State Medicaid agencies are concerned that many sick and disabled enrollees will lose their coverage because the Trump administration is narrowing the definition of who is “medically frail” enough to get an exemption from new work requirements.

Under the tax and spending law President Donald Trump signed a year ago, states that have expanded Medicaid to cover more adults under the Affordable Care Act — 40 states plus the District of Columbia — must mandate that those adults work, go to school or volunteer for at least 80 hours a month.

The so-called One Big Beautiful Bill Act exempts Medicaid recipients who are “medically frail,” with serious illnesses or disabilities. However, on June 1 the Trump administration published interim guidelines for implementing the law that specify that in order to qualify for the “medically frail” designation, a person must have a significant health condition and be significantly impaired in their ability to work.

“This rule helps Americans build skills and independence through work, education, job training, or community service, creating new opportunities for themselves and their families,” said Dr. Mehmet Oz, director for the federal Centers for Medicare & Medicaid Services, in a statement earlier this month announcing the new guidance.

But states had been operating under the assumption that they would use the federal government’s traditional “medically frail” designation, which includes five distinct categories of disabilities and illnesses but does not require Medicaid agencies to determine whether the person can work.

States already were scrambling to set up systems to enforce the new work rules by the January 2027 deadline, according to Jocelyn Guyer, senior managing director at Manatt Health, a consulting firm that advises state Medicaid agencies.

“Now, it’s not enough just to have that diagnosis. You may need to go to your doctor and get a special note,” Guyer said. “So, it’s turned it from a very straightforward protection of people with disabilities and significant health conditions into a paperwork morass, where all of a sudden they have to get their healthcare providers involved in documenting and assessing their capacity to work.”

Earlier this week, 25 Democratic-led states plus the District of Columbia sued the Trump administration over the work requirement, largely on the basis of the changed “medically frail” guidelines.

Several state Medicaid agencies said they’re struggling to understand what they’ll have to do to comply. Even before the “medically frail” change, states were hiring consultants and creating IT systems to verify and track enrollees’ working status, which they never had to do before.

“Most states were working on identifying a number of diagnoses that may be able to meet that definition in hopes that that would align with what the final guidance said,” Melanie Bush, deputy secretary for the North Carolina Medicaid Division of Health Benefits, said. “But the layering in of impaired ability to work — there’s not necessarily a data source that aligns with that.”

Bush said states are focused on figuring out how to prevent eligible people from dropping off the rolls just because of paperwork and logistical challenges. One analysis estimates that five million people could lose coverage from the original work requirements alone. State leaders and consultants worry that figure could rise significantly with the new guidance.

Healthcare providers are worried, too.

“This is not what we’re trained to do. Most of us do not do disability determinations and employability assessments regularly, and even if we do feel comfortable with that role, we don’t have time, we’re not like we’re not paid to do that,” said Dr. Benjamin Sommers, a health economist at the Harvard T.H. Chan School of Public Health.

“Primary care providers, in particular, are already overworked and burning out.”

Still, Medicaid directors have experience in dealing with major shifts within the program, according to Michael Heifetz, a managing director at consulting firm Alvarez & Marsal and a former Medicaid director in Wisconsin. Heifetz said states regularly face major rule changes and tight timeline challenges, and with greater access to advanced technology to help automate some tasks, he’s confident they will be able to mitigate enrollment losses.

Another big help, he said, is that Medicaid enrollees will be allowed to “self-attest” to their eligibility for an exemption through 2027.

“States will work through it, and they will again work with the advocacy community to minimize the impact on beneficiaries,” Heifetz said. “There is still some ambiguity in the rule about how self-attestation will work in 2027, because the rule reads that other sources of information and documentation must still be sought, but in the end, self-attestation will prevail.”

Jennifer Tolbert, an expert on state health policy at health research group KFF, said there are several data sources states might tap to determine a person’s ability to work, such as insurance claims, prescriptions and a person’s use of durable medical equipment.

She cautioned, however, that it will be a challenge to use such data to make thoughtful determinations, especially for people with substance use disorders and mental health issues.

To keep eligible people enrolled, California will use text message alerts, mailed notices, and electronic reminders to make sure recipients meet verification deadlines, according to Anthony Cava, a spokesperson for California Department of Health Care Services. Nevertheless, Cava said, the state is concerned that people, including those with serious illnesses and disabilities, will drop off the rolls “solely due to paperwork barriers.”

Adela Flores-Brennan, Colorado’s Medicaid director, said states could come under fire for making errors.

“We’re also worried about audits,” Flores-Brennan said. “There are new penalties for states, bigger penalties for states related to error rates, and the level of complexity that is being introduced into eligibility right now is making an environment that is ripe for errors because it’s confusing and it’s complex.”

Stateline reporter Shalina Chatlani can be reached at schatlani@stateline.org 

A quarter-century ago, the U.S. Supreme Court ruled that people who are elderly or live with disabilities and need long-term care have a right to get those services at home instead of in a hospital or nursing home.

Now advocates fear that protection could be pulled away, and with it, government support for the care of people with disabilities in their homes or in the community.

The Supreme Court’s Olmstead ruling in 1999, combined with a series of federal laws going back to 1973, “have changed what it means to be a person with a disability,” says Jenny Price, executive director of the Wisconsin Board for People with Developmental Disabilities.

“People just went away, out of their family homes,” Price says. “It is because of these protections that are in place that that doesn’t happen now.”

The Olmstead decision’s author, Justice Ruth Bader Ginsberg, wrote that “unjustified institutional isolation of persons with disabilities is a form of discrimination” under the 1990 Americans with Disabilities Act, and that the law  gives them the right to live in a “less restrictive setting.”

Then-President Bill Clinton called on states to adopt more community-based services and enable people with disabilities to obtain care and services outside institutions as much as possible. Subsequent administrations continued in that direction, including taking legal action to require states to expand community care options.

A June 18 opinion from the U.S. DOJ’s Office of Legal Counsel reverses course. The opinion “concluded states may disregard decades of Supreme Court precedent and ensuing regulations mandating integration of individuals with disabilities into home or community settings,” Bloomberg Law reported.

Price says advocates are concerned that the opinion signals the Trump administration won’t enforce the right of people with disabilities to be integrated into the wider community that was underscored in Olmstead.

Along with that memo, the federal Center for Medicare & Medicaid Services has been focusing on Medicaid coverage for home- and community-based services, HCBS for short, and suggesting it is a source of fraud — a claim rejected by outside Medicaid experts.

“All of these things are happening at the same time,” Price says. With CMS warning states about fraud investigations, “a lot of states are figuring out how to limit home and community based services. It just kind of makes it more likely that there won’t be as much care at home.”

The DOJ memo, “says to states if you don’t have the home care people need to live in the community safely, the federal government isn’t going to care about that,” Price says — nor will it enforce the principle of community integration as it has in the past.

The two women who brought the 1999 Supreme Court case lived with intellectual disabilities as well as mental health diagnoses. Both of them “were in and out of a psychiatric institution but there was no dispute that their needs could appropriately be met in community-based programs,” American University law professor Robert Dinerstein wrote for the American Bar Association in 2025.  

“Needing help or support to live the life that you choose shouldn’t be a reason for the government to take you out of the community, or away from living the life you want,” Price says.

Lives changed for people with disabilities

Stacy Ellingen has a form of cerebral palsy, a result of complications during her birth, that affects all of her muscles. The 41-year-old uses a power wheelchair and technological aids to help her communicate.

Ellingen also has an active life in the community. She has a journalism degree, is a graphic designer and lives on her own in an apartment in Oshkosh. And she manages an online community for people with disabilities, the Self-Determination Network.

Wisconsin’s IRIS program, which enables her to hire caregivers and is covered through Medicaid, makes it possible for her to live in a home of her own where she receives daily care.

“Thanks to the services and supports I receive through Medicaid, I’m able to lead a successful life and be an active member of my community,” Ellingen told the Wisconsin Examiner in an email message.

With her IRIS caregivers, she doesn’t have to depend on her parents, now in their 70s, although they are able to provide backup help.

“I need assistance with all of my basic needs such as eating, toileting, showering, and dressing,” Ellingen wrote. “I literally rely on assistance from caregivers for everything from getting out of bed each morning, to getting dressed, to using the restroom multiple times a day, to eating each meal, to showering and getting back into bed every night.”

Carl Schulze was 27 when he broke his neck in a fall in 2007 after a night of partying. Surgery and two months in the hospital enabled him to survive, but the injury left him a quadriplegic.

 Now 45, Schulze lives near Neenah in Winnebago County. In April he was elected to the Winnebago County Board.

“I can’t get in and out of my wheelchair on my own,” Schulze said in a phone interview. “I can feed myself, but I still need help having my food made.”

He’s been able to live independently thanks to home healthcare workers whom he hires through Medicaid.

The DOJ memo angered him. “The federal government wants to tell the states that they’re not going to enforce it if the states stop funding community-based services. That’s my home health aides,” Schulze said.

In August 2025 Schulze rode his wheelchair to Madison to call attention to home healthcare workers’ low pay and urge lawmakers to support increases in their wages. He said he worries now about having to go to an assisted living home because he’s had trouble finding enough home healthcare workers.

Better care at lower cost

Advocates and people with disabilities say care in the community helps the person thrive and have a more fulfilling life — its most important benefit

Ellingen has lived with disability from birth but has never had to live in an institution, and she can’t imagine having to do so now.

“I know that my needs are pretty high which is concerning when talk of putting people with disabilities back in institutions comes up,” she wrote, in response to a question about the DOJ memo. “Personally, after all the hard work my family and I have done to get me to where I am today, I can’t fathom being forced into an institution.”

In addition to being better overall for the person, Price says, “If we were providing that care the way we used to, it would cost a lot more.”

Advocates say there’s still another problem: There simply aren’t institutions available to house people who are now able to live in the community.

“It’s not as if tomorrow suddenly everyone could go someplace,” Price says. “Our concern always with all of these things going on is, does it mean some people have nowhere to go?”

Without services provided by the state, care would fall on the shoulders of family members.

“There’s so much unpaid caregiving that’s already going on,” Price says. “That burden might increase.”