CMS Approves First-Ever Medicaid Work Requirements in Kentucky

In a historic first, the Centers for Medicare and Medicaid Services (CMS) approved Kentucky’s Section 1115 waiver request that imposes work requirements on Medicaid beneficiaries to maintain coverage. The National Council for Mental Wellbeing strongly opposes work requirements and believes that work requirements not only prevent individuals with mental health or substance use disorders from receiving the treatment they need, but are in opposition to the core mission of Medicaid. Nine other states have pending work requirement waivers; however, any approvals will likely be challenged in court delaying their implementation.

CMS’ decision to approve Kentucky’s waiver breaks with tradition and is the first time work requirements have been approved in the 52-year existence of Medicaid. The National Council opposes making employment a condition for health care coverage as mental health and substance use conditions can result in impairments that preclude individuals from consistent, full-time employment. 

With CMS approval, Kentucky will now require individuals who do not meet certain exemptions to engage in community engagement at least 20 hours per week or risk losing benefits. Per the Kentucky waiver, community engagement includes traditional employment, job or vocational training, educational coursework, community service and caregiving services for non-dependents with chronic disabling conditions. Addiction treatment is not listed as an approved community engagement activity.

Individuals who fail to meet the 20-hour work week requirement, do not complete redetermination paperwork or fail to report a change in work status within 10 days will be disenrolled for a six-month period. Most individuals in Kentucky will be given a three-month grace period to come into compliance with the new work requirements, however any individual who has met non-exempt status for three months or more in the past five years will be required to have 20-hour per week employment from the first day of the program or face disenrollment. Pregnant women, children, individuals determined to be “medically frail” and the elderly are all exempt from the requirements.

Under CMS current regulation, “medically frail” includes individuals with serious mental illness and chronic substance use disorders. However, the way states interpret this federal definition and the process by which they identify individuals as “medically frail” will become very important for ensuring individuals with behavioral health disorders do not become subject to work requirements.

It is estimated over 95,000 Kentuckians will lose coverage due to these new requirements and Governor Matt Bevin has threatened to undo the state’s Medicaid expansion program if courts interfere with the new program. Undoing Medicaid expansion would strip 480,000 low-income Kentuckians of health care. Research shows that Medicaid coverage is vital to maintaining consistent employment and that gaining health coverage has proven to increase employment. Imposing work requirement and/or ending Medicaid expansion as Gov. Bevin suggests would actually have a destabilizing effect on employment overall.

Under the Kentucky program cost-sharing will also change, requiring beneficiaries to pay monthly premiums if they are above 100 percent of the Federal Poverty Level (FPL). Individuals at or below 100 percent of FPL would have the option to pay a monthly premium or continue to be charged copayments. The National Council opposes cost-sharing changes as research has consistently shown that cost-sharing limits enrollees’ participation in Medicaid.

These fundamental changes to Kentucky’s safety net are expected to take effect later this year.

Guest Author

Katiri Zuluaga
Manager, State Initiatives