By Jaymie Baxley
North Carolina’s Department of Health and Human Services waited nearly a year for federal guidance on implementing the Medicaid work requirement approved by congressional Republicans last summer.
The mandate, passed in the summer of 2025 as part of the One Big Beautiful Bill Act, takes effect on Jan. 1. It will force many of the more than 750,000 adults who became eligible through the state’s expansion of the government-funded health insurance program to prove they are working, volunteering or attending school for at least 80 hours a month to retain their coverage.
The number of beneficiaries this would affect, exactly, had been uncertain.
Earlier this month, the Centers for Medicare and Medicaid Services offered some clarity — and introduced new complications — in a lengthy policy document, known as an interim final rule, that was more restrictive than state health officials had anticipated.
State officials and lawmakers had known from the start that children, pregnant women, disabled veterans and members of federally recognized tribes would not be subject to the requirement. But Melanie Bush, head of North Carolina’s Medicaid program, said CMS threw states a “curveball” in its guidance for a harder to define population: enrollees who are medically frail.
Speaking at a conference organized by the i2i Center for Integrative Health in Raleigh on June 9, Bush explained that, according to the interim final rule, an exemption for medically frail beneficiaries applies only to people who can demonstrate they are unable to work.
“It’s not simply based on a diagnosis,” she said. “It’s also verifying that this condition prevents you from working or doing community engagement.”
That’s a significant departure from how states had expected to administer the exemption. In crafting the original legislation, Congress left the definition of medical frailty to the states, giving them latitude to set their own standards — an approach North Carolina and others had been counting on.
“Now we have to sort of go back to the drawing board and figure out how we’re going to link medical frailty criteria to ability to work,” Bush said. “That’s something that we hadn’t necessarily planned on, so we are re-baselining our implementation plans, our timelines [and] raising questions to CMS.”
A heavy lift for counties
The work requirement extends to the 40 states — along with the District of Columbia — that expanded Medicaid under the Affordable Care Act, something North Carolina did in late 2023. (Wisconsin and Georgia, two non-expansion states that broadened eligibility through waiver programs, are also included.)
Carrying out the requirement will require more than determining who qualifies for an exemption. States must also conduct eligibility reviews frequently, checking at least twice a year that beneficiaries still meet the standards so they continue to qualify.
Unlike most of the other affected states, eligibility determinations in North Carolina are handled at the county level. This means the weight of implementing the requirement will fall largely on local social workers.
“A lot of this is really dependent on our county divisions of social services,” Bush said. “They are going to be bearing an untold burden doing the eligibility determinations for these folks.”
The mandate comes as county social services offices are already stretched thin. About 10 percent of local social services positions dedicated to Medicaid statewide are vacant, according to NC DHHS.
Through 2027, beneficiaries in most states will be allowed to self-attest that they are medically frail. They won’t have to prove their condition prevents them from working until 2028, at which point they’ll be forced to provide documentation every six months.
However, North Carolina is one of two states, along with Utah, where lawmakers passed legislation prohibiting self-attestation in the requirement’s first year.
House Bill 696, which was signed by Democratic Gov. Josh Stein in April, prevents “DHHS or county departments of social services from accepting self-attestation as the only evidence in verification of Medicaid eligibility requirements, except as required by federal law.”
The law also requires beneficiaries to satisfy the work requirement retroactively. To enroll, they must show they complied during the three months before their eligibility determination. It’s a hurdle that healthcare advocates say could keep eligible people from getting or maintaining coverage simply because they cannot document past employment or volunteer activity.
Taken together, the federal rule’s heightened frailty standard and the state law’s lookback clause and ban on self-attestation put North Carolina’s county offices in a particularly demanding position compared with most other states.
“Our county DSS [offices] are going to need a lot of support,” Bush said. “It’s going to be completely overwhelming for them to take this on.”
She added that NC DHHS plans to automate the determination process “as much as possible” with existing data from sources such as the Supplemental Nutrition Assistance Program, which could relieve some pressure on county workers.
More than Medicaid
The Medicaid work requirement is not the only provision of the federal budget reconciliation bill straining the state’s social services infrastructure.
The same law reshaped SNAP as well, raising the long-standing age limit from 54 to 65 for people to be excused from that program’s work requirement. It also imposes more frequent eligibility checks and introduces new exclusions for people who aren’t U.S. citizens.
Michael Leighs, deputy secretary for opportunity and well-being at NC DHHS, said the SNAP changes took effect earlier than those for Medicaid, forcing his team to rapidly update policy, overhaul the state’s eligibility system and send out guidance to counties.
“Since the passage of the bill last July, we really, really focused on putting in the changes to our systems,” said Leighs, who also spoke at the i2i conference.
More than 1.25 million North Carolinians rely on SNAP, Leighs said, and half of the recipients are children. About 159,000 are older adults, and 46,000 are veterans. The program is also a major economic driver, particularly in rural areas where retailers may derive up to 20 percent of their sales from SNAP purchases.
For state officials, the challenge extends well beyond adapting to new eligibility rules.
There is a looming financial threat tied to what Leighs called the program’s “error rate” — a measure of how often benefit amounts are higher or lower than they should be. Such errors, he noted, are typically minor miscalculations rather than fraud: a worker who forgot to ask about a deduction, or an applicant who failed to report a few months of income from a side job.
Under the new law, states with error rates above a certain threshold will be required to cover an increasingly large share of SNAP benefit costs — costs that have historically been paid entirely by the federal government.
North Carolina’s annual SNAP benefit total is roughly $2.8 billion. Leighs said a 15 percent cost share, which would apply to states with the highest error rates, could cost North Carolina as much as $420 million.
“That’s going to have huge ramifications if we land there,” he said. “Not just for our program, but for the state budget in general.”
Debra Farrington, the deputy secretary of health and chief equity officer at NC DHHS, meanwhile, offered what she described as a “small beacon of light” amid the cuts.
In January, North Carolina was awarded $213 million by the federal government to set up the state’s Rural Health Transformation Program, which is aimed at improving access to care in rural communities. The state hopes to receive additional annual payments totaling $1 billion for the initiative over the next five years.
The money, Farrington said, presents “a wonderful chance” to improve health outcomes in rural areas, which often have higher rates of chronic disease and infant mortality than their urban counterparts.
Still, she cautioned against overstating what the new program can accomplish in the face of broader federal cuts. North Carolina stands to lose as much as $50 billion in federal funding over the next decade, Farrington said, making the rural transformation grant “a drop in the bucket.”
The post Federal curveball upends NC’s plans for Medicaid work rule appeared first on North Carolina Health News.
