Medicaid Work Requirement Waivers Could Cover Enrollees in 95 High-Unemployment Counties, If States Seek Them

A KFF Health News analysis found that as many as 95 U.S. counties could meet the unemployment standard for a temporary hardship waiver from new federal Medicaid work requirements. If 12-month unemployment averages are used instead of a single month, that number climbs to 120.

Even if a county qualifies, enrollees do not receive automatic relief. A state has to request the exception, and federal officials must approve it. According to KFF's tracker, Indiana, Iowa, and Missouri are not planning to pursue the waiver.

For most states, the requirements are set to begin on Jan. 1, 2027. Under the CMS rule, many adults ages 19 to 64 who receive coverage through Medicaid expansion will need to complete 80 hours a month of work, community service, job training, or school in order to keep their coverage unless they qualify for an exemption.

The Unemployment Standard and the Data Behind It

The 2025 budget law gives states the option to seek a short-term hardship exception for people living in counties where unemployment is at least 8% or at least 1.5 times the national rate, whichever threshold is lower.

CMS told KFF Health News in an unsigned email that states may use unemployment figures from a “reliable” source, including their own labor departments. The agency did not say what time period states should rely on. They may use the latest month or a three-, six-, or 12-month average.

The choice affects the results. Based on July 2026 unemployment rates that are not seasonally adjusted, 95 counties would qualify. Using 12-month averages, 120 would qualify. Sixty-four counties would likely meet the test no matter which data is used.

“Which data is used matters,” said Jennifer Tolbert, deputy director of KFF's Program on Medicaid and the Uninsured. “I think there's a lot still unknown.”

CMS did not tell KFF Health News how long the exceptions would last or which states have submitted requests. With the work rules approaching, people in counties near the cutoff may not know whether they will have to report hours.

States Are Moving at Different Speeds

One exemption has already been approved. In July, federal officials granted a temporary waiver for Dawson County, Nebraska, after the closure of a Tyson Foods beef plant in Lexington eliminated about 3,000 jobs, according to the Nebraska Examiner. Nebraska became the first state to enforce the new rules on May 1. State officials estimated that as many as 29,000 of the 72,000 Nebraskans enrolled in Medicaid expansion could be affected.

California has asked CMS to postpone the start date. In addition, the state asked in September to use state unemployment data that it says is more current than federal figures. A spokesperson for the California Department of Health Care Services told KFF Health News that the state is still waiting for a reply. Five Democratic-led states have also asked the federal government to delay the work requirements, saying there is not enough time to comply before the end of the year.

The exemption issue has also entered election-season politics. In California's 22nd Congressional District, where about 6 in 10 residents are enrolled in Medi-Cal, Republican Rep. David Valadao supported the 2025 law and has described the work provision as “not an unreasonable ask.” His website says, “Based on current numbers, every county in CA-22 would qualify for this exemption.” His Democratic challenger, Randy Villegas, along with other Democratic candidates, says most enrollees already work, are disabled, or are caregivers.

At least 21 Republican incumbents seeking reelection voted for the law and represent counties that could qualify for the exception, according to the KFF Health News analysis. Miranda Yaver, an assistant professor of health policy and management at the University of Pittsburgh, said the exemptions could reduce accountability for the law. “Voters will just not really see the full reach of the law,” she said.

Nationally, the Urban Institute estimates that 3 million to 7 million people could lose coverage because of the work requirements, according to a Stateline report on the new rules.

Where Enrollees Who Could Be Exempt Live

Earlier KFF research shows the possible scale of the exemption. In May 2026, a KFF analysis estimated that about 1.4 million Medicaid expansion enrollees, or 7.5%, live in qualifying counties in states that planned to adopt the exception or had not yet decided. Nine in 10 of those enrollees are concentrated in five states: California, New York, Michigan, New Jersey, and Oregon.

The pattern is uneven. A KFF analysis published in September 2025 found that about 80% of qualifying counties were rural, but more than 80% of the enrollees who could be exempt lived in urban counties.

What Enrollees Should Keep in Mind

The waiver is not open-ended. Dawson County's exemption, for example, remains in effect only until the county's unemployment rate drops below the federal threshold, according to the Nebraska Examiner.

The rule also allows some enrollees to self-attest to a medical frailty exemption when a state cannot confirm it through existing records, but only through January 2028 and generally only once per enrollment period, according to a Holland & Knight summary. CMS issued that interim final rule on June 1, 2026.

People living in high-unemployment areas should not assume they are exempt. They should check their state Medicaid agency's website, read every notice they receive, and keep their mailing address and phone number current. Those who work, volunteer, or attend school should save pay stubs, schedules, or enrollment records. Anyone who may qualify for another exemption, such as caregiving or a serious medical condition, should ask their state Medicaid agency what documentation is accepted.

Key Questions Answered

What is the hardship exemption? It is an optional, short-term exception from Medicaid work rules for enrollees in counties where unemployment is at least 8% or at least 1.5 times the national rate, whichever is lower.

How many counties could qualify? KFF Health News found that 95 counties would qualify using July 2026 data, or 120 using 12-month averages. Sixty-four would likely qualify either way.

Am I automatically exempt if my county qualifies? No. Your state must request the exception, and CMS must approve it.

Which states are not seeking the exemption? Indiana, Iowa, and Missouri, according to KFF's tracker.

When do the work rules start? Jan. 1, 2027, in most states. Nebraska began enforcing them on May 1, 2026.

What should enrollees do now? Open every Medicaid notice, update contact information, and keep records of work, school, or volunteer hours.