States Brace for New Medicaid Work Requirements, Drawing Lessons from Pandemic-Era Unwinding Challenges

The 2025 reconciliation law mandates a significant shift in Medicaid policy, requiring states to condition eligibility for adults in the Affordable Care Act (ACA) Medicaid expansion group, as well as enrollees in partial expansion waiver programs in Georgia and Wisconsin, on meeting work requirements. This transformative change is set to commence on January 1, 2027, though states retain the option to implement these requirements earlier. The ambitious timeline necessitates states to rapidly develop new policies and operational frameworks, devise comprehensive outreach and education strategies, undertake critical system upgrades, and recruit and train additional staff. As states embark on this complex endeavor, many are looking to their recent experiences with the "Medicaid unwinding" for crucial insights and cautionary tales.

The Mandate: Reshaping Medicaid Eligibility

The federal directive introduces a new layer of eligibility criteria for a substantial segment of the Medicaid population. The ACA Medicaid expansion, enacted under the Affordable Care Act, allowed states to extend coverage to nearly all low-income adults with incomes up to 138% of the federal poverty level. Currently, 41 states and the District of Columbia have adopted this expansion, covering millions of individuals. The new reconciliation law now ties this coverage to specific work or work-related activity requirements. While the precise definition of "work requirements" will vary based on state-level policy decisions and federal guidance, typically, these mandates involve a minimum number of hours spent in employment, job training, education, community service, or other approved activities. Exemptions are usually granted for specific populations, such as individuals with disabilities, pregnant women, caregivers, or those undergoing substance use disorder treatment. This marks a notable policy pivot, aiming to encourage self-sufficiency and reduce perceived dependency on public assistance, aligning with a long-standing conservative policy objective. However, critics often argue that such requirements disproportionately affect vulnerable populations, increase administrative burdens, and can lead to eligible individuals losing vital health coverage due to procedural hurdles.

Echoes of the Unwinding: A Recent Precedent

The "Medicaid unwinding," which began in April 2023, provides a recent and extensive case study in managing large-scale changes to Medicaid eligibility. For over three years, during the COVID-19 public health emergency, a continuous enrollment provision protected Medicaid beneficiaries from disenrollment in exchange for enhanced federal matching funds to states. This policy ensured millions maintained their health coverage during a national crisis, with Medicaid enrollment soaring to historic highs of over 95 million people. When the continuous enrollment provision ended, states were tasked with redetermining the eligibility of every single individual on their Medicaid rolls – a monumental administrative undertaking. The unwinding process has seen millions disenrolled, with many losing coverage not because they were ineligible, but due to procedural issues, such as missed paperwork, outdated contact information, or an inability to navigate complex renewal processes. As of late 2024, over 20 million individuals have been disenrolled across the country, highlighting the immense challenges involved in communicating complex policy changes and processing renewals efficiently. This experience underscored the intricate nature of Medicaid eligibility, where outcomes are heavily influenced by federal and state policy decisions, the robustness of implementation strategies, and the capabilities of underlying IT systems.

Key Lessons from the Unwinding Experience

Interviews with state officials, managed care plans, primary care associations, and advocacy organizations conducted by KFF and insights from the 23rd annual budget survey of Medicaid officials have yielded critical lessons from the unwinding that are directly applicable to the impending work requirements.

• Strategic Outreach and Communication: Successful outreach during the unwinding employed a diverse array of strategies. States expanded communication touchpoints significantly, leveraging multi-modal approaches including traditional media campaigns, paid advertising, press conferences, and comprehensive toolkits for partner organizations. Direct outreach through mailers and text messaging proved crucial, alongside targeted efforts for specific populations, such as those with limited English proficiency. States also innovated to update contact information, utilizing databases like the National Change of Address and accepting updates from Managed Care Organizations (MCOs), which significantly reduced returned mail. A key takeaway was the delicate balance required between the frequency of outreach and the clarity of messaging, ensuring enrollees were informed without being overwhelmed or confused by information.

• Leveraging Partnerships and Feedback Loops: The unwinding demonstrated the indispensable role of broad partnerships. Most states collaborated extensively with MCOs, healthcare providers (including community health centers and pharmacies), community-based organizations, navigator/assister groups, and faith-based entities. These partners amplified state-led outreach, with local marketing and word-of-mouth proving particularly effective in reaching hard-to-engage populations. Regular meetings and robust feedback loops with community partners were vital for identifying and addressing emerging problems quickly. Conversely, states with limited engagement with these partners experienced greater frustration and more widespread reports of procedural difficulties. MCOs, in particular, proved capable of taking on new roles under certain waivers, assisting with direct enrollee outreach and sharing updated contact information, which was mutually beneficial for states and health plans.

• Navigating Systemic and Staffing Hurdles: A recurring challenge during the unwinding was the inadequacy of state IT systems. Many systems were described as outdated, difficult to use, and incapable of generating real-time analytics. Compounding this, widespread staffing shortages and high turnover rates among eligibility workers led to slower processing times, significant backlogs, and a workforce often lacking sufficient experience to manage the increased workload. In response, states took steps such as increasing ex parte (automated) renewal rates and investing in additional staff training. The experience highlighted that without significant investment in modernizing IT infrastructure and bolstering the workforce, future policy changes, like work requirements, risk similar or even greater administrative bottlenecks.

• The Power of Streamlined Processes: Streamlining renewal processes, particularly through increased reliance on ex parte renewals, proved critical for maintaining coverage for eligible individuals and reducing administrative burden. Prior to the unwinding, two-thirds of states had already taken steps to improve ex parte renewal rates, such as enhancing system programming rules and expanding data sources. States with more adaptable systems found it easier to integrate new data sources and prioritize automation, directly lessening the workload on human staff. The ability of integrated eligibility systems—which allow individuals to apply for and renew multiple benefit programs (like CHIP, SNAP, and TANF) simultaneously—to share data across programs also helped improve ex parte rates and simplify renewals. However, making changes to these integrated systems can be more challenging due to the need to reconcile complex eligibility rules across various programs. Waivers allowing the use of SNAP data to renew Medicaid were particularly helpful during unwinding and are expected to be valuable for assessing work requirement compliance or exemption status.

The Road Ahead: Unique Challenges for Work Requirements

While the unwinding offers valuable lessons, implementing work requirements presents a distinct set of challenges that will require tailored approaches.

• A Fundamental Shift in Eligibility Policy: Unlike the unwinding, which focused on redetermining eligibility under existing rules, work requirements introduce an entirely new eligibility criterion. This will impact both current enrollees and new applicants, necessitating the collection of novel information to verify compliance or exemption status. States will need to add new questions to applications and renewal forms and integrate new data sources. Crucially, eligibility determinations will shift from a traditional point-in-time assessment to considering historical information, requiring confirmation that individuals met requirements for one or more months prior to application. This adds a layer of complexity not present in the unwinding.

• Precision in Communication: Avoiding Confusion: While the unwinding required broad outreach to the entire Medicaid population, work requirements affect only a subset of adult expansion enrollees. States must devise highly targeted outreach strategies to educate this specific group without causing confusion among the vast majority of Medicaid beneficiaries who are not subject to these new rules. The messaging will need to be exceptionally clear, explaining not just the requirements, but also the full range of exemptions, how to document compliance, and how to submit necessary information. This will likely necessitate working with a more focused subset of community partners, those primarily serving or interacting with Medicaid expansion adults.

• Limitations of Prior Flexibilities: Many of the waivers and flexibilities granted during the unwinding to increase ex parte rates and streamline renewals will not be directly applicable to work requirements. For instance, waivers that streamlined renewals for individuals with zero or low income, while highly effective during unwinding, will be less useful for work requirements, as compliance or exemption is not primarily income-based. Furthermore, while MCOs played a crucial role in assisting members with renewals during unwinding, the new federal reconciliation law explicitly prohibits MCOs from determining beneficiary compliance with work requirements. MCOs may still assist with identification and outreach, but their direct role in eligibility determination will be curtailed.

• Complex Data Integration and System Overhaul: Implementing work requirements will demand far more complicated system changes than those experienced during the unwinding. States will need to identify and establish linkages with a diverse range of new data sources to automate verification of exemptions and qualifying activities, such as educational enrollment, participation in substance use disorder treatment, or even income from gig work platforms. This could involve integrating data from student databases, claims data, and employment registries. Moreover, states will be implementing work requirements concurrently with other forthcoming policy changes, including modifications to eligibility renewal frequency for expansion adults and changes to retroactive eligibility. The fact that states also had to complete work requirement changes for SNAP, which went into effect at the end of 2025, may have further delayed the initiation of work on Medicaid changes, especially for states with integrated Medicaid and SNAP eligibility systems.

Broader Implications and Stakeholder Reactions

The introduction of Medicaid work requirements carries significant implications for both states and beneficiaries. For states, the administrative burden will be substantial, requiring considerable investment in technology, staff training, and outreach. There are concerns that states may struggle to meet the January 2027 deadline, potentially leading to implementation challenges and confusion. State officials have already expressed concerns about workforce shortages and the need for federal guidance and resources to navigate these complex changes effectively.

Advocacy groups and healthcare providers have voiced apprehension that these new requirements could lead to significant disenrollment among eligible individuals, particularly those who face barriers to employment, such as lack of childcare, transportation, or chronic health conditions. They warn that procedural disenrollments—where individuals lose coverage due to administrative hurdles rather than true ineligibility—could rise dramatically, mirroring the challenges seen during the unwinding. This could exacerbate existing health disparities, reduce access to care for vulnerable populations, and potentially increase uncompensated care costs for hospitals and clinics. The fiscal implications are also noteworthy; while work requirements are often framed as a cost-saving measure, the administrative costs of implementation and enforcement can be substantial, potentially offsetting any savings from reduced enrollment.

In conclusion, the impending implementation of Medicaid work requirements represents a profound policy shift, with states facing an arduous task of operationalizing these changes. While the recent Medicaid unwinding provides a valuable blueprint for managing large-scale eligibility changes, the fundamental differences in policy, communication needs, and data integration complexities mean that states cannot simply replicate past strategies. Success will hinge on proactive planning, substantial investment in infrastructure and personnel, precise and targeted communication, and robust partnerships. The stakes are high, with millions of Americans relying on Medicaid for their health coverage, making effective and equitable implementation paramount to ensuring continued access to essential healthcare services.