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By Julie Schurman, Esq., Director of Public Policy, The Arc & UCP California Collaboration
The Centers for Medicare & Medicaid Services (CMS) has released an Interim Final Rule that explains how states must implement the new Medicaid work requirements created by H.R. 1, the One Big Beautiful Bill Act (OBBBA). Beginning January 1, 2027, many adults ages 19 to 64 who receive Medi-Cal through the Medicaid expansion program will be required to work, volunteer, attend school, or participate in other qualifying activities for at least 80 hours each month to keep their health coverage. Unlike a traditional rulemaking process, this rule takes effect before CMS reviews public feedback, although the public still has an opportunity to comment through July 31, 2026.
While many people with disabilities are exempt from these requirements, the new rule significantly narrows how those exemptions are applied. People who receive Medi-Cal through SSI, what is known as the “traditional Medicaid eligibility pathway” are not subject to the work requirements. However, many Californians with disabilities receive Medi-Cal through the Medicaid expansion program because they qualify based on income rather than SSI eligibility. These individuals may need to qualify for an exemption as “medically frail.” The final rule makes that much harder by requiring states to determine not only whether someone has a physical, intellectual, developmental, mental health, or other serious medical condition, but also whether that condition substantially limits their ability to meet the 80-hour monthly work requirement. In many cases, a diagnosis alone will no longer be enough to qualify for an exemption.
This approach creates significant barriers for people with disabilities. Many people want to work but face discrimination, inaccessible workplaces, inconsistent part-time schedules, or a lack of reasonable accommodations. Others experience periods when their health worsens or require surgery and rehabilitation, making it impossible to consistently meet an hourly work threshold. Ironically, access to healthcare is often what enables people with disabilities to work in the first place. Requiring people to prove they cannot work in order to keep their health coverage risks discouraging employment rather than supporting it. For many Californians with disabilities, Medi-Cal is also the only way to access the Home and Community-Based Services that make independent living and employment possible.
There is still time to make your voice heard. CMS is accepting public comments on the Interim Final Rule through July 31, 2026 at 11:59 p.m. ET., and public input can influence future changes to the rule. The Arc of the United States has developed resources explaining the issues and providing guidance on how to write and submit comments. Click HERE to view tips for writing and submitting public comment by the Autistic Self Advocacy Network. You can submit comments through the Federal Register.
The rule is also facing a significant legal challenge. A coalition of 25 states and the District of Columbia has filed a lawsuit arguing that CMS unlawfully narrowed the “medically frail” exemption in ways that could cause people with disabilities and other individuals with serious health conditions to lose Medicaid coverage. The lawsuit asks the court to block these provisions before they take effect, highlighting the serious concerns many states share about the impact of the final rule on people with disabilities.