States Sue to Block Trump's Medicaid Work Rule Framed as Fraud Safeguard

A coalition of 25 states and the District of Columbia has sued the Trump administration over a new Medicaid work requirement rule that could affect millions of low-income adults before it takes effect in January 2027.

The lawsuit was filed Monday in federal court in Boston. It names the Centers for Medicare & Medicaid Services, the Department of Health and Human Services, CMS Administrator Dr. Mehmet Oz, and HHS Secretary Robert F. Kennedy Jr. as defendants.

States Move to Block Medicaid Rule

The lawsuit challenges an interim final rule issued by CMS in early June. The rule sets new requirements for certain Medicaid recipients to keep coverage. Under the policy, many adults must show they are working, volunteering, attending school, or participating in another approved activity. The states argue the rule creates unlawful barriers for people with serious medical conditions.

The plaintiffs are asking the court for a temporary stay and a preliminary injunction. They want the rule blocked before states are required to send notices to affected Medicaid enrollees.

CMS Rule Requires Monthly Activity

The rule applies to many Medicaid adults aged 19 to 64. CMS says that affected recipients must complete 80 hours of qualifying activity per month.

That activity can include work, education, community service, or job training. Some people may also qualify through monthly earnings.

The rule does not apply to every Medicaid recipient. Exemptions include some people with disabilities, serious medical needs, pregnancy, or other qualifying circumstances.

Medical Exemptions Drive Legal Fight

The main dispute centers on people considered medically frail. The states argue CMS changed the exemption process in a way that could hurt vulnerable patients. Before the rule, states were expected to identify many exempt recipients through existing health records. The lawsuit says the new policy requires some people to provide extra documentation before they can keep coverage.

That could affect people with cancer, severe disabilities, serious mental health conditions, or complex medical needs. The plaintiffs say those patients should not face added paperwork when they already qualify for protection.

Coverage Losses Could Be Significant

CMS estimated the policy could lead to 2.3 million fewer enrollees in the first year. The agency also estimated that some people who are working or qualify for exemptions could still lose coverage. Missed paperwork, strict deadlines, or incomplete documentation could trigger those losses.

That estimate is central to the case. The states argue eligible people may lose Medicaid because of process failures, not because they failed to meet the law.

States Say Systems Face Pressure

The plaintiffs say the rule would force Medicaid agencies to change systems already built around automated reviews. Those systems often use existing health, income, and eligibility data. The lawsuit argues the new rule could require more manual reviews, more notices, and more staff time.

The timing adds pressure. States say they must prepare notices and system changes before the January 2027 start date.

Trump Officials Defend Work Requirements

Conceptual photo is showing a hand written text Medicaid — Image Credit: jack_the_sparrow via 123RF

Oz has defended the policy as a safeguard against fraud and improper use of federal benefits. He has said able-bodied people who receive taxpayer-funded coverage should contribute through work or other approved activity.

The administration has framed the rule as a way to preserve Medicaid for people who need it most. Officials have also tied the policy to broader efforts to protect federal health programs. The White House and HHS had not issued a detailed response in the source material. The case is now moving through federal court.</