Medicaid work exemptions in 2027 require more than a diagnosis
A mental disorder exempts a patient from the work rule only if it significantly impairs the ability to comply. Work exemption letters must show that impairment.
Co-founder, JotPsych
Your patient with bipolar disorder lost a job in the spring and hasn't worked since. Medicaid covers the visits, through the Affordable Care Act's expansion for low-income adults. Today your patient asks you for a letter.
Start from the model letter, and put your patient's own facts in the highlighted lines.
Re: [patient name], Medicaid ID [number]
I am a psychiatric nurse practitioner. I have treated the patient for bipolar I disorder since 2024, with a visit every month.
Since March, depressive episodes lasting two to three weeks have kept the patient at home most days.
During these episodes, the patient cannot keep a regular schedule of work, classes, or volunteer hours.
The condition "significantly impairs the individual's ability to comply with the community engagement requirement" (42 CFR 435.554(c)(5)).
[Your name, credentials, and license number]
[Date]
The highlighted lines describe the impairment in days and tasks, and the last one quotes the federal rule's test. Without those lines, the letter gives the state a diagnosis alone.
What the rule asks for
Starting January 1, 2027, adults in the expansion group must show 80 hours a month of work or other approved activities. Your state may get a federal delay. The federal rule exempts people who are medically frail. Disabling mental disorders can qualify. So can a substance use disorder, except after 5 or more years in recovery.
Your patient's condition also has to be one that "significantly impairs the individual's ability to comply with the community engagement requirement," the rule's name for the work requirement. Each state keeps its own list of qualifying conditions, with a way to ask about one that isn't listed.
Where the letter goes and what the state checks
Give the letter to your patient, or send it to the state Medicaid agency for your patient. The state reads your patient's claims from the past 12 months first, including denied ones, so put the current diagnosis on every claim you send.
Through 2027, states may accept a sworn statement from your patient in place of a letter, but from January 1, 2028, a sworn statement works once per enrollment period. At the next renewal, the state first checks its data, such as claims, and asks for documentation only when the data aren't enough.
The state checks medically frail status again at least every 12 months. Write a new letter for each recheck.
| The state's check, in order | What the state reads | What covers the check |
|---|---|---|
| Claims review | Claims from the past 12 months, including denied ones | The current diagnosis on every claim |
| Documentation | Through 2027, documentation or a sworn statement from the patient; from 2028, a sworn statement once per enrollment period, then the state's data first, and documentation only if needed | A dated letter |
| Recheck | Medically frail status again, at least every 12 months | A new, dated letter |
Section 435.557 sets the order of the three checks. Your claims and your dated letters cover each check.
Don't promise your patient the work exemption. The state decides. For a patient already enrolled, the state checks at the first renewal on or after the date the rule starts in your state.
Describe the letter you need, and JotPsych drafts it from your latest note and the patient's active diagnoses.
See JotPsych- Centers for Medicare & Medicaid Services, "Medicaid Program; Community Engagement Requirement for Certain Individuals", interim final rule, Federal Register, June 3, 2026.
- Code of Federal Regulations, title 42, part 435, sections 435.551 to 435.560, as added by the interim final rule of June 3, 2026.