Federal judge lets Trump Medicaid work rule proceed as 25 Democratic-led states’ lawsuit continues
States will have to move forward with implementing new Medicaid work requirements by Jan. 1 after a federal judge denied a request from 25 Democratic-led states and the District of Columbia to temporarily block the Trump administration’s guidance governing the program.
The ruling marks an early victory for the administration as a broader legal challenge continues. At the center of the dispute is new federal guidance issued by the Centers for Medicare & Medicaid Services (CMS) that narrows who qualifies as “medically frail” and therefore exempt from Medicaid work requirements established under the One Big Beautiful Bill Act.
The One Big Beautiful Bill Act, signed by President Donald Trump last summer, requires states that expanded Medicaid under the Affordable Care Act to implement work requirements for certain adults beginning Jan. 1.
Under the law, affected Medicaid recipients must work, attend school, or volunteer for at least 80 hours per month to maintain coverage. The requirement applies in the 42 states and the District of Columbia that expanded Medicaid eligibility under the Affordable Care Act.
Supporters argue the policy encourages workforce participation and helps ensure Medicaid resources are directed toward those most in need.
Democratic-led states filed suit over new CMS guidance
On June 29, a coalition of 25 Democratic-led states and the District of Columbia filed suit against CMS and the Department of Health and Human Services (HHS).
The lawsuit was brought by Democratic attorneys general from Arizona, California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, New York, North Carolina, Oregon, Rhode Island, Vermont, Virginia, Washington and Wisconsin, along with the District of Columbia.
The governors of Kentucky and Pennsylvania also joined the complaint, bringing the total number of participating states to 25.
The lawsuit challenges federal guidance issued earlier in June that changes how states determine whether Medicaid recipients qualify as “medically frail,” a designation that exempts individuals with serious disabilities or health conditions from the work requirements.
The plaintiffs argue the guidance exceeds federal authority and imposes unnecessary barriers on vulnerable Medicaid recipients.
A central issue in the case is CMS’s revised interpretation of who qualifies for a medical exemption.
Before the guidance was issued, states had greater flexibility in identifying medically vulnerable individuals and could often rely on existing health records to determine eligibility for exemptions. The new policy requires additional documentation and narrows the categories of people who automatically qualify.
State officials contend the changes could result in eligible individuals losing coverage because of administrative hurdles rather than a failure to meet eligibility requirements.
States warn vulnerable patients face new administrative hurdles
The Democratic-led states argue that patients with serious illnesses, disabilities and complex medical conditions could face significant challenges maintaining coverage under the new framework.
According to the lawsuit, the guidance would force vulnerable Medicaid recipients to “jump through unnecessary administrative hoops” to prove they qualify for exemptions.
The plaintiffs contend that individuals undergoing treatment for serious illnesses or living with disabling conditions could face additional paperwork burdens at a time when they are already dealing with major health challenges.
As per CMS, affected recipients must complete at least 80 hours of qualifying activities each month to maintain their benefits. They can meet the requirement through paid work, community service, participation in an approved employment program, attendance in an educational program at least half-time, or a combination of those activities.
The requirements do not apply to:
Pregnant people and those eligible for postpartum Medicaid coverage
Former foster care recipients
American Indians and Alaska Natives
Veterans with a total disability rating
Parents, guardians, caregiver relatives or family caregivers responsible for a child age 13 or younger
People caring for an individual with a disability
People considered medically frail or whose health substantially limits their ability to comply
Individuals who already meet Temporary Assistance for Needy Families (TANF) work requirements
Members of households receiving SNAP benefits who are subject to that program’s work requirements
People participating in drug or alcohol rehabilitation or treatment programs
People incarcerated in public institutions
Judge denies request to halt implementation
United States District Judge Richard Stearns of Massachusetts denied the states’ request for a temporary injunction that would have paused implementation of the guidance before the Jan. 1 deadline.
While the judge acknowledged that the lawsuit raises substantial legal questions, he concluded the states had not demonstrated sufficient harm to justify the extraordinary step of blocking the policy before the case is fully litigated.
As a result, states must continue preparing for implementation while the lawsuit proceeds through the courts.
One of the states’ primary arguments was that the guidance would force them to spend significant amounts of money redesigning Medicaid eligibility systems and compliance procedures.
Judge Stearns noted that CMS has committed to reimbursing states for 90% of the costs associated with designing and administering the new requirements.
He wrote that the plaintiffs had not demonstrated that covering the remaining 10% would create irreparable harm.
“Because injunctive relief is the exception, not the rule, there is a certain point at which damages fail to justify the issuance of such an extraordinary measure,” he wrote. “Plaintiffs have not shown that their damages rise above that minimal threshold here. Moreover, the additional costs that may be incurred by the States are unlikely to bloom disproportionately given the familiarity of the responsible state agencies with the tasks to be performed.”
Judge says Congress; not CMS; set the deadline
The ruling also emphasized that the Jan. 1 implementation deadline was established by Congress through the One Big Beautiful Bill Act, not by CMS.
Judge Stearns pointed to that distinction when rejecting arguments that federal regulators had unfairly compressed the timeline for states to comply with the new requirements.
The court concluded that the statutory deadline remains in place regardless of the ongoing legal challenge.
Although the states lost their bid for an immediate injunction, the judge indicated that the underlying lawsuit raises significant legal issues that have yet to be resolved.
The ruling stated that the case presents “difficult issues” regarding the scope of authority Congress delegated to HHS and CMS.
Judge Stearns also wrote that the lawsuit raises questions about CMS Administrator Dr. Mehmet Oz’s “faithfulness to Congressional intent,” suggesting the broader legal dispute remains far from settled.
Trump administration says work requirements protect Medicaid
CMS Administrator Dr. Mehmet Oz has repeatedly defended Medicaid work requirements as a way to strengthen and preserve the program.
Oz has argued that able-bodied adults receiving taxpayer-funded healthcare should either work, attend school or participate in volunteer activities.
“If you can work, you should get up and work,” Oz said.
He has also defended the policy as necessary to prevent waste and abuse within federal healthcare programs.
“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.”
Millions could lose coverage under the new requirements
The potential impact of the Medicaid work requirements remains a major point of contention.
The Urban Institute estimated earlier this year that between 3 million and 7 million people could lose Medicaid coverage as a result of the work requirements alone.
When combined with more frequent eligibility checks and administrative reviews, as many as 10 million people could lose coverage over the next decade, according to the organization’s projections.
Supporters argue many of those individuals would no longer qualify under the new standards, while opponents contend large numbers could lose coverage despite remaining eligible.
What happens next
The denial of the injunction means states must continue preparing for the Jan. 1 rollout while the litigation moves forward.
The court has not ruled on the merits of the lawsuit, and the states will continue arguing that CMS exceeded its authority by narrowing exemptions for medically frail Medicaid recipients.
For now, however, the Trump administration’s Medicaid work requirement framework remains on track for implementation, setting the stage for a major overhaul of Medicaid eligibility rules across much of the country.
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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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