The supportive and affordable housing field depends on strong healthcare partnerships, so residents can get the services they need to thrive. Most services are covered by health insurance, and for people with low incomes, that coverage typically comes through Medicaid.  

A new federal law, H.R. 1, adds work requirements to Medicaid, which will make it harder for people to stay covered, and harder to get the services they depend on. The federal government calls these new rules “community engagement,” but the more common term in the field is work requirements. The rules take effect on January 1, 2027, and states must notify affected enrollees by August 31, 2026. 

What’s Changed? 

On June 1, the Centers for Medicare & Medicaid Services (CMS) released an Interim Final Rule (IFR) with guidance to states on carrying out Medicaid work requirements under H.R. 1. These requirements only apply in states that have chosen to expand Medicaid under the Affordable Care Act (ACA), and only to adults ages 19 through 64. Under the new policy, individuals who qualify for Medicaid based solely on income, often called the “expansion population,” must show one of two things: that they qualify for an exemption, or they are working or taking part in approved activity. 

Research shows that 92% of people who would be subject to these requirements are already working or would qualify for an  exemption because of cargiving, illness, or school. However, many lose coverage because they cannot navigate complex state reporting systems.  

States must first decide whether someone is subject to the work requirements (known as an “applicable individual”).  Several groups are exempt including: 

• Short term hardship exemptions such as living in a federally declared disaster area or having received inpatient or nursing home care in the past month.  

• Medically frail. A diagnosis alone is not enough; the condition must significantly limit the person’s ability to work. States must quickly develop a process to make this determination.  

• Former foster care youth up to age 26 

• American Indians or Alaska Natives 

• Parent, guardian, caregiver relative or family caregiver of a child under age 13, and/or a person with a disability 

• Veterans with a 100% disability rating 

• People participating in substance use disorder treatment 

Everyone else must document at least 80 hours a month of work or an approved work-related activity (school, volunteer work) that meets certain thresholds. If they cannot meet or verify these requirements, their Medicaid will end until they can show they comply. They also cannot obtain subsidized coverage under a marketplace plan. 

The Congressional Budget Office (CBO) estimated in 2025 that approximately 7.5 to 8 million people would lose Medicaid due to H.R. 1 policies. CBO estimates that 5.3 million of those coverage losses will be due to work requirements. Advocates now expect that number to grow because the guidance narrows the options states could have used to keep eligible people covered.  

Key Challenges in the New Guidance 

States face several operational and policy challenges as they implement these requirements:  

1. Compressed timelines: States have limited time to build and update state eligibility determination systems. The law offers “good faith” exemptions, but the bar requesting one is high, and CMS has signaled it will grant few if any.  

2. Medical frailty determinations: States must identify individuals who are exempt due to medical frailty, but they cannot rely solely on diagnoses or healthcare utilization. They must also assess a person’s ability to work—data that states do not currently collect. That adds work on two fronts. States must build their own process for judging who can and cannot work based on health. Enrollees and their doctors must then repeat that process at least every 12 months. 

3. Self-attestation: In Medicaid, self–attestation means a person can self-identify as having a disability. That is allowed in 2027 but not in 2028 and beyond. States will still collect verifying information in 2027, but the process will likely become harder to navigate in 2028.  

4. Work programs: The guidance is unclear about supported employment programs. Programs funded by Medicaid but run by managed care plans do not count as a “work program.” “Medicaid-covered employment services are different from work programs… and do not independently satisfy the work program community engagement requirement” (page 30). How states will treat other supported employment programs is still unknown.  

Lawsuits Challenging the Work Requirement 

On June 29, 2026, 25 states and the District of Columbia filed a lawsuit challenging the Interim Final Rule (IFR). The lawsuit says the IFR adds burdens on states, not just to determine Medical Frailty but to assess whether a condition limits a person’s ability to work. States have asked the courts to block the challenged provisions and to rule by July 31, 2026, the date the rule takes effect. Separately, states must notify affected enrollees by August 31, 2016. In the meantime, states will keep building the systems the law requires, on a timeline they have called rushed from the start. This blog will be updated as the lawsuit moves forward.  

What To Do Now 

States are now building the systems they need to comply. Shaping how they do it, and limiting coverage losses, means working on several fronts. 

1. Find the coalition in your state working on health coverage and join and support it. A list of state-based health advocacy partners is here. 

2. Learn how your state is rolling out these requirements and how to communicate with the field.  Look for openings to shape that process and include or amplify the voices of your residents to inform the process. This helpful guide from Massachusetts offers some great ideas on state communications.  

3. States are required to submit Implementation Plans to CMS on their new processes. Tracking your state plan can help inform your efforts to ensure coverage for those you serve. Assign someone on your policy or services team to track state communications and build internal processes. Some examples include: 

1. California 

2. Illinois 

3. New York 

4. Pennsylvania 

What To Do Over the Next 6-12 Months 

As states roll out their new systems, state health and Medicaid offices will provide training on how to navigate them. Some trainings will be directed to Medicaid beneficiaries; share these opportunities with your residents. Other trainings will be dedicated to staff who help Medicaid beneficiaries maintain their coverage, and relevant staff should be encouraged to attend. 

States often share trainings and materials. Check state websites regularly, so you do not miss them. 

Notices to beneficiaries and training opportunities are expected to be released in late summer 2026. Early adopter states (Nebraska, Arkansas, Georgia, Iowa and Montana) have already built these systems or are expected to shortly.    

Agency work plans should include an internal point person and create space for briefings and trainings for staff. Agency data systems should track health care coverage, including 

1. Insured or uninsured 

2. Coverage types (Medicaid, Medicare, Veterans Administration or private coverage) 

3. Managed care organization (MCO) 

4. Care coordinator or MCO contact information 

Regular reporting around health insurance coverage for your residents based on this data can inform care, partnership development, and future programming.  

What This Means Longer Term 

Longer term, advocates expect more people will become uninsured, and care will be harder to access and navigate. Regular data on the coverage and care your residents need and can access will inform both program development and advocacy efforts.  

Medicaid programs are large and always evolving. As your agency gathers experience and data on how the program is working in practice, sharing those insights with state policymakers and administrators can help strengthen and improve Medicaid.  

States are required to have Medicaid Advisory Committees & Beneficiary Advisory Councils, which provide important opportunities to share feedback from your residents, your agency’s data, and your frontline experience. By participating in these efforts, you can help shape program improvements and protect access to health care coverage for the residents you serve. 

CSH will continue to monitor how states are implementing the guidance and its impact on people experiencing homelessness and people living in supportive and affordable housing. Previous blogs on these topics can be found at Media – National Center for Housing + Health. Additional resources and webinars on these topics are available at H.R.1 and the Impact on Affordable and Supportive Housing Residents – National Center for Housing + Health.  

CSH has also examined similar changes in other benefit programs, including work requirements in the Supplemental Nutrition Assistance Program (SNAP).