The Centers for Medicare & Medicaid Services (CMS) on Friday announced an optional “hold harmless” period for states putting in place the new Medicaid work requirement. The period runs through and including June 30, 2027. States that use it will still assess whether people meet the requirement or are excluded from it. They will not reject applications or end coverage for otherwise eligible people solely because they fail to meet the requirement.

The work requirement starts Jan. 1, 2027, for certain Medicaid applicants and enrollees ages 19 to 64, unless they are excluded. According to a CMS fact sheet on the rule, 43 states and the District of Columbia cover the groups the requirement applies to and must put it in place. U.S. territories are not subject to the law.

CMS said the transition period gives states time to improve their systems and processes before enforcement begins. The agency said it will also let states learn from the early months, identify workforce training needs and improve the experience for applicants and enrollees. The announcement did not say how many states plan to use the hold harmless period.

CMS Deputy Administrator Dan Brillman, who also directs the Center for Medicaid and CHIP Services, said states have made progress. He said that if a state can use data to show someone is working or qualifies for an exclusion, “that person should not have to track down paperwork to prove it.”

CMS also strongly encouraged all states putting the requirement in place to take four steps. They are to use data they already hold to verify activities and exclusions automatically, send clear and timely notices, test that data matching, notices and eligibility decisions work together, and work with community partners to connect people to jobs, education, training and volunteering.

Under CMS’s June 2026 interim final rule, a person can meet the requirement in a month in several ways. These are 80 hours of work, community service or a work program; enrollment in an educational program at least half time; a combination of activities totaling at least 80 hours; or monthly income of at least 80 times the federal minimum wage. The fact sheet puts that income figure at $580 a month in 2026.

The fact sheet lists groups exempt from the requirement. They include people who are pregnant or in the postpartum period, people who are disabled or medically frail, and parents and caretakers of children under 14 or of people with disabilities. American Indians and Alaska Natives, former foster care youth and veterans with a total disability rating are also exempt, as are certain others. States may also offer short-term hardship exceptions, such as for people receiving inpatient care or living in counties with high unemployment or a declared disaster.

The fact sheet also describes a notice process under the rule. A state that cannot verify compliance must send a notice of noncompliance, and the person then has 30 calendar days to show compliance or that the requirement does not apply. If the person does not, the application might be denied or the person might be disenrolled, and people who are disenrolled may reapply at any time. The release did not say how this notice process works during the hold harmless period.

The release links to a CMS guidance document with more information on the hold harmless period.