25 states sue Trump administration over new Medicaid work rule that could affect millions
A coalition of 25 states and the District of Columbia has filed a lawsuit challenging the Trump administration’s new Medicaid work requirement rule, arguing it unlawfully makes it harder for vulnerable Americans to keep their health coverage.
The lawsuit targets an Interim Final Rule (IFR) issued by the Centers for Medicare & Medicaid Services (CMS), which changes how certain Medicaid recipients qualify for exemptions from new work requirements. State attorneys general argue the rule creates unnecessary paperwork, departs from longstanding federal policy and could result in millions of eligible people losing coverage despite qualifying for exemptions.
The lawsuit was filed by 25 states and the District of Columbia against the Trump administration over changes to Medicaid eligibility requirements.
The complaint names CMS Administrator Dr. Mehmet Oz and Health and Human Services Secretary Robert F. Kennedy Jr. as defendants. The plaintiffs argue the agency exceeded its legal authority by issuing the Interim Final Rule and departed from Congress’ original intent for the Medicaid program.
The states are asking the court to temporarily block enforcement of the rule while the case proceeds.
What the new Medicaid work rule requires
Under the new CMS rule, certain able-bodied Medicaid recipients must work at least 20 hours per week, volunteer or attend school in order to remain eligible for the government health insurance program.
The rule also changes how people with severe medical conditions qualify for exemptions. Rather than allowing states to automatically identify many medically exempt individuals using existing health records, some beneficiaries will now have to submit documentation proving they qualify for an exemption.
The work requirements are scheduled to take effect beginning in January 2027.
States argue the rule creates new barriers for vulnerable patients. According to the lawsuit, the biggest concern is not the work requirement itself but the documentation process for medically vulnerable recipients.
Before CMS issued the rule in early June, state agencies could automatically exempt many people with serious health conditions by reviewing existing medical records without requiring beneficiaries to complete additional paperwork.
The lawsuit argues eliminating those automatic exemptions places people with significant health conditions at greater risk of losing coverage simply because they fail to navigate complex administrative requirements.
Lawsuit warns people with disabilities could lose coverage
The plaintiffs argue the new documentation rules could affect some of Medicaid’s most medically vulnerable beneficiaries.
“People with disabilities, patients in the middle of cancer treatment, or those struggling with another serious or complex health condition, shouldn’t be at risk of losing the care that helps maintain their health,” the suit stated.
State officials contend the new requirements increase the likelihood that eligible recipients could lose benefits because of paperwork issues rather than because they fail to qualify.
The lawsuit cites CMS’s own estimates to argue the new rule could significantly reduce Medicaid enrollment.
According to the filing, CMS projects approximately 2.3 million Medicaid enrollees will lose coverage during the first year the rule is in effect.
The agency also estimates that roughly 7% of individuals who are either working or otherwise qualify for exemptions could still lose their health insurance because of confusing paperwork requirements, missed deadlines or incomplete documentation.
The plaintiffs argue those figures demonstrate the administrative burden created by the new policy.
Self-attestation rules would become more restrictive
The lawsuit also challenges new limits on self-attestation for individuals who cannot immediately provide medical documentation.
Beginning in 2028, enrollees without readily available medical records would be limited to a single opportunity to submit a self-attestation declaring, under penalty of perjury, that they are medically unable to work.
Under previous CMS guidance, beneficiaries could submit self-attestations multiple times as their medical circumstances changed.
The states argue the revised policy reduces flexibility for people experiencing evolving or chronic medical conditions.
States say the rule will increase administrative costs. Beyond concerns about Medicaid recipients, the lawsuit argues the rule would create significant new costs for state governments.
According to the complaint, many states have already invested in automated systems designed to identify medically exempt beneficiaries using existing health data.
The plaintiffs say the new federal requirements would force them to abandon those systems and instead build more labor-intensive manual review processes, increasing administrative expenses while slowing eligibility determinations.
Trump administration says guardrails protect Medicaid
CMS Administrator Dr. Mehmet Oz has defended the work requirements as necessary safeguards designed to preserve Medicaid for those who truly need it.
Oz has argued the requirements help prevent fraud while encouraging able-bodied adults receiving taxpayer-funded healthcare to contribute through work, education or volunteer service.
“If you can work, you should get up and work,” Oz said.
He also defended the broader policy by saying: “If we put guardrails around these programs, we’ll allow them to thrive. I’m here because I love Medicaid. The president has already said he loves and cherishes Medicaid and Medicare. … We cannot allow these programs to be defrauded into a turmoil that they cannot pull up from. If we love these programs, we will make the difficult decisions.”
Democratic-led states join lawsuit against Medicaid rule
The plaintiffs include 25 Democratic-led states and the District of Columbia: California, Connecticut, Delaware, Hawaii, Illinois, Maine, Maryland, Massachusetts, New Jersey, New York, Oregon, Rhode Island, Vermont, Washington, Arizona, Colorado, Michigan, Minnesota, Nevada, New Mexico, North Carolina, Pennsylvania, Virginia, Wisconsin, Kentucky, and the District of Columbia.
Together, they argue the rule conflicts with federal Medicaid law and creates barriers that Congress never intended when establishing the program.
The legal challenge comes as states prepare to notify Medicaid recipients about the upcoming work requirements.
With an Aug. 31 deadline approaching to mail notices to beneficiaries, the plaintiffs are asking the court for a temporary stay and a preliminary injunction that would prevent CMS and HHS from enforcing the new rule while litigation continues.
If the court grants the request, implementation of key portions of the rule could be delayed as judges determine whether the administration acted within its legal authority.
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John Dealbreuin came from a third world country to the US with only $1,000 not knowing anyone; guided by an immigrant dream. In 12 years, he achieved his retirement number.
He started Financial Freedom Countdown to help everyone think differently about their financial challenges and live their best lives. John resides in the San Francisco Bay Area enjoying nature trails and weight training.
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