Democrats from 25 states and the District of Columbia filed suit Monday against the Trump administration's guidance on Medicaid work requirements, claiming federal regulators exceeded their statutory authority when implementing changes passed in last summer's tax and policy law. The lawsuit targets an interim final rule from the Centers for Medicare and Medicaid Services released earlier this month.
The new Medicaid restrictions were part of Trump's big tax and policy law in 2025. Starting Jan. 1, expansion enrollees age 19 to 64 will have to show that they work or do community service at least 80 hours a month or are in school at least half the time. The change affects people covered through an expansion in most states that gave more lower-income people access to the government's safety net healthcare program.
The Regulatory Dispute
The core of the legal challenge centers on CMS's interpretation of medical frailty exemptions. The law had said medically frail people include those who have substance use disorders, disabilities or serious medical conditions. But the CMS rule went further, saying someone's condition must "significantly impair" their ability to work, volunteer or attend school at the rates required in the law for them to get an exemption.
In 2027 and once in 2028, the patient can attest that they meet this definition. But when they try to renew coverage in 2028, they'll need to prove it. Health analysts and state Medicaid directors have said they aren't clear on what existing documentation could prove that point.
Kinda Serafi, a partner at the legal and consulting firm Manatt Health who is working with states to make the changes, said the administration "moved the goalposts" with its rule on medical frailty. "By going beyond the clear language of the statute, CMS opened the door to this court challenge," she said.
State Implementation Concerns
The plaintiffs say the Republican administration's narrow interpretation of parts of the statute will create harmful coverage barriers and chaos in states that have been rushing to build new systems by the January deadline. In the lawsuit, the states say the change came "contrary to months of regular communications with CMS and preliminary guidance materials upon which Plaintiff States based their implementation plans." They say CMS still hasn't given states enough clarity on how they can update their systems appropriately.
"Added administrative burdens will cause individuals who are eligible for Medicaid to lose or be denied coverage," the plaintiffs write. "People with disabilities, patients in the middle of cancer treatment, or those struggling with another serious or complex health condition, shouldn't be at risk of losing the care that helps maintain their health."
New York Attorney General Letitia James, one of the Democrats suing the administration, said the new rule puts thousands of her state's residents at risk. "New Yorkers who are battling cancer, living with a disability, managing a serious mental health condition, or recovering from addiction should be able to get the health care they need without being buried in paperwork," she said in a statement.
Administration's Position
Spokespeople for the U.S. Department of Health and Human Services and CMS didn't immediately respond to a request for comment. The Trump administration has promoted the new rules as commonsense measures to eliminate government freeloading and preserve benefits for those who need them most.
There are exceptions for those considered medically frail or in addiction treatment programs, among others. The work requirements apply specifically to expansion enrollees, not traditional Medicaid beneficiaries.
Why This Matters:
This lawsuit highlights the tension between implementing legislative intent and regulatory execution. The work requirements themselves passed Congress as part of a comprehensive tax and policy package designed to promote self-sufficiency and fiscal responsibility in government programs. States now face a January deadline to implement systems they've been building based on preliminary guidance that CMS has since revised. The dispute over medical frailty definitions will determine whether states can efficiently distinguish between those who genuinely can't work and those who should be meeting the law's requirements. The outcome affects how effectively states can administer the program Congress designed while maintaining coverage for legitimately vulnerable populations. It's a test case for whether federal agencies can add substantive requirements beyond statutory language when implementing major policy changes.