New Medicaid work requirements, explained 

If you’ve been following our blog, you’ve probably seen our deep dives into what is now the One Big Beautiful Bill Act (OBBBA) and its significant ripple effects on Medicaid. Sitting heavy at 330 pages, this legislative behemoth is anything but simple, and we want to help you tease out what it all means. To begin this work, let’s focus on the provisions surrounding work requirements for Medicaid recipients, slated to impose big changes for your clients and your practice. 

Starting in 2027, Medicaid eligibility for certain populations will depend on meeting specific work or community engagement criteria. Over the next ten years, OBBBA’s work requirements are projected to reduce medical spending by $344 billion, while total Medicaid cuts in the bill amount to $793 billion. These estimated savings would primarily result from coverage losses. As a clinician, navigating these changes with your clients will likely become an important part of your role. This article outlines what to expect, who’s impacted, and how you can prepare your clients and your practice for the changes ahead. 

Understanding the new Medicaid work requirements 

At the heart of OBBBA is Section 7119, which mandates that specific Medicaid recipients actively engage in work, education, or community service to maintain their coverage. Starting January 1, 2027, adults aged 19-64 who are on Medicaid through expansion programs will have to meet these requirements. The requirements apply on a monthly basis and include any one of the following: 

• Working at least 80 hours.  

• Participating in a work program for at least 80 hours.  

• Completing community service for at least 80 hours.  

• Enrolling in higher education or technical education programs at least half-time.  

• Combining any of these activities to meet the 80-hour threshold.  

As an alternative to meeting these requirements, clients can qualify by earning at least $580 per month (the federal minimum wage of $7.25/hour multiplied by 80 hours). Seasonal workers will need to average this income over a six-month period. 

While these requirements might not seem overwhelming at first glance, for some clients—especially those battling chronic mental health challenges or juggling caregiving responsibilities—the hurdles could be daunting. For others, they may result in an outright loss of Medicaid coverage. 

Note: The work requirements apply only to Medicaid expansion and expansion-related enrollees. That means they’ll directly affect clients in the 40+ states that opted to expand Medicaid under the Affordable Care Act. States that haven’t expanded Medicaid (including Texas, Florida, and Kansas) are not subject to these provisions. 

Key exemptions 

While the work requirements will impact a large segment of Medicaid recipients, there are several important carve-outs built into the law. These exemptions aim to protect some of the most vulnerable populations, including: 

• Native and indigenous populations:  
  • Individuals recognized as Indian or Urban Indian under Section 4 (paragraphs 13 and 28) of the Indian Health Care Improvement Act.
  • California Indians as described in Section 809(a) of the same Act.  
  • Individuals deemed eligible for Indian Health Service under regulations set by the Secretary.  
• Caregivers: Parents, guardians, caretaker relatives, or family caregivers (as defined in Section 2 of the RAISE Family Caregivers Act) of a dependent child aged 13 or under, or of a disabled individual.  
• Veterans with disabilities: Veterans with a disability rated as total under Section 1155 of Title 38, United States Code.  
• Individuals with special medical needs: Medically frail individuals or those with special medical needs as defined by the Secretary, including:  
  • Blind or disabled individuals.  
  • Individuals with a substance use or a disabling mental disorder.  
  • Individuals with physical, intellectual, or developmental disabilities that significantly impair their ability to perform daily living activities.  
  • Individuals with serious or complex medical conditions.  
• SNAP recipients: Members of households receiving Supplemental Nutrition Assistance Program (SNAP) benefits under the Food and Nutrition Act of 2008 and not exempt from work requirements under the Act.  
• Rehabilitation program participants: Individuals enrolled in drug addiction or alcohol treatment and rehabilitation programs.  
• Inmates: Individuals who are inmates of public institutions.  
• Pregnant or postpartum individuals: Individuals who are pregnant or eligible for postpartum medical assistance.

Additionally, OBBBA allows states to offer short-term hardship exceptions for certain situations. Short-term hardship exceptions are limited to the following situations: 

• Critical medical services: Includes inpatient hospital care, nursing facility services, psychiatric care, and related outpatient services as deemed necessary. 

• Disaster zones: Resides in an area with an emergency or disaster declaration.  

• High unemployment areas: Lives in a region with an unemployment rate of 8%+ or 1.5x the national average, whichever is lower.  

• Medical travel: Requires extended travel outside the community for essential treatment of serious or complex medical conditions. 

States are not required to allow these short-term exceptions, so this will ultimately depend on local governments.  

What happens when a client is noncompliant 

Under OBBBA, if a client fails to meet the work requirements, they aren’t immediately dropped from Medicaid. Instead, states are required to provide a 30-day grace period during which the individual can either prove compliance or document a qualifying exemption. Medicaid coverage continues during this time, giving clients a chance to resolve their eligibility. 

However, after those 30 days, if no evidence is presented or exceptions approved, the consequences are clear—Medicaid coverage will be terminated. 

For your clients, this process could be overwhelming, especially for those managing mental health challenges or limited administrative resources. Helping clients understand the compliance process and prepare the necessary evidence could become an important task for you and your practice. 

What this means for your clients 

The introduction of work requirements creates several layers of challenges for Medicaid recipients. For many, meeting an 80-hour monthly requirement or proving compliance via documentation may simply be beyond reach. This is especially true for clients facing barriers like mental illness, physical health challenges, or systemic inequities. 

Here’s the bigger picture: 

• Stress and anxiety will increase for many clients, as they’re forced to balance compliance with existing life stressors.  

• Coverage loss could result in fewer clients being able to access therapy services, making it harder for them to address the very challenges preventing compliance.  

• Disrupted treatment plans as clients face interruptions in therapy or face out-of-pocket costs they can’t afford.  

The reality of these work requirements is that many clients’ ability to secure healthcare may soon depend on factors far outside their control—adding yet another layer of burden to those who are already struggling. 

What this means for your practice 

For clinicians, OBBBA’s Medicaid changes don’t just affect your clients—they impact your livelihood and the way you practice. Here’s how: 

• Decreased client base: Many of your clients may lose Medicaid coverage, either temporarily or permanently, as they struggle to meet the new requirements. This could reduce the number of clients accessing your services. 
• Greater administrative workload: You may find yourself working overtime to help clients document exemptions, communicate compliance issues to Medicaid offices, or appeal denials—especially for clients with complex needs or disabilities. Work to have exemptions codified for serious mental illness and substance use disorder to ensure better support for those who need it most. 
• Financial uncertainty: If your revenue relies heavily on Medicaid reimbursements, you may see a drop in financial stability as the client base shifts. Budgeting ahead will be critical. 
• Shifting therapy priorities: Many clients may arrive at sessions preoccupied with these challenges, forcing you to address the immediate stress of noncompliance or coverage loss instead of long-term therapeutic goals.

Final thoughts 

Medicaid work requirements under OBBBA represent a massive shift for both clients and clinicians. While these changes are aimed at reducing federal spending, the impact on access to healthcare—particularly in mental health and therapy services—will be profound.  

As clinicians, you play a critical role, not just in delivering care but in helping clients overcome the bureaucratic and policy-driven hurdles that might otherwise keep them from your office. By staying informed, advocating for your clients, and preparing your practice for the gaps to come, you can help mitigate some of these challenges and continue to provide the support your clients need.  

Stay tuned to our blog for more updates and strategies as we track the implementation of OBBBA over the coming years! 

About the author