Raleigh -- August 7, 2026: North Carolina officials are asking the federal government to reconsider how it will determine which Medicaid recipients with serious medical conditions are exempt from new work requirements scheduled to take effect next year.
Gov. Josh Stein and the North Carolina Department of Health and Human Services submitted formal comments to the Centers for Medicare & Medicaid Services (CMS) on July 31, arguing that a recently issued federal rule could make it more difficult for some people with cancer and other serious illnesses to qualify for a medical exemption.
At issue are Medicaid work requirements established under H.R. 1 and the federal rules CMS issued to implement them.
Beginning no later than Jan. 1, 2027, certain adults covered through Medicaid expansion will generally be required to demonstrate at least 80 hours per month of qualifying employment, education, community service or other approved activities to obtain or maintain coverage.
Federal law provides exemptions for several groups, including people considered medically frail or who have special medical needs.
The dispute centers on how that medical exemption will be determined.
Under the CMS interim final rule, an individual may qualify as medically frail when a serious or complex medical condition or other qualifying condition “significantly impair[s]” the person's ability to comply with the work requirement.
North Carolina officials contend that standard is narrower and potentially more difficult to administer than the approach the state had been preparing to use.
NCDHHS says North Carolina had planned to identify many medically frail Medicaid recipients through information the state already possesses, including medical claims and diagnosis codes. State officials argue the federal rule could instead require some recipients to provide additional evidence showing that their medical condition specifically interferes with their ability to satisfy the work requirement.
Stein and NCDHHS estimate that more than 64,000 North Carolinians with cancer and other serious illnesses could be affected by the way the medical-frailty exemption is implemented.
“We have laws protecting vulnerable people because Congress recognized that people with life-threatening illnesses cannot afford to lose their access to health care,” Stein said in announcing the state's objection.
The governor's office argues the change could create additional paperwork not only for Medicaid recipients but also for physicians, other health care providers and county social-services employees responsible for determining Medicaid eligibility.
North Carolina's Medicaid eligibility system is state-supervised but administered at the county level, meaning county workers will have a significant role in implementing the federal changes.
“We all agree that the best way to build healthy and safe communities is to increase access to health care,” NCDHHS Deputy Secretary for Medicaid Melanie Bush said. “However, the new federal guidance on medical frailty will lead to a greater number of eligible individuals losing coverage because of the new narrower medical frailty definition, administrative complexity, and operational barriers.”
What the Federal Rule Actually Requires
CMS says the new Medicaid community-engagement requirement applies primarily to certain adults ages 19 through 64 covered under Medicaid expansion.
Those subject to the requirement can generally comply through at least 80 hours per month of employment, community service or participation in a work program; enrollment in an educational program at least half-time; a combination of qualifying activities; or earnings meeting a federally established monthly threshold.
CMS also identifies numerous exemptions, including pregnant women, certain parents and caregivers, American Indians and Alaska Natives, some veterans, people participating in drug or alcohol treatment programs and people who are medically frail or have qualifying special medical needs.
If the state cannot verify that a recipient has satisfied the requirement or qualifies for an exemption, federal rules generally require that person to receive notice and an opportunity to provide additional information before coverage is terminated.
North Carolina's Objection Is Not a Repeal of the Work Requirement
The July 31 action by Stein and NCDHHS does not stop or suspend the federal Medicaid work requirements.
Instead, North Carolina submitted comments asking CMS to change the federal implementation rule governing the medical-frailty exemption.
CMS issued the regulation as an interim final rule with a comment period, meaning the rule is in effect while the federal agency accepts and considers public comments and can subsequently revise its requirements.
Unless federal policy changes, states subject to the new Medicaid community-engagement provisions generally must implement them by Jan. 1, 2027, although states may begin earlier.
That distinction is important: medically frail Medicaid recipients remain exempt under federal law. The disagreement between North Carolina and CMS concerns which patients qualify for that exemption and what evidence may be required to establish it.
For North Carolina Medicaid recipients with serious medical conditions, the practical impact will depend on how CMS responds to comments from North Carolina and other stakeholders and how the final federal requirements are implemented before the 2027 deadline.