What is the Medicaid Hardship Exception and How Could it Affect Who’s Required to Work?

Nationally, 7% of Medicaid expansion enrollees (1.4 million) could potentially qualify for a hardship exception from work requirements because they live in counties with high unemployment, according to a new KFF analysisof how the exception criteria could be implemented. The new Medicaid work requirements, which states must implement in January 2027, mandate that adults enrolled in the Affordable Care Act (ACA) Medicaid expansion—as well as select enrollees in Georgia and Wisconsin’s waiver programs—work or engage in work-related activities for at least 80 hours per month or be enrolled in school at least half-time. The law allows states to request a hardship exception for individuals who live in counties with high unemployment rates, defined as at or above 8% or below 8% but 1.5 or more times the national average unemployment rate, which would provide an exemption from the requirements.

Using methods mirroring existing Supplemental Nutrition Assistance Program (SNAP) waiver rules that rely on 12-month average unemployment rates, KFF found that nine in 10 of the Medicaid expansion enrollees in the 158 qualifying counties are concentrated in five states: California, New York, Michigan, Kentucky, and Ohio. Under a less restrictive method in which a county would qualify if it met the criteria in any month within a 12-month period, the number of qualifying counties would increase to 386, and 4.6 million enrollees could be exempt.

The number of eligible counties and enrollees will depend on how the hardship exception is implemented, including state data requirements, the exception period, the state application process, and how the unemployment rates might change in the future. The Secretary of Health and Human Services must issue the implementation rule for Medicaid work requirements by June 1, 2026.

Related: KFF Health News today also covers how the law’s exception for counties with high unemployment rates could affect Medicaid enrollees.Read the brief

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