Lawsuit Alleges Kentucky Medicaid Work Requirement Breaks Federal Law

On January 11, 2018, the Centers for Medicare & Medicaid Services (CMS) issued guidance announcing a new policy that, for the first time, will allow states to make participation in a work or “community engagement” program a condition for Medicaid eligibility. The next day, CMS approved a Medicaid waiver in Kentucky that will allow the state to test this new policy.

In addition to making employment an eligibility requirement, the Kentucky waiver program, called Kentucky HEALTH, encompasses several other changes never before approved by CMS. These changes include monthly premiums of up to 4% of income and coverage lock-out periods of up to six months for failing to timely renew eligibility, or for failing to report a change in circumstances. Kentucky HEALTH applies to most nonelderly adults, including low-income parents and expansion adults. The state plans to implement Kentucky HEALTH by July 2018.

Fifteen Kentucky Medicaid enrollees responded in January by filing a lawsuit in federal court challenging CMS’s authority to issue the work requirement policy and approve the Kentucky waiver. The plaintiffs allege that CMS is breaking the law by approving such plans and that only Congress has the ability to restrict Medicaid coverage in that way. Plaintiffs are asking the court to declare the work requirement and Kentucky’s wavier illegal because they violate the Administrative Procedures Act, the Medicaid provisions of the Social Security Act, and the President’s Constitutional duty to ensure laws are faithfully executed.

States get permission to alter the Medicaid program by submitting waiver requests to CMS. Historically, such waivers have generally been used to create new avenues for Medicaid eligibility. By law, such waivers are permitted only so long as they are “likely to assist in promoting the objectives” of the Medicaid program, are a temporary experiment, and meet other preconditions. The lawsuit alleges that CMS did not properly assess the state waiver requests and that Kentucky’s program does not meet these preconditions since it is a thinly veiled attempt to reduce costs by restricting coverage. Kentucky acknowledges the policy would reduce coverage, estimating 100,000 people would lose access to Medicaid coverage in the first year alone. Experts believe that number could be as high as 300,000.

At Medicare Rights Center, we are very concerned by schemes that appear to be intended to push people out of the Medicaid program with no assistance to find work and no chance of health coverage. Studies have shown that most of the targeted people with Medicaid are working in very low-wage positions, often with no job security and erratic hours that can be cut at any time. This means that workers who are doing their very best to work can find themselves on the wrong side of these rules and lose their health insurance. In addition, these schemes generally include complex bureaucratic steps that may lead to people who fit all of the eligibility requirements losing coverage through red tape.

Though there are seldom work requirements for the Medicare population, such punitive rules can greatly impact family caregivers who are balancing work and providing care to older family members or family members with disabilities.

Read more about the Kentucky lawsuit.

Read more about our concerns about work requirements in Medicaid here and here.