Editor’s note: This is the third story in a series on how the One Big Beautiful Bill Act and Congress are impacting states in new legislative sessions. Tune in throughout the week as we dive deep on health, tax and benefit policy.

New federally mandated Medicaid work requirements are posing a major test for nearly every state, where policymakers with limited resources have less than a year to figure out how to track whether tens of millions of low-income adults are complying. 

North Carolina lawmakers recently became among the first to publicly acknowledge that meeting a Jan. 1, 2027, deadline could be difficult. 

The changes are required under the One Big Beautiful Bill Act, enacted in July, which directs states to overhaul key parts of their Medicaid programs. 

“We are concerned about the aggressive deadline, but in talking to some folks it is highly unlikely we will be given more time or an extension,” North Carolina Rep. Donny Lambeth, a Republican, told Pluribus News. “So we in North Carolina must do all we can to hit the deadlines.”

Health policy experts in close contact with lawmakers and Medicaid officials across the country said many are privately raising similar concerns as they race to build new systems and infrastructure for a policy shift that would fundamentally change how Medicaid operates.

The work requirements will be among the first meaningful changes to state Medicaid programs under the law, which the Congressional Budget Office projects will cut nearly $1 trillion in federal spending from the safety net program over the next 10 years. 

Supporters of the policy, largely Republicans, say requiring work or community engagement will encourage employment, reduce government spending and more accurately target benefits to those most in need. Health policy researchers have found that most working-age adults enrolled in Medicaid are already employed, and that work requirements don’t result in a meaningful increase in employment.

Two states — Arkansas and Georgia — had already implemented Medicaid work requirements after years of attempts by Republican-led states to secure federal approval. Arkansas’s program was short-lived and resulted in steep insurance coverage losses without meaningful gains in employment; Georgia’s remains in place. 

While Georgia is amending its program to boost coverage and improve it, critics say the limited participation and high administrative costs so far raise concerns about a nationwide rollout.

The Trump administration has said it will work with states to ensure a smooth rollout, including partnerships with technology companies to automate eligibility verification and connect enrollees with job training and employment services. On Jan. 29, the Centers for Medicare and Medicaid Services announced agreements with 10 companies valued at $600 million in free and discounted products and services to support implementation.

“Community engagement is not just a policy requirement — it is an opportunity for states to modernize Medicaid systems while strengthening connections to work, education, and community‑based opportunities,” CMS Administrator Mehmet Oz said in a statement. 

The new rules apply to the 40 states that adopted Medicaid expansion through the Affordable Care Act, as well as two states — Georgia and Wisconsin — that introduced partial expansions through federal waivers. 

For the roughly 20 million adults in the expansion population In those states to maintain coverage, they must document that they worked, volunteered or attended school for at least 80 hours per month or qualify for one of more than a dozen exemptions. States must also verify eligibility at least twice a year, rather than annually.

The Congressional Budget Office estimates that the new rules will reduce federal spending by $326 billion over 10 years and result in 5.3 million more people who are uninsured.

Much of the federal savings will be offset by increased costs to the states that are only starting to come into focus as legislatures draft budgets. 

Massachusetts Gov. Maura Healey, a Democrat, is requesting $30 million in her Fiscal Year 2027 budget to cover work requirements and more frequent eligibility checks. 

In Missouri, health officials told lawmakers last week that the state must address a backlog of roughly 900,000 Medicaid renewals before it can begin conducting the more frequent checks required under the new law. The Department of Social Services is requesting about $33 million for technology upgrades and more than $12 million to hire the equivalent of roughly 120 staff positions.

Democratic Rep. Betsy Fogle said those figures suggest administrative costs could exceed any savings from removing people from the rolls.

“I would argue that in a few years, no matter what we do, we’re going to be in a worse fiscal situation than we are,” she said. 

In North Carolina, where counties handle eligibility determinations, officials estimate the changes would cost just over $30 million annually to support county operations, plus $6.5 million in one-time state start-up costs and $13.2 million per year in ongoing state administrative expenses beginning in 2027.

“We have a very, very short runway,” Sarah Gregosky, chief operating officer for the state’s Medicaid program, told lawmakers. “This is a complex technology, policy and process change.” 

Gregosky also noted that federal officials are signalling to states that they are unlikely to grant any extension requests. 

The Centers for Medicare and Medicaid Services released preliminary guidance in December clarifying some technical issues, including notification requirements and implementation timelines. More detailed instructions are expected in June, when the agency is required to publish an interim final rule.

While some states are waiting for that guidance, others are moving ahead. Health policy experts say one of the biggest challenges will be data matching: aligning Medicaid enrollee records with wage, unemployment and other databases to verify eligibility and ensure individuals are not enrolled in multiple states.

That task is especially difficult for people with gig or seasonal jobs, those who work for small businesses, or individuals required to document job searches.

With many Medicaid agencies already understaffed, states are seeking workarounds rather than expanding payrolls.

The Trump administration and the technology industry have encouraged states to explore AI tools to streamline the process. Maryland received a $1.2 million grant last month from the nonprofit Public Benefit Innovation Fund to lead a multi-state effort to develop an open-source AI tool for that purpose.

Past attempts to use AI to modernize Medicaid programs have been plagued with errors.  And pilot programs in Louisiana, Arizona and Georgia that relied on technology promoted by the Trump administration to verify employment have struggled to perform as promised.

Health care advocates caution that technology shouldn’t be solely relied upon for troubleshooting hitches.

“No tech company or state can solve for this through tech alone, especially with a very short period to pull it together,” said Mary-Beth Malcarney, senior adviser on Medicaid policy at Families USA. “New technology should not be seen as some silver bullet to solve everything.”

States are also leaning on community health centers and other organizations that helped process eligibility during the post-pandemic “unwinding” period.

And some are pressing private insurers to shoulder more responsibility. In Kentucky, lawmakers are prioritizing legislation that would codify work requirements in state law and fine Medicaid-managed care plans that fail to collect accurate enrollee data.

“As a program that provides coverage to one-third of Kentuckians and is our second largest state expense, we have a responsibility as lawmakers to ensure it is being run properly for our most vulnerable citizens and the taxpayers who fund it,” Republican Rep. Ken Fleming, the bill sponsor, said in a statement.  

Despite the hurdles, some Republican-led states are moving quickly. Nebraska was the first state to announce in December it would implement its work requirement early, starting in May 2026. State officials said last month the state does not intend to hire extra staff to carry out the changes.

That plan is already encountering resistance from the legislature. A bill that would require the state to implement only the work requirements mandated by federal law is scheduled for a hearing in February.

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