CMS issues rule for states on community engagement requirements
On June 1, CMS published an Interim Final Rule on how states should implement community engagement requirements, or work requirements, a central piece of H.R. 1, commonly known as the One Big Beautiful Bill Act, which was signed into law last summer. The full rule is several hundred pages long, but AOTA is working to analyze its provisions for any impacts on the occupational therapy profession. An Interim Final Rule is a federal regulation that takes effect upon publication, but also includes a public comment period.
Under the law, states that expanded Medicaid in accordance with the Affordable Care Act must require that Medicaid beneficiaries age 19 to 64 who are covered under the expansion document at least 80 hours per month of work, school, job training, or volunteering to maintain their Medicaid eligibility. States must evaluate beneficiaries every 6 months (the previous requirement was every year) to ensure compliance and can rely on a variety of data sources. H.R. 1 also lays out a number of populations to which the requirement does not apply, including caregivers, disabled veterans, incarcerated or recently incarcerated individuals, and pregnant women. Another population that is exempt are individuals who are “medically frail”, which the law says includes individuals who are blind or disabled, have a substance use or disabling mental health disorder, a physical, intellectual, or developmental disability that impacts the performance of one or more activities of daily living, or have a serious or complex medical condition. (“Policy Cheat Sheet”, 2026).
As states are required to begin implementing the community engagement requirements on January 1, 2027, this rulemaking has been eagerly anticipated by state Medicaid officials for months. States have spent millions of dollars working with software vendors and contractors to set up computer systems for tracking compliance, hiring and training staff to answer questions, and communicating the new requirements to beneficiaries (King, 2026).
Stay tuned to AOTA’s website for more information about this sweeping new rule. Please direct any questions to AOTA State Affairs staff at state@aota.org.
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References:
Policy Cheat Sheet: A Summary of Federal Medicaid Work Requirements. (2026) Center for Health Care Strategies. https://www.chcs.org/resource/a-summary-of-national-medicaid-work-requirements/. Accessed June 4, 2026
King, R. and Ollstein, A.M. (2026, June 4) States balk at the high price of Medicaid work requirements amid budget crunch. Politico. https://tinyurl.com/y64n2393. Accessed June 4, 2026