NEW YORK – The Trump administration’s new law that Americans must work or volunteer to qualify for Medicaid healthcare benefits, set to take effect next year, has left states waiting for details on how to comply and with limited funding promised, according to six industry experts.
The $200 million set aside for states to implement the work requirements in President Donald Trump’s 2025 tax cuts and spending bill is expected to fall short of many states’ needs, the industry experts said.
In addition, detailed guidance to states and insurers who manage Medicaid benefits about who is exempt and what volunteer work qualifies, is not expected until June.
Unlike Medicare for those ages 65 and older, which is fully funded by the federal government, costs of Medicaid for low-income Americans are shared between the states and the U.S. government.
With the law going into effect on Jan. 1, some states may seek extensions and partially launch their systems, industry and policy experts said.
Matt Salo, CEO of health consultancy Salo Health Strategies, likened the rollout of the system to “a soft opening of a restaurant.”
“You’re not going to see people get kicked off immediately,” said Salo, a former executive director of the National Association of Medicaid Directors.
About 68 million people are enrolled in Medicaid plans, and nearly half are at risk of losing coverage, according to health policy firm KFF.
The plans are managed by insurers such as UnitedHealth Group, CVS Health’s Aetna, Elevance, Centene and Molina.
The launch may be messy for insurers, but the impact of the new policy on companies should even out over time, two investors and one analyst said.
A spokesperson for the U.S. Centers for Medicare and Medicaid Services said the government has been distributing funds and is working with states on implementation.
“CMS has provided significant support to states,” they said, and “will continue to provide additional guidance through the interim final rule and ongoing engagement with states.”
Half of the funding is divided evenly across the 50 states – about $2 million per state – while the other half is dependent on how many state residents are subject to the work requirements, the spokesperson said.
IOWA, UTAH AND GEORGIA ARE PREPPING
A spokesperson for Iowa’s Department of Health and Human Services said the state has begun working on implementation and expects its technology costs to exceed the federal funding received. It is one of half a dozen states that have filed implementation plans with the government.
In Utah, which has also filed its plan, a state health department spokesperson said it expects the funding to be adequate but that it is still waiting on specific guidance from the government.
Georgia, which has had its own work requirements since 2023, is assessing whether the $5 million in funding it has received is enough as it waits for the final rule’s details on community engagement requirements, a spokesperson for Georgia’s Department of Community Health said.
Georgia’s state requirement applied to people receiving additional benefits through the Affordable Care Act’s Medicaid expansion.
FLYING BLIND WITHOUT FINAL RULES
The government’s final rule is expected to define documentation and verification requirements, provide specifics on who qualifies for exemptions and outline reporting mechanisms, the six industry experts said.
The law generally says enrollees must regularly document and verify they are working or volunteering 20 hours a week. Exempt enrollees include people with disabilities, pregnant women and children.
States can independently carry out verifications by connecting to external groups like employment data brokers or other state agencies tracking employment status, but compiling volunteer hours may be challenging.
There is little clarity on what role volunteer organizations play in verifying volunteer hours and little information on how states will automate that reporting in their systems, said Allie Gardner, policy expert at the Center for Budget and Policy Priorities, calling the situation “really concerning and problematic.”
INSURERS TO HELP KEEP PEOPLE ENROLLED
Insurers, who want to keep costs and enrollment steady, are likely to play a major role in managing communication with enrollees as they tend to have advanced infrastructure and are already in direct contact with members, industry and policy experts said.
Aetna is connecting some Medicaid members with job opportunities and waiting for state and federal government guidance, a spokesperson said. Aetna operates Medicaid plans in 15 states.
“Most states with which we work are still in the planning phase of these new requirements, and we are in close communication with them about how we can support their implementation,” the spokesperson said.
Gardner said without the details from the federal government, insurers have not been able to launch effective engagement programs.
And work that should be done by electronic systems would need to be done manually, which could increase errors and cause people to be disenrolled, Gardner said.
“There’s not enough time built in.”
Reporting by Amina Niasse; editing by Caroline Humer and Bill Berkrot, Reuters
