A coalition of 25 states and the District of Columbia has sued the Trump administration to block a new Medicaid work-rule policy that state officials say could push medically vulnerable people off health coverage through a maze of paperwork, documentation demands, and narrowed exemptions.
The lawsuit, filed June 29 in federal court in Massachusetts, challenges an interim final rule issued by the Centers for Medicare & Medicaid Services that tells states how to carry out new work requirements enacted under President Donald Trump’s 2025 tax and spending law. The rule requires many Medicaid expansion adults ages 19 to 64 to show they are working, doing community service, participating in a work program, or enrolled in school for at least 80 hours a month to keep coverage.
The case does not challenge only the idea of work requirements. It targets how the administration defined who can be exempt from them.
The states argue that Congress protected people who are “medically frail or otherwise have special medical needs,” including people with disabilities, substance use disorders, disabling mental health conditions, and serious or complex medical conditions. But CMS’s rule adds another test: a person’s condition must significantly impair their ability to meet the work or community engagement requirement.
That added standard, the states say, unlawfully narrows the protections Congress wrote into the law and puts people with serious health needs at risk of losing coverage even when they should be exempt.
The plaintiffs say CMS changed course after states had already spent months planning around earlier federal guidance. In the complaint, they argue that the new rule forces states to rebuild eligibility systems, revise outreach materials, create new medical-frailty verification processes, and notify Medicaid recipients by an August 31 deadline, all while facing the risk of federal penalties if the agency later decides they applied the exemption too broadly.
The lawsuit names CMS Administrator Mehmet Oz, CMS, Health and Human Services Secretary Robert F. Kennedy Jr., and HHS as defendants. CMS is part of HHS and oversees Medicaid in partnership with state governments.
For Medicaid recipients, the policy fight could determine whether coverage depends on care needs or on a person’s ability to document those needs in the exact way federal officials demand.
Medicaid is the federal-state health insurance program for low-income people, people with disabilities, children, pregnant and postpartum people, older adults, and others who cannot afford medical care on their own. Under the Affordable Care Act, many states expanded Medicaid to cover more low-income adults. The new work requirements apply to many adults in that expansion population, though the law includes exemptions.
Supporters of work requirements have described them as a way to protect the program and ensure public benefits are reserved for people who qualify. The Trump administration has promoted the policy as a fraud-prevention and accountability measure.
But the states suing the administration argue the rule will not mainly remove people who refuse to work. They say it will remove people who are eligible but cannot navigate a complex new reporting system, cannot quickly obtain medical documentation, miss a deadline, or are incorrectly sorted by state or federal systems.
That concern is grounded in past Medicaid work-rule experiments. In Arkansas, the first state to implement Medicaid work requirements under a waiver program during Trump’s first presidency, thousands of people lost coverage before a federal court blocked the policy. Health-policy researchers and advocates have long warned that work requirements often function as paperwork requirements, especially for people with unstable work schedules, limited internet access, disabilities, untreated health conditions, transportation barriers, or language access needs.
The new CMS rule adds another layer of difficulty because medical frailty is not always simple to document. A cancer diagnosis, a serious mental health condition, a substance use disorder, or a complex chronic illness may show up across medical records, claims data, treatment notes, prescriptions, and doctor assessments. The states say the federal rule may require more than a diagnosis, forcing Medicaid agencies to determine whether a condition is severe enough to impair compliance with work requirements.
That could be especially difficult for people who are sick but still working some hours, people whose symptoms fluctuate, people waiting for specialist appointments, people without stable housing, and people who rely on community clinics or emergency rooms instead of a regular primary care provider.
The New York attorney general’s office said New York estimates at least 475,000 Medicaid recipients in the state could lose coverage because of the combined effect of work requirements and more frequent eligibility checks. The office also said New York’s uninsured population could increase by up to 45 percent after implementation. Those estimates are specific to New York, but the multistate lawsuit argues the rule will create similar risks across the plaintiff states.
The coalition includes the attorneys general of 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, Wisconsin, and the District of Columbia, along with the governors of Kentucky and Pennsylvania.
The case also raises questions about federalism and the cost of rapid implementation. States administer Medicaid, build eligibility systems, communicate with enrollees, process renewals, and absorb operational costs. The complaint says the CMS rule arrived too late, departed from prior guidance, and left states without clear instructions for identifying who qualifies as medically frail. If states get those decisions wrong, they could face penalties or federal funding disputes.
The Kaiser Family Foundation said the rule requires states to consider not just whether someone falls into one of the medical-frailty categories identified by law, but whether the condition impairs the person’s ability to engage in required activities. KFF also said states will likely need to shift from earlier implementation plans and that the rule may increase barriers to getting or keeping coverage.
The lawsuit asks the court to block the restrictive provisions of the rule before they take effect. The states argue the rule violates the Administrative Procedure Act because it is contrary to law, arbitrary and capricious, and was issued without adequately weighing harm to states and Medicaid recipients. They also argue the rule imposes unconstitutional conditions on federal Medicaid funding.
HHS and CMS did not immediately respond to requests for comment from Reuters and the Associated Press after the lawsuit was filed.
The legal fight now moves to federal court as states face near-term administrative deadlines and Medicaid recipients wait to learn whether their coverage will depend on new federal reporting rules. For people with serious health needs, the lawsuit frames the rule not as a work policy in isolation, but as a health-care access policy that could make coverage contingent on paperwork. New York Attorney General Letitia James put it this way: “New Yorkers who are battling cancer, living with a disability, managing a serious mental health condition, or recovering from addiction should be able to get the health care they need without being buried in paperwork.”
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