Medicaid work requirements: Judge blocks CMS limits on medically frail exemptions

A federal judge has blocked part of new Medicaid guidance that tied medically frail exemptions to work rules. The decision means chronically ill people can qualify for exemptions without proving limits on work compliance. U.S. District Judge Richard Stearns issued the ruling in Boston. The case challenged guidance from the Centers for Medicare and Medicaid Services.

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Judge Stearns gave a partial win to a group of 25 states and the District of Columbia. The states sued the Trump administration in June. The challenge focused on CMS guidance linked to the 2025 law called the One Big Beautiful Bill. The judge issued a 16-page ruling. The decision left the main work requirement policy in place.

Medicaid work requirements and medically frail exemptions

The 2025 law set who counts as medically frail for Medicaid purposes. It said the definition must include people who are blind or disabled. It also covered people with substance use disorders. It included disabling mental disorders and some disabilities affecting daily activities. It also included serious or complex medical conditions.

CMS went further than the law’s text, the states argued. The guidance required people in those protected groups to show more. Under the policy, a person also had to prove the condition limited ability to meet work rules. The plaintiffs said this extra test could block eligible people. The lawsuit also said the agency overstepped the law.

Stearns said the states showed a risk of harm that could not be fixed later. The judge wrote that costs would fall on state systems quickly. "The states have met their burden of showing irreparable harm for which monetary damages would provide inadequate compensation -- they face the burden of costly and intensive alterations to their eligibility verification systems,\" Stearns said in his 16-page ruling.

Medicaid coverage impact and state responses

Stearns did not declare Medicaid work requirements unlawful. Still, the order could help some people keep cover. Morgan Henderson, an economist studying Medicaid at The Hilltop Institute, explained the likely effect. \"Those individuals who would have lost coverage because theyre sick but theyre not quite sick enough,\" Henderson said. \"they might have their coverage preserved now.\"

North Carolina Health and Human Services Secretary Dev Sangvai said patients may face less stress. \"One of our top priorities is to make sure people can get the critical health care they need without facing confusing paperwork or the fear of losing coverage during treatment,\" Sangvai said in a statement. \"This decision allows us to focus on what matters most: delivering reliable health care to our states most vulnerable residents when they need it most.\"

Medicaid verification rules upheld by the judge

The ruling kept two other federal limits on how states check medical frailty. One rule requires states to reject proof if a diagnosis is over a year old. Another policy allows only one self-attestation per continuous period of enrolment. Stearns said the government justified these parts. \"The government provided a non-frivolous rationale for adopting each provision and explained why it did not find the States concerns of disenrolment compelling.\"

CMS declined to comment on the ruling. The Medicaid restrictions are part of Trump’s large tax and policy law passed in 2025. The changes apply to people covered through Medicaid expansion in most states. Expansion widened access for more low-income people. It is a key part of the government safety net healthcare programme.

From January 1, expansion enrollees aged 19 to 64 must meet activity rules. They must work or do community service at least 80 hours a month. Another option is being in school at least half the time. Some exceptions remain, including for medically frail people. Exceptions also include those in addiction treatment programs.

With inputs from PTI