CMS just sorted "too sick to work" into three tiers — and which one your diagnosis lands in decides how much paperwork you owe
New federal guidance lets states use existing claims data to automatically exempt the sickest Medicaid enrollees from the 20-hour work requirement. It is a real improvement over asking every chronically ill patient to prove it with a form. It is also a sorting machine, states have under four months to build it, and the Congressional Budget Office still expects more than 7 million people to lose coverage.
If you are on Medicaid in an expansion state and you are seriously ill, the question that decides your coverage in January is not whether you can work. It is whether a computer at your state Medicaid agency can tell that you cannot.
That is the practical meaning of guidance the Centers for Medicare & Medicaid Services released this week, made public in a document after being walked through with state Medicaid directors. States may now sort "medical frailty" — the legal term for too sick to meet the work requirement — into a three-tier system based on diagnosis codes already sitting in their claims data. Tier 1 is automatic. Tier 3 is a case-by-case review. Tier 2 is the middle, and the middle is where most chronically ill people live.
- 80 hours a month — work, school, job training or volunteering — is the requirement under H.R. 1 for most working-age adults in Medicaid expansion states
- 43 states and D.C. are covered by the mandate
- January 1 is the start date for most states; Iowa begins December 1, and Nebraska, Montana and Arkansas started early
- Tier 1 — end-stage renal disease, ALS, end-stage cancer and similar — exempts you automatically, no extra paperwork
- Tier 2 needs supporting data: recent acute-care billing, inpatient admissions, pharmacy codes for certain medications
- Tier 3 gets reviewed one file at a time
- Over 7 million people are expected to lose Medicaid coverage in coming years, per preliminary Congressional Budget Office estimates
- 2028 is when self-attestation ends and documentation becomes mandatory for the frailty exemption
- Two dozen states are suing CMS, arguing the work requirements and the frailty burden are unlawful
(Sources: CMS guidance to states, September 2026, reported by STAT; KFF Health News; Congressional Budget Office preliminary estimates; American Medical Association national advocacy update.)
What the tiers actually do
Start with what the tiers replace. Before this guidance, the live fear among patient groups and physician associations was that "medical frailty" would be proved the way prior authorization is proved: a form, a signature, a fax, a denial, an appeal. Multiply that by every adult with a serious chronic illness in 43 states, on a deadline, and you get a paperwork event that no state agency and no primary care practice is staffed for.
The tier structure swaps some of that for data the state already has. Tier 1 conditions are self-evident — end-stage renal disease, ALS, end-stage cancer — and the exemption applies without the patient doing anything. Tier 2 says the diagnosis is suggestive but not conclusive, so the state looks for corroboration in the claims: repeat inpatient admissions, recent acute care, prescriptions for drugs only seriously ill people take. CMS's own example is instructive. Someone with vision loss from type 2 diabetes is Tier 1. Someone with type 2 diabetes on several medications with possible peripheral neuropathy and no recent hospitalizations is Tier 3 — same disease, opposite end of the machine.
Benjamin Sommers, a primary care physician and professor of medicine at Harvard, called the approach "somewhat more encouraging" precisely because states can exempt people automatically from existing data. He also said the part that should worry you: "it's still a fairly complicated approach, and there's just not much time for states to get this right." His concern is not that the rule is cruel on paper. It is that very sick people get caught in red tape and lose insurance anyway.
Why the middle tier is the whole story
Tier 1 is a short list. Tier 3 is a queue. Tier 2 is a bet that your medical history looks expensive enough, in billing terms, to count as sick.
That is a strange thing to make coverage depend on, and it disadvantages exactly the people who have already been failed once. If you have myalgic encephalomyelitis/chronic fatigue syndrome, long Covid, or postural orthostatic tachycardia syndrome — a disorder that drops your blood pressure when you stand up — you may have spent years without a diagnosis at all, let alone a tidy trail of inpatient claims. #MEAction, which represents that community, has contacted dozens of state Medicaid directors and met with several to argue for better tier placement. Its campaigns director, Ben HusuBorger, described the timeline as "two cliffs": the first when the rules start, the second in 2028 when you can no longer simply attest to your own condition and need documentation instead.
Disease groups are now lobbying, openly, to climb a rung. That is what this guidance created — a ladder, with coverage on it.
States are not required to use it, and they have four months
The tier system is an option, not a mandate. States must have an eligibility-check system running by January 1 regardless, which is the main argument for adopting it: flexibility beats building a documentation pipeline from scratch in a quarter. The American Medical Association, which had been pressing CMS to say plainly whether diagnosis codes alone could establish frailty, welcomed the answer, noting the "data-driven approach could reduce the need for beneficiaries and physicians to submit additional documentation."
Reduce, not eliminate. And it will not be uniform. Your exemption will depend on which state you live in, which tier list that state adopts, and how good its data is — which is a sentence that describes most of American Medicaid, and is not a defense of it.
One group gets no option at all. Native Americans and Alaska Natives are exempt from the work requirements; Native Hawaiians are not, because they are not among the 575 federally recognized tribes. Hawai'i's Medicaid administrator, Meredith Nichols, said CMS never responded to the state's request for an exemption. About 15% of Hawai'i's roughly 390,000 Medicaid enrollees identify as Native Hawaiian.
What to actually do before January
You cannot pick your tier. You can make sure the data the state reads is complete, and you can find out where you stand before a notice arrives.
Get your records now. Request your medical records and your claims history from your plan, and check that the diagnoses you actually carry are coded and present — not implied in a note. If a hospitalization or an infusion is missing from the claims, it cannot corroborate anything. Here is how to get your medical records.
Ask your state, in writing, whether it is using tiers and where your condition sits. States are publishing implementation details on a compressed schedule. Knowing you are Tier 2 in October is worth more than discovering it in February. Start from the Medicaid eligibility rules.
If you are on Medicare and Medicaid both, confirm your status. Dual eligibility changes which rules touch you; do not assume. See the dual-eligible guide.
Keep a copy of whatever you attest to. The first year allows self-attestation; 2028 will ask you to back it up. None of this is medical advice — ask your doctor about your condition, and your state about your file.
The part nobody is arguing about
Both sides of this fight now agree on the mechanism. The administration says data can identify the seriously ill without burdening them. Advocates say the data will miss people. The Congressional Budget Office has put a number on the gap between those two positions: more than 7 million.
A tier system is genuine progress over a blank form and a deadline. It is also an admission of what the work requirement really is — not a test of whether you can hold a job, but a test of whether your illness shows up in a claims file. Some of the sickest people in this country have illnesses that do not.