Summary
Highlights
The lawsuit does not challenge the existence of Medicaid work requirements established by Congress, but rather the additional rules created by CMS. States argue that CMS exceeded its authority by adding restrictions on exemptions and proof requirements, potentially causing eligible individuals to lose coverage.
One key area of disagreement is the CMS rule requiring medically frail individuals not only to have a condition but also to prove it 'significantly impairs their ability to meet work requirements.' States contend Congress intended exemption based on medical condition alone, without this additional, vague test.
States were initially told by CMS they would have broad flexibility in identifying exempt individuals and had begun preparing their systems and processes accordingly. However, CMS issued a final rule just last month (June 1st) with significant, last-minute changes, including the 'significantly impairs' clause, new restrictions on self-attestation, and limits on medical claim look-back periods. This has left states in an impossible situation, facing potential federal penalties for misinterpreting unclear rules as they rush to implement by the January 1st deadline.
The lawsuit targets seven particular aspects of the new CMS rule: blocking the 'significantly impairs' requirement for medically frail individuals, challenging the inability to rely on diagnosis alone, removing limits on self-attestation for ongoing or new conditions, extending the 12-month limit on medical claims, blocking the 'prior month hardship' rule for hospitalizations, challenging added requirements for disaster exemptions, and modifying renewal procedures that shorten the compliance period.
While the lawsuit doesn't stop the new rules yet, it offers hope for changes. Medicaid recipients, especially those with medical conditions or disabilities, are advised to keep their contact information updated with their state Medicaid office, open all correspondence, and prepare medical documentation. A critical date is August 31st, 2026, when states are slated to begin notifying recipients of changes. It's crucial to respond to any state requests for information to avoid losing coverage for procedural reasons.