Judge strikes federal limit on Medicaid work rule exemption for medically frail adults
A federal court ruled that the administration narrowed a protection Congress wrote for people with serious health conditions, two months before Medicaid work requirements begin in expansion states.
A federal judge in Boston ruled on Oct. 29 that the Centers for Medicare & Medicaid Services (CMS) went beyond the 2025 budget law when it narrowed who counts as "medically frail" and is therefore exempt from Medicaid's new work requirements. Judge Richard G. Stearns of the U.S. District Court for the District of Massachusetts struck the added language and permanently barred its enforcement, a partial win for 25 states and the District of Columbia, according to his 16-page opinion1.
The exemption decides whether people with serious illnesses must document work hours to keep their coverage. Starting Jan. 1, 2027, most adults covered through Medicaid expansion must show 80 hours a month of work or community service, or half-time enrollment in school, under the law. In its June interim final rule2, CMS projected that the requirements would reduce Medicaid enrollment by 2.3 million people in fiscal 2027 and by 3.1 million to 3.3 million a year after that, cutting federal Medicaid spending by $350.3 billion over 10 years. People who lose Medicaid and do not find other insurance face paying for their care on their own.
The law says the medically frail category includes five groups: people who are blind or disabled; people with a substance use disorder; people with a disabling mental disorder; people with a physical, intellectual or developmental disability that significantly impairs their ability to perform one or more activities of daily living; and people with a serious or complex medical condition.
CMS's interim rule added a second test. A person in one of those groups would qualify only if the condition also significantly impaired their ability to meet the work requirement. Stearns held that the word "including" sets a floor that the agency cannot lower, and that CMS "lacked authority to exclude any subset of individuals" in the five groups. He noted that Congress wrote a functional test into only one of the five, the disability category, which shows it knew how to add limits where it wanted them.
The government had argued that the law did not require every person in the listed groups to qualify. The court disagreed and ordered the language removed rather than sent back to the agency, saying vacatur gives the parties clarity before the Jan. 1 deadline.
The states did not win everything. Stearns upheld two other CMS limits: states may not rely on claims or encounter data more than 12 months old to verify frailty, and they may accept only one self-attestation of frailty per continuous period of enrollment. He found the agency had reasonably explained both. CMS has said older information may not reflect a person's current condition, according to the interim rule.
To allow for errors as states rebuild their verification systems on a short timeline, the court gave the states a six-month stay of enforcement for any decision on whether a person does or does not qualify as medically frail. The opinion notes that the stay does not change the Jan. 1, 2027, start date set by Congress, which the states did not ask to delay and which the court said it had no power to extend.
California Attorney General Rob Bonta's office announced the decision the same day in a press release3. Connecticut Attorney General William Tong called the federal approach "another web of useless red tape," according to an Associated Press (AP) report4 published by CT Mirror. The Department of Health and Human Services and CMS did not immediately respond to the AP's request for comment.
What comes next
States must now finish eligibility systems that apply the broader exemption before the requirements start. The case did not challenge the work requirements themselves. The government can appeal the decision to the U.S. Court of Appeals for the First Circuit.
