in January. The broader law applies to all states that expanded their Medicaid programs after the 2010 Affordable Care Act.

States are deeply divided over the broader work requirement. Even as the 28 blue states sued to water down the new standard, others, including Indiana, Idaho, New Hampshire, and North Carolina have adopted other, even stricter work rules.

Practical Problems

Besides its questionable legality, there are many practical problems with the ability-to-work exemption. Mainly, many states still have no functioning process for a Medicaid recipient or applicant to provide evidence they cannot work.

If Medicaid’s “significantly impaired” rule is eventually upheld, some states will try to rely on medical claims data to determine some’s eligibility. However, the law prevents them from using only billing codes, while providing little guidance on what they can use. Besides, medical records describe a patient’s health history, not whether they can work.

States could ask applicants’ doctors, but physicians are not trained to determine whether someone can work or not. They can diagnose patient’s condition and even describe any limitations in their functional abilities such as, say, whether they can lift a certain amount of weight. But can they say patients are so impaired they cannot work? Many doctors are unwilling to go there.

Medicaid And Social Security

Another big issue is how these new rules conflict with Social Security’s disability program.  Many younger people with physical or cognitive limitations receive Social Security disability or Supplemental Security Income payments. But to do so, they must show they are unable to work. To qualify for Medicaid, they must work, or, under the original Trump Administration rules, prove they cannot.

Worse, the two laws have completely different definitions of work and disability. Qualifying for SSI requires a rigorous five-step process. For example, while an applicant must show evidence of severe impairment, that is based on medical criteria, not ability to work. A doctor must fill out forms that describe a patient’s physical and cognitive abilities. But they do not attest to whether an applicant can work.

SSI does make its own determination about whether a medical condition prevents an applicant from working. But for Social Security disability, people with one of hundreds of conditions effectively are automatically considered unable to work.

And because SSDI applicants often must wait as long as two years before they know whether they are eligible for benefits, they often must rely only on Medicaid during the delay. But if you work even part-time to keep Medicaid, you could lose disability benefits.

It isn’t a trivial problem. The research organization KFF estimates that in 2023, more than 220,000 people were receiving Medicaid while they waited for Social Security to determine whether they qualified for SSI.

Catch-22

These conflicts between Social Security and Medicaid will leave many in a Catch-22. Navigating the maze of these two conflicting programs means many will lose benefits from one or both, even if they are eligible for both programs. And that in fact is the point: To drown applicants for federal benefits in red tape, thus denying assistance even to those who are eligible.

Then, there is the ability of states to review all this new paperwork. The law says beneficiaries must reconfirm their Medicaid eligibility, including their exemption from the work requirement, at least twice a year. Some states will require even more frequent recertifications.

But many state Medicaid offices, already short-staffed and often technologically challenged, won’t have the ability to review all this extra paperwork. Many likely will rely on contractors to review determinations of medical frailty and, if the Trump rules eventually stand, inability to work.

Last week’s court ruling was a step towards easing what will be an enormous challenge for low-income frail people. But it won’t fix the real problem: A work requirement that past experience shows will not increase employment but will result in people losing health care and becoming sicker.