Sec. 71119 Requirement for States to Establish Medicaid Community-Engagement Requirements for Certain Individuals
Signed into law July 4th, 2025
Bill Overview
On July 4, 2025, President Trump signed the House of Representatives budget reconciliation bill H.R. 1 titled “An Act to provide for reconciliation pursuant to title II of H. Con. Res.14,” formerly known as the One Big Beautiful Bill. H.R. 1 includes many chapters with numerous sections covering a wide range of policy areas, such as health care, tax reform, education, agriculture, energy, defense, and infrastructure. This overview focuses specifically on the new statutory provisions related to the requirement for states to establish Medicaid community engagement requirements for certain individuals.
Community-Engagement Requirements
Section 71119 requires that state Medicaid programs condition eligibility for medical assistance on an “applicable individual” having met certain community engagement requirements, often referred to as “work requirements.” While several states have pursued similar policies in recent years via Section 1115 Demonstration waivers, most of these waivers were either rescinded by the Biden administration or withdrawn by their respective states. As of July 2025, Georgia is the only state with an approved Medicaid community engagement waiver in operations, while at least seven states (i.e., Arkansas, Arizona, Iowa, Kentucky, Ohio, South Carolina, and Utah) have waiver requests pending approval.
Implementation Timeline
States must implement community engagement requirements beginning January 1, 2027, or earlier at the state’s discretion via a Section 1115 Demonstration waiver or State Plan Amendment; however, the Secretary of Health and Human Services is expressly prohibited from waiving any additional provisions of Section 71119. Conversely, states may request an exemption to delay implementation that may not extend beyond December 31, 2028. As part of this request, states must demonstrate a good faith effort toward compliance, citing actions taken and any significant barriers, and providing a detailed plan and timeline to achieve compliance. The Secretary may terminate an approved exemption based on failure to provide routine progress reports or a determination that the state has failed to make a good faith effort toward achieving compliance. Finally, H.R. 1 requires the Secretary to promulgate an interim final rule for purposes of implementing the community engagement policy no later than June 1, 2026. This rule and any subsequent amendments are explicitly exempt from formal notice and comment rulemaking outlined at 5 U.S. Code § 553.
Applicable Individuals
Per H.R. 1, individuals aged 19-64 who are eligible for, or enrolled in, Medicaid expansion or equivalent coverage must comply with community engagement requirements, subject to certain exceptions:
- Mandatory exceptions:
- Pregnant or receiving postpartum coverage;
- Enrolled in or entitled to Medicare Part A benefits, or enrolled in Medicare Part B;
- Foster youth/former foster youth under age 26;
- Individuals who are Indian, Urban Indian, California Indian, and other Indians who are eligible for the Indian Health Services;
- Parent or caregiver of a dependent child under age 14 or a disabled individual;
- Veteran with a disability rated as “total” by the Department of Veterans Affairs;
- Medically frail or has special medical needs (e.g., blind or disabled; chronic substance use disorder; disabling mental disorder; physical, intellectual, or developmental disability; or serious or complex medical condition);
- Compliance with Supplemental Nutrition Assistance Program (SNAP) or Temporary Assistance for Needy Families (TANF) work requirements;
- Participating in a drug addiction or alcoholic treatment and rehabilitation program operated by certain designated entities; or
- An inmate or recent inmate of a public institution.
- Short-term hardship exceptions (subject to state discretion):
- Individuals receiving inpatient hospital services, nursing facility services, services in an intermediate care facility for individuals with intellectual disabilities (ICF/IID), or inpatient psychiatric hospital services;
- Individuals residing in a county where there exists a Presidentially-declared disaster; or
- Individuals residing in a county that has an unemployment rate at or above the lesser of 8% or 1.5 times the national unemployment rate; or
- Individuals or individuals with a dependent required to travel outside of their community for an extended period to receive necessary medical services.
Requirements and Verification
H.R. 1 outlines community engagement requirements for applicable individuals, as well as parameters for states verifying an applicable individual’s compliance with said requirements.
- Applicable individuals must meet one or more of the following each month:
- Work at least 80 hours, complete at least 80 hours of community service, participate in a work program for at least 80 hours, enroll in an educational program (i.e., institution of higher education and program of career and technical education) at least half time, or any combination of the preceding requirements for at least 80 hours;
- Have a monthly income of at least the federal minimum wage multiplied by 80 hours (i.e., $580.00 per month as of July 2025); or
- Have an average monthly income over the preceding 6 months of at least the federal minimum wage multiplied by 80 hours and is a seasonal worker, as defined by the Internal Revenue Code.
- States must conduct verification activities no less frequently than at the initial eligibility determination and at redetermination. For new applicants, states must verify compliance for at least one, but not more than three, consecutive months prior to application. For existing members, states must verify compliance for one or more months, whether or not consecutive. States may elect to complete more frequent verifications of compliance.
- States must establish processes and use reliable, available information (i.e., payroll data, encounter data) without requiring the applicable individual to submit additional information. Note: states are expressly prohibited from using a managed care organization (MCO), prepaid inpatient health plan (PIHP), prepaid ambulatory health plan (PAHP), or any other contractor with financial relationship with an MCO, PIHP, or PAHP to conduct verification activities.
- States must notify applicable individuals whose compliance cannot be verified. Such notice shall describe how the individual may make a satisfactory showing of compliance and how the individual may reapply for assistance if the individual is disenrolled. Notice must provide 30 calendar days to make a satisfactory showing of compliance or a satisfactory showing that community engagement requirements do not apply.
- The state must continue to provide medical assistance to enrolled individuals during the 30-day notice period and disenroll non-compliant individuals no later than the end of the following month in which the 30-day period ends, provided the state first determines whether there is an alternative basis for eligibility and that the individual is afforded a fair hearing.
Outreach Activities
H.R. 1 provides that no later than three months prior to implementation, and periodically thereafter, states must conduct member outreach activities. Specifically, states must notify applicable individuals currently enrolled in the Medicaid program of how to comply with community engagement requirements, including any exceptions, as well as the consequences of noncompliance and how to report any changes in their status as an applicable individual or an excepted individual. Finally, notices must be provided by regular mail, or in an electronic format if elected by the applicable individual, and in one or more additional forms that may include telephone, text, website, etc.
Implementation Grants
H.R. 1 provides funding to support states’ establishment of systems necessary to conduct eligibility determinations or redeterminations. Specifically, $100M in grant funding is appropriated in the federal fiscal year (FFY) 2026, to be allocated by the ratio of applicable individuals in the state compared to the total number of applicable individuals nationally. In addition, $100M in grant funding is appropriated in the FFY 2026, to be allocated evenly among all states. An additional $200M is appropriated in the FFY 2026 to the Centers for Medicare & Medicaid Services to support its overall implementation efforts.
Potential State Actions
While further rulemaking and sub-regulatory guidance is forthcoming, states should consider the following activities as soon as possible:
- Assess the current ability to implement community engagement requirements by January 1, 2027, and consider options for early or delayed implementation. As applicable, review pending Section 1115 Demonstration waivers with related policies.
- Assess opportunities to establish a cross-functional governance model to support policy, systems, and program implementation.
- Assess existing systems’ ability to identify individual exemptions to community engagement requirements and consider any desired hardship exemptions to be implemented.
- Assess existing mechanisms to verify applicable individuals’ compliance with community engagement requirements (e.g., SNAP/TANF systems data matching) and identify necessary systems and/or process changes.
- Assess existing employment support services and/or programs (e.g., Medicaid and non-Medicaid, community-based, education, etc.) available to assist applicable individuals in achieving and demonstrating compliance with community engagement requirements.
- Assess the desired “look-back” period (i.e., 1 – 3 months preceding eligibility determination and redetermination) and frequency of verification checks (i.e., beyond initial eligibility determination and redetermination).
- Begin developing a community engagement outreach strategy inclusive of notices for applicable individuals currently enrolled in the Medicaid program and notices for applicable individuals whose compliance cannot be verified.
- Begin the process of determining resources necessary to implement community engagement requirements (e.g., staffing, systems, technology, etc.) to support any future applications and/or reporting related to federal implementation funding.
Need More Information?
Myers and Stauffer will continue monitoring federal guidance and state implementation of the Medicaid community engagement requirements. We are available to assist states with the implementation strategies, including requests for early or delayed implementation, requests for federal funding, and/or implementation planning. For more information, please reach out to one of our subject matter experts:
Bobby Courtney, JD, MPH
Principal
PH 317.815.5475
bcourtney@mslc.com
Catherine Snider
Principal
PH 317.815.5475
csnider@mslc.com
Jerry Dubberly, PharmD, MBA
Principal
PH 404.524.0775
jdubberly@mslc.com
Jennifer Kyritsis, MHA
Director
PH 404.524.0775
jkyritsis@mslc.com
