CMS Releases H.R. 1 Community Engagement Requirements Guidance

In a Dec. 8 bulletin, the Centers for Medicare & Medicaid Services (CMS) issued preliminary guidance to help states plan for Medicaid community engagement requirements. This bulletin details applicable individuals, exclusions and exemptions to community engagement requirements, how to verify engagement, procedures for noncompliance, beneficiary outreach, and good faith effort exemptions.

H.R. 1, which CMS refers to as the Working Families Tax Cut (WFTC) legislation, requires certain Medicaid beneficiaries to demonstrate that they work or are in a work program, are enrolled in school, or complete community service for 80 hours a month to stay enrolled in the program. The community engagement requirement begins Jan. 1, 2027. CMS must promulgate an interim final rule before June 1, 2026.

Additional resources about the implementation of community engagement requirements and other H.R. 1 provisions are available to association members in our H.R. 1 Resource Center.

Applicable Individuals

The new community engagement requirements apply to states that have expanded Medicaid under the Affordable Care Act (ACA) and states that have expanded coverage to non-elderly adults under a Section 1115 demonstration waiver. The requirements will apply to adults who qualify under the new adult group added by the ACA or are enrolled under a waiver that offers similar coverage to adults.

In states that offer Section 1115 demonstration waiver coverage to adults who are not covered by the state plan, the community engagement requirements will only apply to individuals who are:

• At least 19 and under 65 years of age
• Not pregnant
• Not entitled to or enrolled for benefits under Medicare Part A or Part B
• Not otherwise eligible to enroll under the state Medicaid plan

Community Engagement

To meet community engagement requirements, applicable individuals must meet one or more of the following criteria:

• Work at least 80 hours a month
• Complete at least 80 hours of community service a month
• Participate in a work program for at least 80 hours a month
• Be enrolled in an educational program, including an institution of higher education or a career or technical education program, for at least half time
• Engage in a combination of the above activities for a total of at least 80 hours a month
• Have a monthly income that is less than the federal minimum wage multiplied by 80 hours, currently $580 a month
• Be a seasonal worker with an average monthly income over the preceding six months that is less than the federal minimum wage multiplied by 80 hours

Exclusions from and Exceptions to Community Engagement Requirements

Exclusions

The following individuals are excluded from community engagement requirements:

• An individual in the former foster care children eligibility group
• An American Indian, California Indian, or Alaskan Native; or an individual determined to be eligible as an Indian for the Indian Health Service
• A parent, guardian, caretaker relative, or family caregiver of a dependent child age 13 and under or a disabled individual
• A veteran with a total disability
• An individual who is medically frail or has special needs (yet to be defined), including an individual:
  • Who is blind or disabled
  • With a substance use disorder
  • With a disabling mental disorder
  • With a physical, intellectual, or developmental disability that significantly impairs their ability to perform one or more tasks of daily living, or with a serious or complex medical condition
• An individual who is compliant with any requirements applied by their state's Temporary Assistance for Needy Families program who is part of a household that receives Supplemental Nutrition Assistance Program benefits and is not exempt from a work requirement
• A participant in a drug addiction or alcoholic treatment and rehabilitation program
• An inmate of a public institution
• A woman who is pregnant or entitled to postpartum medical assistance

Exceptions

Applicable individuals are exempt from the community engagement requirement for part or all of the month if they:

• Are under the age of 19
• Are entitled to or enrolled in benefits under Medicare Part A
• Are enrolled in benefits under Medicare Part B
• Are described in a mandatory categorically needy eligibility group
• Were an inmate of a public institution at any point during the previous three-month period and otherwise would be subject to the community engagement requirement

States also have the option to provide a "short-term hardship event" exception for certain medical conditions or other circumstances that prevent the individual from meeting the community engagement requirements.

Medical services that are eligible for the short-term hardship event exception include:

• Inpatient hospital services
• Nursing facility services
• Services in an intermediate care facility for individuals with intellectual disabilities
• Inpatient psychiatric hospital services
• Outpatient services related to the above services as deemed appropriate by the Health and Human Services Secretary

However, to receive these exceptions, the guidance notes that an individual must affirmatively request the exception. The guidance does not provide any more specifics on the process of doing so or the role that hospitals can play in helping patients request this exception. An individual may also be excepted from these requirements if they

• Reside in a county with a declared emergency or disaster
• Reside in a county with an unemployment rate above the lesser of 8% or 1.5 times the national unemployment rate
• Must travel outside their community for an extended period to receive medical services not available where they live for themselves or their dependent

Demonstrating and Verifying Community Engagement

Community Engagement Requirement at Application

Applicable individuals must meet the community engagement requirement for at least one month immediately preceding the month when they apply for Medicaid. States have the option to require these individuals to meet the requirement for up to three consecutive months before application.

Community Engagement Requirement at Renewal

Medicaid beneficiaries subject to these requirements must comply for one or more months between renewals. States have an option to determine how many months are required to meet this requirement, as well as whether the months must be consecutive. CMS interprets this to mean that a beneficiary is considered to have successfully met the community engagement requirements if, during any part of the eligibility period, the beneficiary demonstrated community engagement for the number of months the state specified.

The informational bulletin reminds states that renewals will be required once every six months for a beneficiary population that significantly overlaps with the population subject to these requirements. Thus, many of these individuals must meet the community engagement requirements at least every six months. States can also verify engagement more frequently if they choose.

Using Reliable Information

States must first attempt to verify an individual is meeting these requirements through information available to the state. This can include payroll data, Medicaid provider payments, encounter data, data sources on higher education enrollment, job training participation, or community service. A state cannot request additional information or documentation from the beneficiary without checking these data sources first. This applies at application and renewal, regardless of renewal frequency. Further guidance on data sources is forthcoming.

Requirement Noncompliance

If a state cannot verify that an applicable individual met these requirements, the state must provide a notice of noncompliance and allow the individual 30 calendar days to provide documentation that the requirement was met or that it does not apply. The notice must include instructions to demonstrate compliance and how to reapply if the individual was denied or disenrolled. The state must provide Medicaid coverage during the 30-day period.

If the individual remains out of compliance, the state must check if the individual is eligible for another insurance program. The state must then provide written notice and fair hearing rights and deny or terminate Medicaid coverage.

Outreach

States are required to notify applicable individuals enrolled in Medicaid about the community engagement requirement. The notice must include:

• How to comply with the requirements, including who is subject to the requirements and exceptions
• Consequences of noncompliance
• How to report a change in status that could result in being excluded, excepted, and subjected to the requirements

The notice must be sent via mail and one other format. States are required to notify applicable individuals three months before the month in which beneficiaries must start demonstrating they meet the community engagement requirements. For example, if a state begins community engagement requirement implementation on Jan. 1, 2027, and requires three months of community engagement to be eligible for Medicaid, the state must notify beneficiaries no later than July 2026.

Good Faith Effort Exemption

States can request to delay the implementation of community engagement requirements by up to two years. To receive a temporary exemption, a state must submit a request to CMS, and the Secretary needs to determine that the state is demonstrating a good-faith effort to comply with the statutory requirements. CMS will consider actions taking towards compliance, significant barriers or challenges, the state's plan and timeline for achieving compliance, and other criteria deemed appropriate. Exemptions will expire Dec. 31, 2028, and can be terminated if a state fails to meet reporting requirements.

Contact Director of Policy Rob Nelb, MPH, at [email protected] or 202.585.0127 with questions.