Federal judge limits work rule for chronically ill Medicaid recipients

Federal Judge Richard Stearns ruled Thursday that the Trump administration cannot enforce a new Medicaid guideline that forces chronically ill patients to prove their conditions prevent them from working.

The decision blocks a specific provision in Centers for Medicare and Medicaid Services guidance tied to the 2025 One Big Beautiful Bill. It grants a partial win to a coalition of 25 states and the District of Columbia that challenged the rule in June.

The core conflict lies in the definition of medical frailty. The 2025 statute defines the category to include people with blindness, disabilities, substance use disorders, or complex medical conditions. The CMS rule added a stricter layer by requiring those individuals to also show that their conditions significantly impair their ability to comply with work mandates.

Stearns wrote that the states demonstrated irreparable harm because they would have to make costly changes to their eligibility systems. He stated that monetary damages would not adequately compensate for those burdens.

The ruling clarifies the financial stakes for the 19 to 64 year old expansion enrollees. Starting January 1, these individuals must work or perform community service for 80 hours a month or be enrolled in school at least half the time. Those deemed medically frail are exempt from this requirement.

By blocking the extra impairment test, the judge removed a barrier that might have disqualified some sick patients from their exemption. Morgan Henderson, a Medicaid economist at the University of Maryland, Baltimore County, said this change likely preserves coverage for people who are sick but not quite sick enough to meet the stricter federal standard.

Dev Sangvai, the North Carolina Health and Human Services Secretary, noted that the decision allows states to focus on delivering care rather than processing complex paperwork. He said it helps patients avoid the fear of losing coverage during treatment.

The work requirement itself remains in effect. Stearns did not strike down the mandate as unlawful. He also upheld two other federal restrictions on how states verify frailty, including a rule that rejects diagnoses older than one year and a policy limiting self-attestations to one per enrollment period.

Stearns explained that the government provided a non-frivolous rationale for those retained provisions. He found the states' concerns about potential disenrollment less compelling in those specific areas.

CMS declined to comment on the ruling. The new restrictions apply to people covered through the Medicaid expansion in most states, a policy that expanded the safety net for lower income Americans.