Medicaid Work Requirement Verification Procedures for Counties: Implementation Guide 2026-2027

Updated October 8, 2025 | 18-minute read for county eligibility offices and finance directors

Published by Leading Payment Processing Solutions for Government

As a payment processing partner to county governments nationwide, we’re committed to helping our clients navigate operational changes affecting their payment systems and workflows. This comprehensive guide addresses the technical and operational requirements counties face implementing Medicaid work verification.

Quick Answer: What Counties Must Do for Medicaid Work Requirements

Starting January 1, 2027, counties that process Medicaid eligibility must verify that expansion enrollees (adults ages 19-64) complete 80 hours per month of work, education, volunteering, or approved activities.

For Payment Processors Supporting County Clients: Counties managing Medicaid eligibility will need enhanced payment processing capabilities and system integrations starting January 2027. This guide helps you understand county operational requirements so you can provide better support and anticipate infrastructure needs.

Your county’s role:

• Verify work hours at the application and every 6 months
• Track exemptions for parents, pregnant women, and disabled individuals
• Issue compliance notices and process appeals
• Coordinate with employers, schools, and volunteer organizations

Timeline pressure: Federal guidance comes in June 2026, giving you only 6 months to build systems before the January 2027 deadline.

Understanding Medicaid Work Requirements

The One Big Beautiful Bill Act (OBBBA), signed July 4, 2025, creates the first nationwide Medicaid work requirement. According to the Kaiser Family Foundation, an estimated 18.5 million adults per year will need to document compliance or prove exemption.

Who Must Meet Work Requirements?

Subject to Requirements:

• Adults ages 19-64
• Enrolled through Medicaid expansion (income-based eligibility only)
• Not meeting any exemption criteria

Automatically Exempt:

• Parents/caregivers of dependent children under age 14
• Pregnant women and those entitled to postpartum coverage
• Individuals who are medically frail, blind, or disabled
• People with substance use disorders or serious mental health conditions
• American Indians and Alaska Natives
• Currently or recently incarcerated individuals
• Foster youth under age 26
• People already meeting TANF or SNAP work requirements

Source: H.R. 1, Section 71119

The 80-Hour Monthly Requirement

Enrollees must complete 80 hours per month of:

1. Employment – Any paid work
2. Work programs – Job training, SNAP employment programs
3. Education – At least half-time enrollment in college, trade school, or career training
4. Community service – Volunteering at approved organizations
5. Combination – Any mix of the above totaling 80 hours

Alternative compliance methods:

• Monthly income equivalent to 80 hours at federal minimum wage ($580/month)
• Average monthly income over 6 months for seasonal workers

Frequently Asked Questions: Medicaid Work Verification

When do counties need to start verifying work requirements?

States must implement by January 1, 2027 (some may start earlier). Federal guidance from HHS is due June 1, 2026. Counties should begin system planning now, even before federal guidance arrives.

How often must work be verified?

At two points: (1) At initial application – verify compliance for at least one month prior to application, and (2) At redetermination – verify compliance for at least one month between determinations. States conduct redeterminations every 6 months for expansion enrollees.

What documentation do we accept as proof of work?

Federal guidance (due June 2026) will specify acceptable documentation. Based on previous state implementations, likely acceptable proof includes: pay stubs, employer letters, timesheets, school enrollment verification, volunteer coordinator confirmation, and SNAP work program records.

Can we use data matching instead of requiring documents?

Yes – the law encourages states to use available data sources like wage databases, Medicaid payment records, and SNAP databases to verify compliance automatically. However, Center for Health Care Strategies analysis notes that states’ capacity for data matching varies widely.

What happens if someone doesn’t comply?

Issue a notice of non-compliance via mail and at least one other method. Give the individual 30 days to show compliance or claim an exemption. If they don’t respond, terminate Medicaid coverage. They cannot get marketplace subsidies and must reapply (with work verification) to regain Medicaid.

How much will implementation cost our county?

Previous state implementations ranged from $6 million (New Hampshire) to $86 million (Georgia) according to Aurrera Health Group research. Most costs went to IT system upgrades. The federal government provides $200 million total to all states for implementation in FY2026.

Step 1: Understand Your County’s Verification Responsibilities

What Counties Must Verify

At Initial Application:

• Review compliance for at least 1 month prior to the application month
• States may require up to 3 consecutive months of verification
• Check if the applicant meets work requirements OR qualifies for exemption
• Use data matching where available before requesting documents

At Six-Month Redetermination:

• Verify compliance for at least 1 month between last determination and current
• Does not need to be the month immediately before redetermination
• Re-verify exemption status (circumstances may have changed)
• Update contact information and reporting methods

Data Matching Priority

According to State Health & Value Strategies analysis, states should establish a verification hierarchy:

First: Check Available Data Sources

1. State wage databases (quarterly employer reports)
2. SNAP work program participation records
3. Educational institution enrollment databases
4. Medicaid payment/encounter data showing employment
5. Other state employment/training program databases

Second: Request Self-Attestation

• Online portal reporting
• Phone verification
• Mail-in forms

Third: Require Documentation

• Only when data sources are unavailable or show non-compliance
• Specific to the individual’s situation

Step 2: Build Your Verification System

Required System Components

1. Work Hour Tracking Database

Your system must track:

• Hours worked/volunteered per month
• Type of activity (employment, education, volunteer, etc.)
• Exemption status and type
• Verification method used
• Date of last verification
• Upcoming redetermination dates

2. Data Integration Capabilities

Connect to:

• State wage database
• SNAP eligibility system
• Educational institution verification systems
• Volunteer management systems (if your county coordinates)

3. Notice Generation

Automated notices for:

• Initial work requirement explanation
• Compliance verification requests
• Non-compliance warnings (30-day notice)
• Termination notices
• Exemption approvals

4. Appeal Processing

Track and manage:

• Requests for fair hearings
• Documentation of exemption claims
• Alternative verification methods
• Good cause exceptions

Technology Needs Assessment

Payment Processing Insight: Counties implementing work verification will see 15-30% increases in eligibility transaction volumes during the first year. Scalable payment infrastructure and integrated verification systems become critical for operational efficiency.

Questions for Your IT Department:

1. Can our current eligibility system track monthly work hours?
2. Do we have API access to state wage databases?
3. Can we integrate with SNAP work program data?
4. Does our system support multiple verification methods?
5. Can we generate automated compliance notices?
6. Do we have capacity for online member portals?
7. What is our timeline for system modifications?
8. What is the estimated cost?

Real-World Implementation Challenges

Arkansas Experience (2018-2019):

• Required online-only reporting through the state portal
• System glitches prevented many from reporting
• Limited customer service support
• Result: 18,000 people lost coverage, many were actually compliant

Georgia Pathways (2023-present):

• Complex monthly reporting requirements
• Limited outreach and support services
• After 2 years, only 8,633 enrolled out of 300,000 potentially eligible
• Administrative hurdles, not actual non-compliance, drove low participation

Sources: Commonwealth Fund – Work Requirements for Medicaid Enrollees, HealthInsurance.org – What is a Medicaid Work Requirement

Lessons for Counties:

• Provide multiple reporting methods (online, phone, mail, in-person)
• Staff provide adequate customer service support
• Test systems thoroughly before launch
• Plan for higher appeal volumes

Payment Processing Insight: Counties with robust multi-channel payment and verification systems experienced fewer disruptions during previous policy implementations. Integrated customer service portals that combine payment processing with verification tracking reduce administrative burden and improve compliance rates.

Step 3: Establish Verification Procedures

Standard Verification Process

Step 3A: Initial Application Verification

1. Applicant submits Medicaid application
2. System checks: Is the applicant age 19-64 an adult?
   • NO: Process as usual, no work requirement
   • YES: Continue to Step 3
3. System automatically checks exemptions:
   • Parent of child under 14? → EXEMPT, approve
   • Receiving disability benefits? → EXEMPT, approve
   • Pregnant/postpartum? → EXEMPT, approve
   • Meeting SNAP/TANF work requirements? → EXEMPT, approve
4. If not automatically exempt, check data sources:
   • State wage database shows 80+ hours? → APPROVE
   • SNAP work program participation? → APPROVE
   • School enrollment verification? → APPROVE
5. If data sources are insufficient:
   • Request self-attestation and documentation
   • Give 10 business days to respond
   • Accept reasonable verification (pay stub, employer letter, etc.)
6. Make eligibility determination:
   • Compliant OR Exempt → APPROVE for 6 months
   • Non-compliant → DENY with appeal rights
7. Schedule 6-month redetermination

Step 3B: Six-Month Redetermination Process

1. System triggers redetermination 45 days before the due date
2. Send notice to enrollee:
   • Remind of the work requirement
   • List exemption categories
   • Provide reporting options
   • Include deadline (30 days before redetermination date)
3. Check data sources automatically:
   • Has wage data for any month since last determination?
   • Has SNAP work program participation?
   • Has school enrollment?
4. If data shows compliance for at least 1 month:
   • Auto-approve renewal
   • Send confirmation notice
   • Schedule the next redetermination
5. If data is insufficient:
   • Request attestation/documentation
   • Process submitted information
   • Verify exemption claims
6. If no response after 30 days:
   • Send a non-compliance notice
   • Give an additional 30 days to respond
   • Offer assistance in completing verification
7. If still no response:
   • Terminate coverage with a 10-day advance notice
   • Provide appeal rights information
   • Note: the individual must reapply to regain coverage

Documentation Standards

Acceptable Proof of Employment:

• Pay stubs showing dates and hours
• Employer verification letter on letterhead
• Signed timesheets
• W-2 forms (for annual verification)
• Self-employment records (invoices, 1099 forms)

Acceptable Proof of Education:

• School enrollment verification
• Class schedule showing half-time or greater
• Letter from registrar or academic advisor
• Student ID with current semester

Acceptable Proof of Volunteering:

• Letter from volunteer coordinator
• Signed volunteer timesheet
• Organization verification on letterhead
• Community service completion certificate

Acceptable Proof of Exemption:

• Birth certificates (for children under 14)
• Disability determination letters
• Pregnancy verification from a healthcare provider
• TANF/SNAP participation records
• Tribal enrollment documentation

Step 4: Staff Training and Resource Planning

Staffing Needs Assessment

Based on Urban Institute projections cited by Center on Budget and Policy Priorities, estimate your county’s workload:

Calculate Your County’s Affected Population:

Total Medicaid expansion enrollees in county: _________
Multiply by 0.62 (est. already compliant): _________
Multiply by 0.11 (est. automatically exempt): _________
Remaining requiring active verification: _________ (A)

Applications per year: _________ (B)
Redeterminations per year (A × 2): _________ (C)

Total annual verifications needed: B + C = _________

FTE Requirements:

Rule of Thumb: Most counties will need 0.5-1.0 additional FTE per 1,000 expansion enrollees subject to work requirements.

Training Program Development

Essential Training Topics:

1. Work Requirement Basics (2 hours)
   • Who is subject vs. exempt
   • 80-hour requirement and qualifying activities
   • Alternative compliance methods
   • Exemption categories
2. Verification Procedures (4 hours)
   • Using data matching systems
   • Reviewing documentation
   • Determining reasonable compatibility
   • Processing self-attestation
3. System Navigation (3 hours)
   • Entering work hour data
   • Running verification reports
   • Generating notices
   • Tracking redetermination dates
4. Customer Service Skills (2 hours)
   • Explaining requirements clearly
   • Helping enrollees gather documentation
   • De-escalation techniques
   • Referral resources
5. Legal Compliance (2 hours)
   • Due process requirements
   • Notice and appeal rights
   • Documentation standards
   • Confidentiality rules

Training Schedule:

• Initial training: Complete by November 2026
• Refresher training: Quarterly
• System updates: As needed
• New staff orientation: Within the first week

Step 5: Member Outreach and Communication

Required Outreach Timeline

June 30 – August 31, 2026: States must conduct initial member outreach per federal requirements

Methods Required:

• Regular mail (mandatory)
• Plus at least one additional method:
  • Telephone calls
  • Text messages
  • Website notifications
  • Email
  • Other electronic means

Required Content:

• Explanation of work requirements
• List of qualifying activities
• Exemption categories
• How to report compliance
• Consequences of non-compliance
• Where to get help

Source: Center for Health Care Strategies – Summary of Federal Medicaid Work Requirements

Ongoing Communication Strategy

Monthly Touchpoints:

• Email/text reminders about reporting
• Portal notifications of upcoming deadlines
• Automated calls for those without email

Quarterly Updates:

• Newsletter with success stories
• Tips for tracking hours
• Reminder of exemption categories
• Contact information for assistance

As-Needed Communications:

• Non-compliance warnings (30-day notice)
• Exemption approval confirmations
• Verification receipt confirmations
• Redetermination reminders

Community Partner Coordination

Organizations to Engage:

Employers:

• Provide verification letter templates
• Explain the reporting process
• Coordinate for seasonal workers

Educational Institutions:

• Streamline enrollment verification
• Provide semester schedules automatically
• Designate Medicaid liaisons

Volunteer Organizations:

• Establish pre-approved volunteer sites
• Create standard hour tracking forms
• Train volunteer coordinators on verification

Workforce Development Programs:

• Share SNAP work program participation data
• Coordinate job training hour reporting
• Cross-train staff on Medicaid requirements

Healthcare Providers:

• Identify potentially exempt patients (medically frail)
• Provide exemption documentation
• Refer patients for enrollment assistance

Step 6: Develop Contingency Plans

Short-Term Hardship Exemptions

States may grant temporary exemptions for:

Medical Hardship:

• Inpatient hospital care
• Nursing facility stays
• Psychiatric facility treatment
• Intensive outpatient care

Disaster Relief:

• Living in federally declared disaster area during the month of requirement

High Unemployment:

• Living in a county with an unemployment rate over 8% OR 1.5x national rate
• State must request and receive monthly approval from HHS

Medical Travel:

• An individual or dependent must travel outside the community for extended medical care

Implementation:

• Create exemption request process
• Train staff on approval criteria
• Track exemption periods
• Set up renewal procedures

Appeal Processing Procedures

Standard Appeal Rights:

• 30 days to request a fair hearing
• Coverage continues during appeal (if requested within 10 days)
• Burden on the state to prove non-compliance
• Independent hearing officer

Common Appeal Issues:

• Documentation lost or not received
• System errors in the hour calculation
• Exemption should have been granted
• Good cause for non-reporting

Appeal Processing Capacity:

• Estimate 5-10% of denials will be appealed
• Assign dedicated appeal staff
• Coordinate with the state fair hearing office
• Track appeal outcomes for system improvement

Step 7: Budget and Cost Planning

Implementation Cost Categories

One-Time Costs:

Ongoing Annual Costs:

Federal and State Funding

Federal Implementation Funding:

• $200 million total for all states in FY2026
• Distributed based on each state’s share of affected enrollees
• Your state’s allocation: Contact your state Medicaid office

State Funding:

• Varies by state
• Some states may pass costs to counties
• Advocate for adequate state support

Implementation Timeline and Checklist

October – December 2025 (Planning Phase)

• Form work requirement implementation team
• Assess current eligibility system capabilities
• Estimate affected population and staffing needs
• Begin vendor discussions for system modifications
• Draft preliminary procedures

January – May 2026 (Development Phase)

• Await federal guidance (due June 1, 2026)
• Finalize system requirements based on guidance
• Begin system development/modifications
• Develop training materials
• Create member communication materials
• Establish community partner agreements

June – August 2026 (Testing and Outreach Phase)

• Test system modifications
• Conduct staff training
• Launch required member outreach (June 30 – Aug 31)
• Pilot verification procedures with a small group
• Refine processes based on pilot results

September – December 2026 (Final Preparation)

• Complete system testing
• Train all eligibility staff
• Establish customer service protocols
• Set up appeal processing procedures
• Conduct final system readiness review
• Brief the county leadership on the go-live plan

January 2027 and Beyond (Implementation)

• January 1, 2027: Work requirements take effect
• Monitor system performance daily (first month)
• Track compliance rates and appeal volumes
• Adjust procedures based on experience
• Provide ongoing staff support and training
• Report implementation challenges to state

Risk Mitigation Strategies

Top Implementation Risks

Risk 1: System Not Ready by Deadline

• Mitigation: Start development now, don’t wait for June 2026 guidance
• Contingency: Request state extension until December 31, 2028
• Backup: Manual paper-based processing (labor-intensive but functional)

Risk 2: Inadequate Staffing

• Mitigation: Begin recruitment now for positions starting late 2026
• Contingency: Contract with a temporary staffing agency
• Backup: Reassign staff from other programs temporarily

Risk 3: High Error Rate/Coverage Losses

• Mitigation: Implement robust quality control reviews
• Contingency: Expand customer service hours
• Backup: Partner with community organizations for enrollment assistance

Risk 4: Federal Guidance Insufficient

• Mitigation: Connect with other counties/states through NACo
• Contingency: Develop procedures based on best practices from Arkansas/Georgia
• Backup: Build flexibility into systems for policy changes

Risk 5: Member Confusion and Complaints

• Mitigation: Multi-channel outreach starting summer 2026
• Contingency: Establish a dedicated hotline
• Backup: Partner with community health centers for assistance

Resources and Support

Federal Resources

• CMS Interim Final Rule (due June 1, 2026): www.medicaid.gov
• Legislative Text: H.R. 1, Section 71119

Professional Associations

• National Association of Counties (NACo): Human services resources and peer networking
• American Public Human Services Association (APHSA): Implementation guidance and webinars
• National Association of Medicaid Directors (NAMD): State-level policy information

Research and Analysis

• Kaiser Family Foundation Work Requirements Explainer: www.kff.org/medicaid/a-closer-look-at-the-work-requirement-provisions-in-the-2025-federal-budget-reconciliation-law/
• Center for Health Care Strategies Summary: www.chcs.org/resource/a-summary-of-national-medicaid-work-requirements/
• Commonwealth Fund Explainer: www.commonwealthfund.org/publications/explainer/2025/sep/work-requirements-medicaid-enrollees
• State Health & Value Strategies Implementation Guide: shvs.org/medicaid-work-reporting-requirements-implementation-basics-and-state-decision-points/

State-Specific Information

Contact your state Medicaid agency:

• Implementation timeline for your state
• State-specific verification procedures
• Available state funding
• Technical assistance resources
• Training opportunities

How Work Requirements Affect County Payment Processing Operations

Counties implementing work verification requirements will experience significant changes to their payment processing and financial operations:

Increased Transaction Volumes

Application Processing:

• More complex eligibility determinations require additional verification steps
• Multiple touchpoints per application increase transaction processing needs
• Documentation management systems must handle higher document volumes

Redetermination Processing:

• Twice-yearly verifications (vs. annual) double the redetermination workload
• Each redetermination involves payment system interactions for fees, fines, or cost-sharing
• Automated payment scheduling becomes essential for managing increased frequency

System Integration Requirements

Data Verification Systems:

• Payment systems must integrate with state wage databases
• Real-time verification reduces manual processing and payment delays
• Automated compliance checking improves accuracy and speeds payment processing

Multi-Channel Payment Options:

• Members need flexible payment methods for cost-sharing obligations
• Online portals must support both verification and payment functions
• Mobile payment capabilities improve compliance and collection rates

Reporting and Compliance Tracking:

• Financial reporting systems must track work verification costs separately
• Audit trails for payment processing related to work requirements
• Compliance reporting for state and federal oversight

Customer Service Payment Impacts

Increased Inquiry Volume:

• Payment-related questions tied to verification status
• Questions about cost-sharing obligations during coverage gaps
• Support for payment methods during the appeals process

Payment Plan Management:

• Managing payment arrangements for those facing coverage interruptions
• Processing refunds for overpayments during verification periods
• Coordinating retroactive payments after successful appeals

Infrastructure Considerations for Payment Processors

Counties need payment processing partners who can provide:

• Scalable Systems: Handle 15-30% transaction volume increases
• Integration Capabilities: Connect with state verification databases and eligibility systems
• Flexible Payment Options: Support online, phone, mail, and in-person payments
• Reporting Tools: Generate verification-related financial reports for state compliance
• Security Compliance: Meet HIPAA and other government security standards for sensitive data

Summary: Key Takeaways for Counties

✓ Timeline is tight: 6 months between federal guidance (June 2026) and implementation (January 2027)

✓ System needs are significant: Plan for $50K-$500K in IT costs plus ongoing staffing

✓ Data matching is key: Reduce burden on members and staff by maximizing automated verification

✓ Multiple reporting methods: Learn from Arkansas and Georgia – provide phone, mail, online, and in-person options

✓ Staff training is critical: Plan 13+ hours of initial training per eligibility worker

✓ Exemptions are common: 73% of expansion adults already work or qualify for exemptions – focus on making that verification smooth

✓ Appeals will increase: Budget for 5-10% appeal rate on denials

✓ Start planning now: Don’t wait for federal guidance to begin system assessment and budget planning

Payment Processing Consideration: Counties that began payment system assessments and vendor discussions in Q4 2025 were better positioned for successful January 2027 implementation than those who waited for federal guidance.

Partner With Payment Processors Who Understand Government Operations

Counties facing these new requirements need payment processing partners who understand both technology and government operations. Successful implementation requires more than just processing transactions—it demands integrated systems, scalable infrastructure, and dedicated support for government sector requirements.

How Modern Payment Solutions Support Work Verification

Integrated Verification and Payment Systems:

• Single platform for eligibility verification and payment processing
• Automated data matching reduces manual entry and errors
• Real-time reporting for compliance monitoring

Scalable Infrastructure:

• Cloud-based systems that grow with transaction volumes
• Redundant systems ensure uptime during high-volume periods
• Flexible capacity planning for redetermination surges

Multi-Channel Payment Options:

• Online portals with verification status integration
• Mobile apps for on-the-go reporting and payments
• Phone, mail, and in-person options for accessibility

Government-Sector Expertise:

• HIPAA-compliant data security
• Experience with state system integrations
• Dedicated government support teams
• Understanding of public sector budget cycles and procurement

Reporting and Compliance Tools:

• Automated financial reports for state submissions
• Audit trail documentation for oversight
• Cost allocation tracking for federal funding

Questions to Ask Your Payment Processing Vendor

Before January 2027 implementation, evaluate your payment processor’s readiness:

1. Can your system integrate with state wage verification databases?
2. How do you handle transaction volume increases of 20-30%?
3. What experience do you have with government eligibility systems?
4. Can you provide real-time verification status with payment data?
5. What security certifications do you maintain for government data?
6. Do you offer dedicated support for government sector clients?
7. What is your implementation timeline for system modifications?
8. How do you handle system testing and go-live support?

Planning Your Payment System Readiness

Now – December 2025:

• Evaluate current payment processing capabilities
• Identify integration requirements
• Request vendor proposals for system enhancements
• Budget for infrastructure upgrades

January – May 2026:

• Select vendors and finalize contracts
• Begin system integration planning
• Develop testing protocols
• Train finance staff on new systems

June – December 2026:

• Complete system integrations
• Conduct thorough testing
• Train eligibility and customer service staff
• Prepare for January 2027 go-live

Important Disclaimer for County Finance Professionals

The information in this guide is provided for educational and informational purposes to help county eligibility offices and finance directors prepare for Medicaid work requirement implementation under the One Big Beautiful Bill Act. This content represents our interpretation of publicly available legislative text, government guidance, and professional analysis as of October 8, 2025.

Please note:

• This guide does not constitute legal, technical, operational, or professional advice for your specific county
• Federal implementation guidance from HHS is not due until June 1, 2026, and may significantly affect procedures described here
• State-specific interpretations, verification procedures, and county responsibilities vary significantly by jurisdiction
• System requirements, exemption processes, and compliance timelines may be subject to regulatory clarification or amendment
• States may receive implementation deadline extensions through December 31, 2028
• Payment processing recommendations are general in nature and should be evaluated based on your county’s specific operational needs and vendor capabilities

We strongly recommend:

• Consulting with your county attorney on legal compliance obligations, due process requirements, and appeal procedures
• Working closely with your state Medicaid agency to confirm specific verification procedures, timelines, and system integration requirements
• Engaging your IT vendors early to assess system modification needs, integration capabilities, and implementation costs
• Evaluating payment processing vendors based on government sector experience, security compliance, and scalability
• Coordinating with other counties through your state association and NACo for shared implementation strategies and lessons learned

All readers should verify information with official government sources (CMS, HHS, state Medicaid agencies) and qualified professionals before making operational, technical, or budgetary decisions. Counties implement these requirements at their own discretion and risk.

Last updated: October 8, 2025. This guide will be updated following the release of federal implementation guidance in June 2026.