Medicaid Community Engagement Rules and the Significance of Employment

Working adults are not only contributing to the nation's economy, but they are also reaping benefits for their physical and mental health, as well as the health of their children. However, when it comes to Medicaid, the picture is more complex.

The 2025 federal budget reconciliation law introduced Medicaid-Community Engagement Requirements for able-bodied adults without children. These individuals must complete at least 80 hours per month of work or qualifying community engagement activities to enroll in and maintain Medicaid coverage. Exemptions include being medically frail, pregnant or postpartum, or a parent/caretaker of a child age 13 or younger, among others.

These requirements primarily target the Medicaid expansion population—adults aged approximately 19 to 64 with incomes up to 138% of the federal poverty level—who are able-bodied and without dependent children. Examples of qualifying activities include employment, job training, school attendance, or volunteering.

Despite the intention to promote engagement, these requirements have resulted in reduced Medicaid enrollment due to individuals failing to meet the engagement criteria or losing coverage due to administrative complications. This reduction in enrollment does not necessarily equate to more people working, but rather fewer people covered by Medicaid. The requirements also impose significant administrative costs for states to verify activity compliance and manage exemptions, increasing program expenses.

In 2024, California and New York accounted for over one third of the total nationwide spending on Medicaid for childless, working-age, able-bodied adults working 20 hours a week or less. This spending amounted to 11 percent of total federal Medicaid spending in 2024, with federal taxpayers spending $56.1 billion on Medicaid for this group alone. Half of working-age adults on Medicaid worked 20 hours or fewer per week in 2024, with 88 percent of this group not working at all.

Working adults, on the other hand, are more likely to live longer than non-working adults. Work promotes a healthier lifestyle for both adults and their children, contributing to improved well-being and better mental health for adults. Work can also have a significant impact on the physical health of children.

Past reforms linking eligibility for social welfare programs to working have promoted financial stability, financial independence, and stronger families. As such, the spending on Medicaid for working adults may be a significant area for potential reform to reduce federal spending, while still ensuring that those in need have access to essential healthcare services.

States like Arizona, Montana, and others have begun or plan to apply waivers to implement or adjust these requirements in compliance with the new federal standards, which allow limited state flexibility but require at least the 80-hour engagement baseline.

In summary, while work offers numerous benefits for health and well-being, the Medicaid-Community Engagement Requirements for able-bodied adults without children have resulted in reduced enrollment and higher administrative costs, rather than increased employment or directly saved federal spending. However, the potential for reform exists to strike a balance between promoting work and ensuring access to healthcare for those in need.

The workforce benefits not only from improved physical and mental health, but also contributes to the health and wellness of their children.
The introduction of Medicaid-Community Engagement Requirements in the 2025 federal budget focuses on able-bodied adults without children, requiring them to complete 80 hours of work or qualifying activities each month.
Despite the intention of promoting engagement, these requirements have led to decreased Medicaid enrollment and increased administrative costs for states.
Reform in the spending on Medicaid for working adults might be an opportunity to achieve a balance between promoting work and ensuring access to healthcare services, saving federal funds while addressing the needs of those in need.