For nearly a year, North Carolina health officials prepared for new federal rules that would require roughly 730,000 residents with Medicaid health coverage to verify that they are working, in school, or engaged in certain other community activities.
Congress included the new work requirements for the joint federal-state health insurance program for low-income people in last year’s One Big Beautiful Bill Act. The rules apply to people in the Medicaid expansion created by the Affordable Care Act, which North Carolina adopted in 2023. The change does not affect people covered under traditional Medicaid, including those in nursing homes.
Like most Democrats, Gov. Josh Stein’s administration disagrees with linking health care to employment; when the legislation passed, Stein predicted it would be “a crisis … a devastating loss.” But to comply with the federal law, state health officials had to begin contracting vendors and putting plans in place for when the rules take effect on January 1, 2027.
Then, on June 1, federal officials unveiled a complicated nearly 400-page rule detailing how states should handle work requirements that is far stricter than Washington had led states to expect—particularly for people who are too sick to work. These “medically frail” recipients will need a doctor to verify every six months that they still can’t work.
It can be hard to get timely medical appointments in parts of the state, and transportation, child care, and other hurdles can make it challenging for people living near the poverty line to get to a doctor. Beyond that, people with chronic health conditions may have good spells and bad spells, and physical job requirements vary widely. Doctors say it could be both time-consuming and difficult to assess whether someone is able to work in the next six months. Federal officials have opened the door to states creating algorithms to help with these judgments, but it’s not clear how that would work.
“A great burden is being placed on clinics, mainly on public health and safety net providers, being asked to translate a medical diagnosis into a judgment about work capacity—a determination that is often subjective, changes over time, and falls outside the traditional practice of medicine,” Brian Klausner, a WakeMed primary care doctor who works with many low-income and unhoused people, said in an email.
State health officials and advocates now say they fear tens of thousands of North Carolinians could lose their coverage because of the burden of the new rules, and that the sickest could be hit hardest. Manatt Health, a consulting firm that works on Medicaid, estimated that 289,000 people in North Carolina could lose coverage by fiscal year 2034–64,000 more than they had forecast before the rule was released in June.
N.C. Medicaid director Melanie Bush told The Assembly that the people who need exemptions because of severe illnesses “are also the ones who will face the highest barriers to obtaining them.”
“We’re all just trying to figure it out right now, real time,” she said.
People with children under age 14, or who are pregnant, are exempt from the rules. Bush said roughly a third of the people on Medicaid expansion coverage in N.C. already work, while another third are engaged in community activities that meet the requirements. The remaining third are medically frail and unable to work.
For the first year, the law allows people to “self-attest” about their health status, which will ease the transition. But that’s temporary.
North Carolina is one of 25 states with Democratic attorneys general or governors, as well as Washington, D.C., that recently filed a legal challenge to the new rules. The suit claims the rules are both unworkable and in violation of the wording of the “Beautiful Bill” law Congress passed a year ago.
“This is cruel and illegal. The sickest people in North Carolina—people with late-stage cancer and life-threatening illnesses—are being put at risk of losing healthcare while they are still in treatment,” Attorney General Jeff Jackson said in a statement. “Congress passed a law to protect these patients specifically. Then the [federal] Medicaid agency broke that law and put these patients back at risk.”
The Trump administration has defended the work rules. Centers for Medicare & Medicaid Services Administrator Dr. Mehmet Oz has often said the law will “save” Medicaid from excessive spending, fraud, and abuse. “If you can work, you should get up and work again,” he told reporters at a White House briefing last month.
North Carolina’s Republican Sen. Thom Tillis cited the sweeping changes to Medicaid as a “broken promise” when he announced last year he would not seek a third term, but has supported some form of work requirements. Neither his office nor that of Republican Sen. Ted Budd, who voted for and has praised the legislation, responded to requests for comment.
Medical Frailty
Many people on Medicaid expansion have jobs, and the state will often be able to document that with tax and employment records. Others will have to provide their own documentation—or prove that they qualify for exemptions.
People in treatment for substance abuse are exempt, as are people granted exemptions from work rules under other government programs like Supplemental Nutrition Assistance Program (also known as SNAP or food stamps) or Temporary Assistance for Needy Families (often called welfare). Being in school (including trade school), serving as a caregiver, or doing steady volunteer work also fulfill the work requirement, though some of those activities can be hard to verify.
Some health experts worry that people on Medicaid who are working will lose coverage anyway. Bryce Stanley, a health economist at UNC Wilmington who has researched mental illness and disability, said policymakers may not have understood the “administrative burden” Medicaid recipients could face in documenting their employment or proving that they’re exempt.
That challenge, he said, “can really lead to a lot of people that would otherwise either qualify or be exempt from requirements to end up losing coverage.”
That’s what happened when Arkansas experimented with work rules in 2018: Problems with apps and Internet access, among other things, meant that many of the 18,000 people who lost coverage shouldn’t have. Arkansas has begun a “soft launch” of the new national program, hoping to spot and remedy problems before full implementation in January.
The One Big Beautiful Bill Act included plenty of requirements but seemed to give states space to make some of their own decisions on implementation. Both Democratic- and Republican-led states expected to be able to rely on medical records—diagnostic codes, Medicaid billing records, and the like—to determine which Medicaid patients are too sick to work. Now they are scrambling to put different systems in place by the end of the year.
“They took a bad policy and made it worse,” said Anthony Wright, executive director of the national health advocacy group Families USA. “It’s doubling down on the confusion and bureaucratic barriers already in [the legislation],” he added.
Work capacity assessments can be complicated. Medical conditions aren’t static. People with a serious mental illness may function well for several months, and then they don’t. Someone with cancer can feel strong enough to work at times and very sick at others. Two people with a similar orthopedic injury can recover at very different paces. And of course some jobs are more strenuous than others.
Experts say these assessments will also likely cost the state’s Medicaid program more money—even though one major rationale for the law was savings.
“This will require folks to have another doctor’s visit,” said Bush, the N.C. Medicaid director. “Doctors are going to bill [Medicaid] for this assessment that they are going to be doing.” Further complicating it, the federal government hasn’t given doctors “necessarily the right guidelines,” for making those assessments, she added.
“If you’re too sick, well, you’re going to have to jump through hoops to show that you’re too sick,” said Rebecca Cerese, interim director of the health advocacy project at North Carolina Justice Center, a liberal policy organization.
It won’t affect just doctors and patients. Processing the findings of those twice yearly checkups, then updating patients’ eligibility and exemption status, will add work for county social services offices.
“That’s going to be our big challenge, and that’s also going to be the biggest expense,” Bush added. Counties are already facing “significant workforce shortages,” she said, and now they have to find more workers and train them in an unfamiliar new system.
Keeping Coverage
If many people lose Medicaid coverage, it’s likely to have ripple effects throughout the state, particularly in rural areas with high rates of enrollment.
“People, whether or not they have health insurance, are going to get sick. They’re still going to seek care,” Bush said. “It’s going to be uncompensated in our hospitals and our clinics, and that’s going to drive the overall cost of health care up for everyone.”
Some community advocates are coming up with creative approaches to keep people covered. A group of volunteers in the Greensboro area is trying to build on a similar effort they undertook with SNAP food assistance, which also now has a work requirement.
Retired pediatrician Jane Foy is working with local faith-based groups to help Moses Cone Hospital in Greensboro come up with a streamlined process to show that someone is too sick to work and that other health systems could adopt. Their plan is to have a designated nurse oversee verifications, relying on patients’ electronic medical records and a virtual visit to assess their current health and capacity for work.
Foy’s group can’t be sure that Medicaid will accept that verification–and even if it does, it would take a lot of work to scale up across the state.
“This is very troubling, and we had to pivot very rapidly,” Foy said. “I’ve got a stack of my ‘to-do’ things on my desk, but I have set them aside to get through this situation.”
Medicaid insurers can’t do the verifications themselves, nor do they directly provide care. But private Medicaid-managed care plans, which have an interest in keeping qualified people covered, are preparing to do a lot of outreach and follow-up.
Heidi Chan, president of AmeriHealth Caritas North Carolina, said administrators will use mail, emails, texts, and phone calls to alert people to the coming changes and what they need to do to stay covered. They will also offer in-person help via community educators and at the company’s five regional community-based Wellness & Opportunity Centers.
Alliance Health is a nonprofit Medicaid plan that covers people with physical, mental, or intellectual disabilities, including some covered under the expansion.
Sara Wilson, the plan’s chief of staff, said they are determining which recipients to focus on and engagement strategies “for a population that can be transient.”
Even with help from the plans, clinics, advocacy groups, and volunteers like Foy, officials and health care providers expect a steep climb to get everything in place by January 1.
“I think it’s going to be a challenge,” Bush said. “Absolutely it’s going to be a challenge.”
