During the Congressional debate about the passage of H.R. 1, many concerns were raised about the adoption of a mandatory work reporting requirement for people covered by Medicaid expansion – including the risks of people living in areas with high unemployment losing health coverage despite their best efforts to find work. In response, statutory language was adopted that allows (but does not require) states to exempt residents of areas with elevated unemployment rates who rely on Medicaid expansion to meet their health needs.
Specifically, the language1 permits states to request that the HHS Secretary allows them to provide hardship exemptions from work reporting requirements to people who live in counties with an unemployment rate that is at or above the lesser of 8% or 1.5 times the national unemployment rate.
Regulations implementing the work reporting requirements are not yet out; the statute includes a deadline of June 1, 2026 for those rules. In guidance issued by CMS this provision was not addressed beyond restating the statutory language. Very little public discussion on this issue has occurred (I personally have not heard much at all), and states are under enormous deadline pressure to get work reporting requirements up and running by January 1, 2027. Definitions will be important for CMS to address this question and comply with Congressional intent.
A quick look at recent county unemployment rates for illustrative purposes suggests that for some states and counties this issue is of critical importance. There is enormous variation of course in county unemployment rates. Let’s take a look at the two states that are starting early on implementing work reporting requirements – Nebraska (starting May 1) and Montana (starting July 1).
Using Bureau of Labor Statistics data from January 2026, when the national seasonally adjusted unemployment rate was 4.3 percent the standard for qualifying would be 6.45 percent (1.5 times the national rate).
Nebraska does not have any counties that are close to the threshold as of January 20262, but Montana has 6 counties that exceed the 6.45 percent unemployment threshold including three with unemployment greater than 8% (Lincoln County 9.5%; Petroleum County (a very small county) 8.8%; and Sanders County 9.2%). All three are rural counties; Lincoln and Sanders counties have one-quarter of adults covered by Medicaid; underscoring one of the many reasons why rural communities have a lot to worry about. The state’s website, which explains who will be exempt from work reporting requirements, indicates that Montana may be providing hardship exemptions for people living in high unemployment counties. So, residents of these counties may be exempt; but the counties are not listed making it difficult to figure out who qualifies for an exemption even though implementation is just a few months away.
There are still key questions about how this exemption will work. For example, the state has to request the exemption from CMS using a form containing certain information and under certain timing (none of which has yet been specified by CMS)
All states concerned about the health and well-being of their residents should pick up this hardship exemption so that people living in counties with high unemployment rates are exempted from the work reporting requirements. Whether anyone benefits from the exemption approved by Congress remains to be seen.
- Section 1902(xx)(3)(B)(ii)(II)(bb) as added by section 71119 of H.R. 1 ↩︎
- BLS county data for January 2026 is not seasonally adjusted unlike the national number. ↩︎
[Editor’s Note: This post was updated April 29, 2026 to correct an error. An earlier version incorrectly indicated that Medicaid enrollees residing in high unemployment counties would have to also specifically request a high unemployment exemption (if adopted by the state)]