In what advocates are hailing as a win, a federal judge is tossing a requirement that many people with disabilities prove they are unable to work in order to remain eligible for Medicaid.
U.S. District Judge Richard Stearns sided with a coalition of states in a ruling late last week rejecting a Trump administration plan to impose stringent standards on who qualifies for exemptions under forthcoming Medicaid work requirements.
Starting next year, most state Medicaid programs must implement so-called “community engagement” requirements. Per the rules, beneficiaries will be required to prove that they are working, volunteering or going to school at least 80 hours per month in order to qualify for coverage. The mandate came as part of a broad 2025 law known as the One Big Beautiful Bill Act that included nearly $1 trillion in Medicaid cuts.
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The law stipulated that people be exempt from the work requirements if they are “medically frail” or have “special medical needs” including individuals with physical, intellectual or developmental disabilities.
However, regulations put forth by the Centers for Medicare and Medicaid Services in June imposed additional hurdles to obtain an exemption. The agency said that individuals must not only have a qualifying condition, but that the condition must also significantly limit their ability to work.
That extra barrier led to a lawsuit from 25 states and Washington, D.C. alleging that the Trump administration regulations were stricter than Congress had intended and would result in eligible people losing Medicaid coverage.
Stearns agreed.
“The portion of the (interim final rule) imposing a limitation that the individual’s ‘physical, mental, or other behavioral health condition significantly impairs the individual’s ability to comply with the community engagement requirement’ is beyond the powers of CMS … and thus contrary to law,” the ruling states.
Stearns ordered CMS to remove the requirement and also imposed a six month “stay of enforcement” on decisions about who does and does not qualify as “medically frail” in order “to accommodate any errors or delays which may arise.”
Under the decision, people will only need to show that they qualify for one of the five “medically frail” categories that Congress specified.
“This ruling is a win for disabled people,” said Maria Town, president and CEO of the American Association of People with Disabilities. “The court has removed an unnecessary hurdle that would have caused many disabled people who should otherwise be exempt to be at risk of losing their Medicaid coverage.”
Still, Town and others said they remain concerned about the impact of work requirements on people with disabilities.
“Make no mistake: this decision does not change the January 1 start date for work requirements,” said Nicole Jorwic, chief program officer at Caring Across Generations. “Millions of people, including disabled people who should be exempt, are still at risk of losing their care because of paperwork and broken eligibility systems.”
Stearns rejected other claims brought by the states in their lawsuit related to the types of documentation that can be used to seek an exemption and the ability of Medicaid beneficiaries to self-attest that they qualify for a “medically frail” exemption.
“We are disappointed by the part of the court’s order leaving in place the part of the rule requiring states to demand documentation where Congress allowed them to accept people’s own attestation that they have a disability meeting the ‘medically frail’ exception,” said Jennifer Mathis, deputy director at the Bazelon Center for Mental Health Law. “That part of the rule will lead to loss of coverage for many who shouldn’t lose it. We are hopeful that a different court may invalidate this documentation requirement.”
CMS said it does not comment on pending litigation.
