Rule2026-11094
Medicaid Program; Community Engagement Requirement for Certain Individuals
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
June 3, 2026
Effective
July 31, 2026
Issuing agencies
Health and Human Services DepartmentCenters for Medicare & Medicaid Services
Abstract
This interim final rule with comment period (IFC) interprets and implements the community engagement requirement in Medicaid under section 1902(xx) of the Social Security Act. States are required to implement the new requirement no later than January 1, 2027. This IFC specifies the requirements and expectations for States, including the Medicaid applicants and beneficiaries who must demonstrate community engagement as a condition of their eligibility, the types of qualifying activities that satisfy the community engagement requirement, the criteria to meet an exception from the requirement (that is, be deemed compliant), and the criteria to meet a specified exclusion from the requirement. It also specifies requirements for verification of qualifying activities, outreach to affected populations, steps States must take if they determine individuals are noncompliant, and additional operational considerations for States. Finally, this IFC specifies implementation timing and establishes new State reporting requirements.
Full Text
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<title>Federal Register, Volume 91 Issue 106 (Wednesday, June 3, 2026)</title>
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[Federal Register Volume 91, Number 106 (Wednesday, June 3, 2026)]
[Rules and Regulations]
[Pages 33348-33482]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-11094]
[[Page 33347]]
Vol. 91
Wednesday,
No. 106
June 3, 2026
Part III
Department of Health and Human Services
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Centers for Medicare & Medicaid Services
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42 Parts 431, 435, 438, et al.
Medicaid Program; Community Engagement Requirement for Certain
Individuals; Final Rule
Federal Register / Vol. 91 , No. 106 / Wednesday, June 3, 2026 /
Rules and Regulations
[[Page 33348]]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Parts 431, 435, 438, 457, and 600
[CMS-2454-IFC]
RIN 0938-AV98
Medicaid Program; Community Engagement Requirement for Certain
Individuals
AGENCY: Centers for Medicare & Medicaid Services (CMS), Department of
Health and Human Services (HHS).
ACTION: Interim final rule with comment period.
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SUMMARY: This interim final rule with comment period (IFC) interprets
and implements the community engagement requirement in Medicaid under
section 1902(xx) of the Social Security Act. States are required to
implement the new requirement no later than January 1, 2027. This IFC
specifies the requirements and expectations for States, including the
Medicaid applicants and beneficiaries who must demonstrate community
engagement as a condition of their eligibility, the types of qualifying
activities that satisfy the community engagement requirement, the
criteria to meet an exception from the requirement (that is, be deemed
compliant), and the criteria to meet a specified exclusion from the
requirement. It also specifies requirements for verification of
qualifying activities, outreach to affected populations, steps States
must take if they determine individuals are noncompliant, and
additional operational considerations for States. Finally, this IFC
specifies implementation timing and establishes new State reporting
requirements.
DATES:
Effective date: These regulations are effective on July 31, 2026.
Comment date: To be assured consideration, comments must be
received at one of the addresses provided below, by July 31, 2026.
ADDRESSES: In commenting, please refer to file code CMS-2454-IFC.
Comments, including mass comment submissions, must be submitted in
one of the following three ways (please choose only one of the ways
listed):
1. Electronically. You may submit electronic comments on this
regulation to <a href="https://www.regulations.gov/docket/CMS-2026-2047">https://www.regulations.gov/docket/CMS-2026-2047</a>. Follow
the ``Submit a comment'' instructions.
2. By regular mail. You may mail written comments to the following
address ONLY: Centers for Medicare & Medicaid Services, Department of
Health and Human Services, Attention: CMS-2454-IFC, P.O. Box 8016,
Baltimore, MD 21244-8016.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments to
the following address ONLY: Centers for Medicare & Medicaid Services,
Department of Health and Human Services, Attention: CMS-2454-IFC, Mail
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
For information on viewing public comments, see the beginning of
the SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT: CMS Medicaid Works,
<a href="/cdn-cgi/l/email-protection#efa28a8b868c8e868b98809d849caf8c829cc187879cc1888099"><span class="__cf_email__" data-cfemail="86cbe3e2efe5e7efe2f1e9f4edf5c6e5ebf5a8eeeef5a8e1e9f0">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION:
Inspection of Public Comments: All comments received before the
close of the comment period are available for viewing by the public,
including any personally identifiable or confidential business
information that is included in a comment. We post all comments
received before the close of the comment period on the following
website as soon as possible after they have been received: <a href="https://www.regulations.gov">https://www.regulations.gov</a>. Follow the search instructions on that website to
view public comments. CMS will not post on <a href="http://Regulations.gov">Regulations.gov</a> public
comments that make threats to individuals or institutions or suggest
that the commenter will take actions to harm an individual. CMS
continues to encourage individuals not to submit duplicative comments.
We will post acceptable comments from multiple unique commenters even
if the content is identical or nearly identical to other comments.
Table of Contents
I. Background
A. Overview
B. Working Families Tax Cut Legislation
C. Severability
II. Provisions of the Interim Final Rule With Comment Period
A. Decision to Revise Certain Eligibility and Enrollment
Regulations To Implement Community Engagement
B. Applicable Individuals
C. Demonstrating Community Engagement
D. Mandatory Exceptions for Certain Individuals
E. Specified Excluded Individuals
F. Mandatory Exceptions vs. Specified Excluded Individuals
G. Short-Term Hardship Exceptions
H. Assessing Compliance With the Community Engagement
Requirement
I. Verification of Compliance With and Exceptions and Exclusions
From the Community Engagement Requirement
J. Noncompliance Procedures
K. Implementation Timing
L. Outreach
M. Managed Care Implications
N. Additional Considerations
O. Monitoring
III. Good Cause for Proceeding With an Interim Final Rule With
Comment Period
IV. Collection of Information Requirements
A. Wage Estimates
B. Adjustment to State Cost Estimates
C. Information Collection Requirements (ICRs)
D. Burden Summary
E. Submission of PRA-Related Comments
V. Regulatory Impact Analysis
A. Statement of Need
B. Overall Impact
C. Detailed Economic Analysis
D. Alternatives Considered
E. Accounting Statement
F. Regulatory Flexibility Act (RFA)
G. Unfunded Mandates Reform Act (UMRA)
H. Federalism
I. E.O. 14192, ``Unleashing Prosperity Through Deregulation''
J. Conclusion
I. Background
A. Overview
Title XIX of the Social Security Act (the Act) authorizes Federal
grants to States for Medicaid programs to provide medical assistance to
people with limited income and resources. While Medicaid programs are
administered by the States, the program is jointly financed by the
Federal and State governments. As such, the Centers for Medicare &
Medicaid Services (CMS) and State agencies share responsibility for
administering and ensuring the overall fiscal and programmatic
integrity and effectiveness of the Medicaid program. This joint
Federal-State partnership is the cornerstone of Medicaid. Enacted in
1965, Medicaid was created to serve and support vulnerable populations,
including: children living in low-income households, caretaker
relatives with dependent children, seniors, and individuals with
disabilities receiving Supplemental Security Income (SSI). In the 1980s
and 1990s, the Medicaid statute was amended to enable coverage of
additional services and populations, for example home and community-
based services, pregnant women and infants (up to 1 year of age), and
higher-income children (aged 6 through 18 under 100 percent of the
Federal poverty level). The Patient Protection and Affordable Care Act
of 2010, (Pub. L. 111-148, enacted March 23, 2010), as amended by the
Health Care and Education Reconciliation Act of 2010
[[Page 33349]]
(Pub. L. 111-152, enacted March 30, 2010), together referred to as the
Affordable Care Act (ACA), expanded Medicaid eligibility to include
non-pregnant adults with income up to 133 percent of the Federal
poverty level (also known as the adult group). Each of these coverage
expansions not only grew the number of eligible beneficiaries Medicaid
serves, but also contributed, along with benefits expansions and rising
health costs generally, to increased Medicaid spending. In fiscal year
(FY) 2025, approximately 82.4 million individuals were enrolled in
Medicaid, roughly 20 million of whom were enrolled in the adult
group.\1\ Total State and Federal combined Medicaid spending for FY
2025 was nearly $1 trillion, with approximately $200 billion
attributable to adult group expenditures.\2\
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\1\ CMS, Fiscal Year 2027; Justification of Estimates for
Appropriations Committees. <a href="https://www.cms.gov/files/document/fy-2027-justification-estimates-appropriations-committees.pdf">https://www.cms.gov/files/document/fy-2027-justification-estimates-appropriations-committees.pdf</a>.
\2\ Medicaid Budget and Expenditure System (MBES) data source
updated with FY2025 data as of the June 2026 IFC publication date.
Available at <a href="https://data.medicaid.gov/dataset/5b19d1d4-ae43-5fcd-ba14-3cecd99f473f">https://data.medicaid.gov/dataset/5b19d1d4-ae43-5fcd-ba14-3cecd99f473f</a> and <a href="https://data.medicaid.gov/dataset/00505e90-f8ac-5921-b12f-5e23ba7ffcf3">https://data.medicaid.gov/dataset/00505e90-f8ac-5921-b12f-5e23ba7ffcf3</a>.
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Presently, States are not required to provide coverage to the adult
group.\3\ States that have elected to provide coverage to the adult
group have primarily done so using State plan authority. The adult
group consists of low-income individuals (up to 133 percent of the
Federal poverty level) who are age 19 to 64, not pregnant, not entitled
to or enrolled in Medicare Part A or B, or described in any other
mandatory eligibility groups (for example, parent and caretaker
relatives, children, or individuals eligible based on their receipt of
SSI). Individuals are determined eligible based on income and household
size, State residency, and citizenship and immigration status. Unlike
other Federal means-tested public assistance programs such as
Supplemental Nutrition Assistance Program (SNAP) and Temporary
Assistance for Needy Families (TANF), community engagement or work
requirements have not historically been a condition of eligibility in
the Medicaid program under title XIX of the Act. However, some States
have applied such requirements through a section 1115 demonstration.
The community engagement requirement will apply in States that have
elected the adult group through the State plan or that have a section
1115 demonstration that covers a similar population to which the
requirement applies. To date, 40 States and the District of Columbia
have expanded Medicaid \4\ and will be subject to the new community
engagement requirement. States that have partially expanded Medicaid
through a section 1115 demonstration and additional States that have
applicable individuals (defined later in this rule) eligible to enroll
or enrolled in a section 1115 demonstration will also be subject to the
new community engagement requirement.\5\
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\3\ While the ACA established the adult group as a mandatory
eligibility group, the U.S. Supreme Court decision, National
Federation of Independent Business v. Sebelius, 567 U.S. 519 (2012),
effectively made coverage of this eligibility group voluntary for
States.
\4\ See: CMS, Adult Coverage Expansion (December 1, 2023),
available at <a href="https://www.medicaid.gov/medicaid/program-information/downloads/medicaid-expansion-state-map.pdf">https://www.medicaid.gov/medicaid/program-information/downloads/medicaid-expansion-state-map.pdf</a>.
\5\ NOTE: This document contains links to non-United States
Government websites. We are providing these links because they
contain additional information relevant to the topic(s) discussed in
this document or that otherwise may be useful to the reader. We
cannot attest to the accuracy of information provided on the cited
third-party websites or any other linked third-party site. We are
providing these links for reference only; linking to a non-United
States Government website does not constitute an endorsement by CMS,
HHS, or any of their employees of the sponsors or the information
and/or any products presented on the website. Also, please be aware
that the privacy protections generally provided by United States
Government websites do not apply to third-party sites.
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B. Working Families Tax Cut Legislation
Public Law 119-21, which CMS refers to as the Working Families Tax
Cut (WFTC) legislation, was signed into law by President Donald J.
Trump on July 4, 2025. This landmark legislation includes significant
changes in Medicaid and the Children's Health Insurance Program (CHIP)
affecting eligibility, program operations, and oversight capabilities.
It also establishes new accountability measures for Medicaid and CHIP.
Among other changes to Medicaid, section 71119(a) of the WFTC
legislation added section 1902(xx) of the Act to establish a community
engagement requirement for certain adults applying for or enrolled in
Medicaid. This requirement has the potential to empower Medicaid
beneficiaries through employment, education, or volunteer service so
they can escape isolation and dependency, build confidence, and achieve
self-sufficiency and independence. Isolation and loneliness have become
an epidemic in the United States, affecting even able-bodied adults who
can engage with their communities through work and other
activities.<SUP>6 7 8 9</SUP> One study found that lacking social
connection is as harmful as smoking 15 cigarettes per day.\10\
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\6\ Cigna Corporation. The Loneliness Epidemic Persists: A Post-
Pandemic Look at the State of Loneliness among U.S. Adults. 2021.
<a href="https://newsroom.thecignagroup.com/all-stories?item=446">https://newsroom.thecignagroup.com/all-stories?item=446</a>.
\7\ Bruce LD, Wu JS, Lustig SL, Russell DW, Nemecek DA.
Loneliness in the United States: A 2018 National Panel Survey of
Demographic, Structural, Cognitive, and Behavioral Characteristics.
Am J Health Promot. 2019;33(8):1123-1133. doi: 10.1177/
0890117119856551. Epub 2019 Jun 16. PMID: 31203639; PMCID:
PMC7323762.
\8\ Shovestul B, Han J, Germine L, Dodell-Feder D. Risk factors
for loneliness: The high relative importance of age versus other
factors. PLOS ONE. 2020;15. doi: 10.1371/journal.pone.0229087. PMID:
32045467; PMCID: PMC7012443.
\9\ Buecker S, Mund M, Chwastek S, Sostmann M, Luhmann M. Is
loneliness in emerging adults increasing over time? A preregistered
cross-temporal meta-analysis and systematic review. Psychological
Bulletin. 2021;147(8):787. doi: 10.1037/bul0000332. PMID: 34898234.
\10\ Holt-Lunstad J, Robles TF, Sbarra DA. Advancing social
connection as a public health priority in the United States. Am
Psychol. 2017;72(6):517-530. doi: 10.1037/amp0000103. PMID:
28880099; PMCID: PMC5598785.
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Moreover, employment has been shown to be an important factor
leading to long-term beneficiary health and well-being. Obtaining
stable employment provides individuals with reliable income and
financial stability, which in turn supports access to safe housing,
nutritious food, and other resources necessary for maintaining
health.<SUP>11 12</SUP> Financial stability can lead to improved living
conditions, purchasing healthier foods, and the ability to engage in
healthy behaviors.<SUP>13 14</SUP> Financial stability has also been
linked to reduced chronic conditions, such as cardiovascular
risk.<SUP>15 16</SUP> Beyond its role in income generation, employment
itself has been shown to be an important factor in long-
[[Page 33350]]
term beneficiary health and well-being. Evidence indicates that
obtaining and maintaining stable employment is associated with improved
physical and mental health outcomes and greater overall well-being,
while unemployment and unstable work are linked to poorer health
outcomes.<SUP>17 18 19 20</SUP> Evidence from numerous studies show
that the link between health and work is intrinsic and bi-directional
whereby work is associated with healthier outcomes, and better health
is associated with increased employment. Thus, a well-designed
community engagement requirement may benefit individuals so that they
are not dependent, demoralized, or stuck in situations that hinder
their economic, physical, and mental state.
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\11\ Zafar, Q., M.A. Khan, A.Z. Warsi, and L. Iqbal. (2024).
``Economic Strain and Recovery Trajectories in Mental Health: The
Role of Financial Stability in Mental Health Outcomes.'' Review of
Applied Management and Social Sciences,7(4): 345-358. <a href="https://doi.org/10.47067/ramss.v7i4.385">https://doi.org/10.47067/ramss.v7i4.385</a>.
\12\ R. Gerdes, T.D. Jackson, R. Roberts, et al. (2026).
``Associations Between Employment and Health Outcomes: A Systematic
Review of Reviews.'' Journal of Occupational Rehabilitation. <a href="https://doi.org/10.1007/s10926-025-10357-5">https://doi.org/10.1007/s10926-025-10357-5</a>.
\13\ R. Chetty, M. Stepner, S. Abraham, et al. (2016) ``The
association between income and life expectancy in the United States,
2001-2014.'' JAMA.315(16):1750-1766. https://doi:10.1001/
jama.2016.4226.
\14\ Schoufour, J., E. A.L. de Jonge, J. C. Kiefte-de Jong, et
al. (2018). ``Socio-economic indicators and diet quality in an older
population'' Maturitas, Volume 107: 71-77, ISSN 0378-5122, <a href="https://doi.org/10.1016/j.maturitas.2017.10.010">https://doi.org/10.1016/j.maturitas.2017.10.010</a>.
\15\ Kim, S., B. Lee, M. Park, et al. (2016) ``Prevalence of
chronic disease and its controlled status according to income
level.'' Medicine 95(44):p e5286, <a href="https://doi.org/10.1097/MD.0000000000005286">https://doi.org/10.1097/MD.0000000000005286</a>.
\16\ Brownell, N., Z. Boback, J. Nicholas, et al. (2024).
``Trends in Income Inequities in Cardiovascular Health Among US
Adults, 1988-2018'' American Heart Association Journals. 17(5).
<a href="https://doi.org/10.1161/CIRCOUTCOMES.123.010111">https://doi.org/10.1161/CIRCOUTCOMES.123.010111</a>.
\17\ Han,W.-J. (2024). ``How longitudinal employment patterns
shape health as individuals approach middle adulthood--US NLSY79
cohort.'' PLOS ONE, 19(4), e0300245. <a href="https://doi.org/10.1371/journal.pone.0300245">https://doi.org/10.1371/journal.pone.0300245</a>.
\18\ Virtanen M, Kivim[auml]ki M, Joensuu M, Virtanen P,
Elovainio M, Vahtera J. Temporary employment and health: a review.
Int J Epidemiol. 2005 Jun;34(3):610-22. doi: 10.1093/ije/dyi024.
Epub 2005 Feb 28. PMID: 15737968.
\19\ Kim TJ, von dem Knesebeck O. Perceived job insecurity,
unemployment and depressive symptoms: a systematic review and meta-
analysis of prospective observational studies. Int Arch Occup
Environ Health. 2016 May;89(4):561-73. doi: 10.1007/s00420-015-1107-
1. Epub 2015 Dec 29. PMID: 26715495.
\20\ Gerdes R, Jackson TD, Roberts R, Lytvyak E, Deibert D,
Dennett L, Burton AK, Gross DP, Els C, Doroshenko A, Hagtvedt R,
Straube S. Associations Between Employment and Health Outcomes: A
Systematic Review of Reviews. J Occup Rehabil. 2026 Jan 6. doi:
10.1007/s10926-025-10357-5. Epub ahead of print. PMID: 41493509.
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Section 71119(d) of the WFTC legislation directs CMS to publish an
IFC no later than June 1, 2026, for the purpose of implementing the
community engagement requirement. As directed, this IFC implements
section 71119 of the WFTC legislation, including 1902(xx) of the Act.
Demonstrating community engagement as a condition of Medicaid
eligibility is not an entirely new policy for the Medicaid program.
Under President Trump's 2017 to 2021 presidential term, we approved
section 1115 demonstration projects in 13 States \21\ that conditioned
Medicaid eligibility, for certain individuals, on compliance with a
community engagement requirement. These section 1115 demonstrations
were intended to test and evaluate approaches that required work or
community engagement as a condition of eligibility, coverage,
additional or enhanced benefits, or reduced premiums or cost sharing.
The demonstrations aimed to produce improved health and well-being by
increasing the number of beneficiaries who were employed or engaged in
other activities such as volunteering or education. Due to litigation
and the subsequent Administration's withdrawal of approved authority
for those States that had previously approved section 1115
demonstration authority to implement their community engagement
programs, Georgia and Arkansas were the only two States that launched
programs. Georgia is the only State that continues to operate a
community engagement program as a condition of Medicaid eligibility for
certain adults. This early implementation experience provides insight
into operational considerations, indicating that beneficiary awareness,
clarity of requirements, and the accessibility of reporting mechanisms,
as well as overall administrative complexity, can influence
participation and compliance.<SUP>22 23 24 25</SUP>
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\21\ Arizona, Arkansas, Georgia, Indiana, Kentucky, Maine,
Michigan, Nebraska, New Hampshire, Ohio, South Carolina (two 1115
demonstrations), Utah, and Wisconsin.
\22\ Centers for Medicare & Medicaid Services (CMS). (2025,
December 8). Requirements for states to establish Medicaid community
engagement requirements for certain individuals (CMCS Informational
Bulletin: Section 71119 of the Working Families Tax Cut Legislation,
P.L. 119-21). <a href="https://www.medicaid.gov/federal-policy-guidance/downloads/cib12082025.pdf">https://www.medicaid.gov/federal-policy-guidance/downloads/cib12082025.pdf</a>.
\23\ Medicaid and CHIP Payment and Access Commission (MACPAC).
(2026, April 9). Implementing community engagement requirements in
Medicaid. <a href="https://www.macpac.gov/wp-content/uploads/2026/04/01_April-Slides_Implementing-Community-Engagement-Requirements-in-Medicaid.pdf">https://www.macpac.gov/wp-content/uploads/2026/04/01_April-Slides_Implementing-Community-Engagement-Requirements-in-Medicaid.pdf</a>.
\24\ Centers for Medicare & Medicaid Services (CMS). (2021,
March 17). Letter to Arkansas regarding Arkansas Works
demonstration. <a href="https://www.medicaid.gov/medicaid/section-1115-demonstrations/downloads/ar-works-ca2.pdf">https://www.medicaid.gov/medicaid/section-1115-demonstrations/downloads/ar-works-ca2.pdf</a>.
\25\ Georgia Department of Community Health. (2025, April 28).
Georgia section 1115 demonstration waiver extension request. <a href="https://www.medicaid.gov/medicaid/section-1115-demonstrations/downloads/ga-pathway-pa-04282025.pdf">https://www.medicaid.gov/medicaid/section-1115-demonstrations/downloads/ga-pathway-pa-04282025.pdf</a>.
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In this IFC, we implement section 1902(xx) of the Act premised on
what we learned from the previously approved section 1115 demonstration
projects, permitting States to retain flexibility for their programs
where possible, balancing the benefits of State flexibility with the
potential costs, such as those associated with systems and operations,
and promoting alignment with other health and social service programs,
such as SNAP, while also adhering to the letter of the law. This IFC
also seeks to increase program integrity by requiring State use of data
and information that can ensure that State Medicaid eligibility
determinations are auditable and that we have the data needed to
exercise appropriate oversight of State implementation of the community
engagement requirement. To help defray operational costs and streamline
operational workflows, this IFC relies and builds upon existing
statutory and regulatory requirements when possible, including existing
requirements for Medicaid, SNAP, TANF, the Internal Revenue Service
(IRS), and Health Insurance Exchanges.
The new requirement at section 1902(xx) of the Act requires
individuals to engage in qualifying community engagement activities
like work or education. The law also requires disenrollment of
noncompliant individuals from Medicaid. This requirement will bring
Medicaid in line with other public benefit programs, like SNAP and
TANF, which have similar work requirements to support beneficiaries on
a path to self-sufficiency. In SNAP and TANF, noncompliance with work
requirements has implications for eligibility in those programs. For
SNAP, noncompliance can result in ineligibility for time-limited
participants after 3 months within a 36-month period. For TANF,
noncompliance can result in the reduction or termination of cash
benefits. As specified in section 1902(xx) of the Act for Medicaid,
noncompliance would result in Medicaid disenrollment from or denial of
eligibility for the adult group or section 1115 demonstrations that
include applicable individuals; however, the individual can re-apply at
any time and will be subject to the procedures for assessing compliance
at application.
Consistent with our understanding of the Congress' directive
through passage of the WFTC legislation, for able-bodied adults
(generally those who enroll in the adult group), Medicaid should be a
short-term hand up, not a lifetime handout. Implementing the community
engagement requirement, we believe, will assist in prioritizing
coverage for Medicaid's most vulnerable populations such as seniors,
individuals with disabilities, pregnant women, and children while
empowering able-bodied individuals through community engagement.
Section 1902(xx) of the Act and this IFC are applicable to all States
and the District of Columbia that elect to provide coverage to the
adult group under the State plan or to certain individuals covered
through certain section 1115 demonstrations as defined in statute and
explained in the preamble of this IFC. Section 1902(xx) of the Act and
this IFC do not apply to the territories. States that provide Medicaid
coverage to applicable individuals as
[[Page 33351]]
defined in section 1902(xx) of the Act generally must comply with the
community engagement requirement no later than January 1, 2027; States
may implement the community engagement requirement earlier, provided
that certain conditions are met.
This IFC implements the statutory definition of applicable
individuals, the statutory term for the Medicaid applicants and
beneficiaries who must demonstrate community engagement as a condition
of their Medicaid eligibility. With certain exclusions specified in the
statute, applicable individuals are those who are eligible for, or
enrolled under, the State plan adult group described in section
1902(a)(10)(A)(i)(VIII) of the Act and Sec. 435.119. In addition,
applicable individuals are those who are eligible to enroll or are
enrolled under a waiver of the State plan authorized under section 1115
of the Act that provides coverage that meets minimum essential coverage
(MEC) requirements described in section 5000A(f)(1)(A) of the Internal
Revenue Code (the Code) and who have attained the age of 19 and are
under 65 years of age, are not pregnant, and not entitled to, or
enrolled, for benefits under part A of title XVIII, or enrolled for
benefits under part B of title XVIII, and are not otherwise eligible to
enroll under such plan.
This IFC specifies the steps States must take when they are unable
to verify whether an applicable individual has met the community
engagement requirement when applying for Medicaid, as part of a renewal
of Medicaid eligibility, and, if elected by the State, during a more
frequent verification. This includes providing the individual with a
notice of noncompliance and 30 calendar days to demonstrate a
satisfactory showing. This IFC specifies that the notice of
noncompliance must inform the individual how they may make a
satisfactory showing to demonstrate compliance or that the individual
should not be subject to the requirement as well as how the individual
can reapply for coverage if they are disenrolled.
The IFC also specifies when and how States must verify an
applicable individual's compliance with the community engagement
requirement and whether an individual meets an exception (that is, will
be deemed compliant) or exclusion from the requirement. This includes
the use of data sources to verify community engagement activity
consistent with section 1902(xx) of the Act and when to request
additional information from the individual.
This IFC specifies outreach and notice requirements for States that
are integral to implementing the community engagement requirement; how
individuals can meet the community engagement requirement, which
require that affected individuals work or engage in other educational
or community service activities for at least 80 hours a month; how
applicants and beneficiaries will be able to demonstrate compliance and
how States will verify compliance; and what steps States must take in
the event of noncompliance. This IFC also specifies when States will
have flexibility in implementing the community engagement requirement.
This IFC addresses additional considerations for States and
implications of the community engagement requirement for other existing
enrollment pathways, such as presumptive eligibility, as well as
eligibility for demonstration projects authorized under section 1115 of
the Act. This IFC also specifies the new State data and reporting
requirements for monitoring purposes. In addition, this IFC outlines
considerations for States that elect to delegate certain functions to
their managed care plans as well as implications of the conflict-of-
interest requirement for managed care plans and other contractors.
Finally, this IFC specifies the situations and steps for a State to
request a temporary good faith effort exemption from compliance with
timely implementation of the community engagement requirement.
C. Severability
In this IFC, CMS and HHS establish multiple policies related to the
implementation of the community engagement requirement described in
section 1902(xx) of the Act. It is our intent that if any provision of
this final rule is held to be invalid or unenforceable by its terms, or
as applied to any person or circumstance, or stayed pending further
action, it shall be severable from this IFC, and from rules and
regulations currently in effect, and not affect the remainder thereof
or the application of the provision to other persons not similarly
situated or to other, dissimilar circumstances. If any provision is
held to be invalid or unenforceable, the remaining provisions which
could function independently should take effect and be given the
maximum effect permitted by law. Through this rule, we adopt provisions
that are intended to and will operate independently of each other, even
if each serves the same general purpose or policy goal. Where a
provision is necessarily dependent on another, the context generally
makes that clear, such as by a cross-reference to apply the same
standards or requirements.
II. Provisions of the Interim Final Rule With Comment Period
Through this IFC, we are adding regulations to Subpart F of part
435 to implement amendments made by section 71119 of the WFTC
legislation, that require certain adults who apply for Medicaid or who
are enrolled in Medicaid to meet the community engagement requirement.
Section 71119(b) of the WFTC legislation made a conforming amendment to
section 1902(a)(10)(A)(i)(VIII) of the Act, which describes the
eligibility requirements for the adult group. We implement this
conforming change by amending Sec. 435.119, which implements Medicaid
adult group eligibility, to specify that this eligibility group is
subject to the community engagement requirement described at Sec. Sec.
435.550 through 435.563. Additionally, we establish a basis and scope
for the community engagement requirement for applicable individuals at
Sec. 435.550, by citing the authority provided by section 1902(xx) of
the Act and specifying that these requirements only apply to Medicaid
programs operated by one of the 50 States or the District of Columbia
(to the extent that a Medicaid program elects to provide coverage to
the adult group under the State plan or to certain individuals through
certain section 1115 demonstrations, as described in section II.B. of
this IFC). Consistent with the definition of State at section
1902(xx)(9)(C) of the Act, the community engagement requirement does
not apply to a U.S. territory, regardless of whether it elects to cover
the adult group or has a section 1115 demonstration with applicable
individuals. We also make additional revisions to certain regulations
that are necessary to implement the community engagement requirement
outlined in this IFC. These revisions are described in more detail in
section II.A. of this.\26\
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\26\ NOTE: This document contains links to non-United States
Government websites. We are providing these links because they
contain additional information relevant to the topic(s) discussed in
this document or that otherwise may be useful to the reader. We
cannot attest to the accuracy of information provided on the cited
third-party websites or any other linked third-party site. We are
providing these links for reference only; linking to a non-United
States Government website does not constitute an endorsement by CMS,
HHS, or any of their employees of the sponsors or the information
and/or any products presented on the website. Also, please be aware
that the privacy protections generally provided by United States
Government websites do not apply to third-party sites.''
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[[Page 33352]]
A. Decision to Revise Certain Eligibility and Enrollment Regulations To
Implement Community Engagement
Under section 71119 of the WFTC legislation, Congress has directed
us to implement a community engagement requirement and directed that
any action taken to implement this requirement not be subject to the
provisions of 5 U.S.C. 553. Implementation of the community engagement
requirement requires ensuring related regulations reflect current and
effective policy. Currently, the regulations do not contain current and
effective policies related to application requirements,
redeterminations of eligibility during periodic renewals,
redeterminations of eligibility in between renewals based on a change
in circumstances, and timeliness standards to process eligibility and
enrollment actions.
Section 71102 of the WFTC legislation precludes CMS from
implementing, administering, or enforcing amendments made by provisions
of the final rule titled ``Medicaid Program; Streamlining the Medicaid,
Children's Health Insurance Program, and Basic Health Program
Application, Eligibility Determination, Enrollment, and Renewal
Processes'' (89 FR 22780) (hereinafter referred to as the 2024
Eligibility and Enrollment final rule) for Federal regulations
specified in section 71102 of the WFTC legislation until after
September 30, 2034. This prohibition renders the amendments made by the
2024 Eligibility and Enrollment final rule to the specified regulatory
provisions unenforceable prior to October 1, 2034, effectively
suspending these provisions during that period (herein referred to as
the section 71102 moratorium).
Many of the regulations amended by the 2024 Eligibility and
Enrollment final rule that are now subject to the section 71102
moratorium are necessary to implement the community engagement
requirement successfully. For example, section 1902(xx) of the Act, as
added by section 71119 of the WFTC legislation, requires States to
verify, at renewal, that individuals satisfy the community engagement
requirement. However, the regulatory provisions governing renewals are
among those suspended by the section 71102 moratorium because the
moratorium suspends amendments made by the 2024 Eligibility and
Enrollment final rule to Sec. 435.916, which establishes requirements
for States to conduct periodic renewals of eligibility. As a result,
there are currently no enforceable regulations in effect governing
renewals of eligibility that CMS could cite in implementing the new
community engagement requirement.
Accordingly, it would not be feasible to establish an enforceable
community engagement requirement where the implementing regulations
would need to rely on suspended eligibility and enrollment policies. In
addition to renewal requirements, the section 71102 moratorium also
suspends regulatory provisions relating to application requirements,
procedures for acting on changes in circumstances that may affect
eligibility, and timeliness standards for processing eligibility and
enrollment actions. Because current and effective Federal regulations
no longer comprehensively address these core eligibility and enrollment
processes, CMS would be significantly constrained in its ability to
implement section 71119 of the WFTC legislation and enforce provisions
of the IFC while the moratorium is in effect.
To implement community engagement while the section 71102
moratorium is in effect, it is therefore necessary to restore, for
regulations impacted by the section 71102 moratorium, the previous
version of the Code of Federal Regulations (CFR) that was in effect
prior to the effective date of the 2024 Eligibility and Enrollment
final rule. The restoration of the previous version of the CFR for
certain provisions will ensure that the regulations reflect current
legal authority and CMS policy to support implementation of community
engagement while the section 71102 moratorium is in effect. For the
period until October 1, 2034, this IFC restores the following
regulations as they existed before the 2024 Eligibility and Enrollment
final rule: Sec. Sec. 431.213(d), 431.231(d), 435.907, 435.911(c),
435.912, 435.916, 435.919, 457.340(d)(1), 457.344, and 457.960. We also
make a corresponding edit to remove a cross-reference at Sec.
435.1200(e)(1), that would no longer exist, with the revisions to
revert to the previous version of the CFR and make conforming changes
to affected CHIP regulations, which cross-reference to Medicaid
regulations. The changes to these provisions are either necessary to
implement the community engagement requirement in this IFC or are
conforming changes to the Medicaid and CHIP regulations because of the
implications of the revisions to restore the previous version of the
CFR. For the period until October 1, 2034, the changes are as follows:
<bullet> Sec. Sec. 431.213(d) and 431.231(d) concerning
whereabouts unknown based on returned mail are revised to reflect the
version of the CFR for these paragraphs in effect as of June 2, 2024,
as a conforming change to restore regulations that were relocated by
the 2024 Eligibility and Enrollment final rule to Sec. 435.919, which
is removed as noted in this section.
<bullet> Sec. 435.907(c)(4) concerning modalities for States to
accept non-MAGI (modified adjusted gross income) application forms is
removed, which is affected by the section 71102 moratorium.
<bullet> Sec. 435.907(d)(1) and (2) concerning the minimum time
for applicants to respond to requests for information, the provision of
a reconsideration period at application, and expansion of the
prohibition on in-person interviews, are removed because they are
affected by the section 71102 moratorium and replaced with Sec.
435.907(d) of the CFR in effect as of June 2, 2024.
<bullet> Sec. 435.911(c) is revised to reflect the version of the
CFR for this paragraph in effect as of June 2, 2024, to remove cross-
references removed in this IFC, which is affected by the section 71102
moratorium.
<bullet> Sec. Sec. 435.912 concerning timeliness standards and
435.916 concerning redeterminations of eligibility, which are affected
by the section 71102 moratorium, are replaced in their entirety with
the version of the CFR in effect as of June 2, 2024.
<bullet> Sec. 435.919 concerning acting on changes in
circumstances and updating contact information, which is affected by
the section 71102 moratorium, is removed.
<bullet> Sec. 435.1200(e)(1) is amended to remove the phrase
``(regarding regularly-scheduled renewals of eligibility) or Sec.
435.919 (regarding changes in circumstances)'' as a conforming change
because we remove Sec. 435.919 in this IFC.
<bullet> Sec. 457.340(d)(1) is revised to reflect the version of
the CFR for this paragraph in effect as of June 2, 2024, to conform
with revisions to Sec. 435.912.
<bullet> Sec. 457.344 is removed to conform with revisions to
restore the previous version of the CFR for Sec. Sec. 435.912 and
435.916 and the removal of Sec. 435.919.
<bullet> Sec. 457.960 is revised to conform with changes to
reflect the previous version of the CFR because Sec. 457.344 is
removed.
In this IFC, we limit revisions to the regulations: (1) to restore
the previous version of the CFR for requirements affected by the
moratorium, when needed to implement community engagement, and (2) when
conforming changes are needed for consistency. At this time, we are not
updating the CFR
[[Page 33353]]
to restore other regulations \27\ impacted by section 71102 of the WFTC
legislation to their versions in effect prior to the 2024 Eligibility
and Enrollment final rule and are not amending the policies in the
restored regulations because such action falls outside the scope of the
Congress's directive under section 71119 of the WFTC legislation. We do
not permanently restore the CFR as such action also falls outside the
scope of Congress's directive under section 71119 of the WFTC
legislation. Because we modify the CFR to restore the regulations which
are necessary to implement the community engagement requirement and
sunset the provisions on October 1, 2034, we will follow applicable
rulemaking procedures to ensure that policies governing Medicaid and
CHIP eligibility and enrollment are implemented and effective on
October 1, 2034, replacing the policies scheduled to sunset on that
date.
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\27\ For more information on the section 71102 moratorium and
how to interpret regulations that remain impacted, see the November
18, 2025, CMCS Informational Bulletin, `` ``Working Families Tax
Cut'' Legislation, Public Law 119-21: Summary of Medicaid and
Children's Health Insurance Program (CHIP) Related Provisions,''
available at <a href="https://www.medicaid.gov/federal-policy-guidance/downloads/cib11182025.pdf">https://www.medicaid.gov/federal-policy-guidance/downloads/cib11182025.pdf</a>.
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Separately, the regulations that we are updating so that they
reflect the versions in effect prior to the 2024 Eligibility and
Enrollment final rule are referenced throughout this IFC. In accordance
with the changes discussed here, the references to the regulations
affected by the section 71102 moratorium in the preamble, regulatory
impact analysis, collection of information, and cross-referenced in
regulatory text should be interpreted as referring to the prior CFR
versions implemented in this IFC.
B. Applicable Individuals
Section 71119(a) of the WFTC legislation amended section 1902 of
the Act to add subsection (xx). Section 1902(xx) of the Act requires
that ``applicable individuals'' demonstrate, as a condition of their
Medicaid eligibility, ``community engagement'' (generally, that they
work, are enrolled in an educational program, complete community
service, participate in a work program, or any combination thereof) for
a minimum period of time preceding their Medicaid application and
during their Medicaid enrollment. Section 1902(xx)(9)(A)(i) of the Act
defines the term ``applicable individual'' to mean an individual who is
not a ``specified excluded individual'' described in section
1902(xx)(9)(A)(ii) of the Act (as further discussed in section II.E. of
this IFC) and who (1) ``. . . is eligible to enroll (or is enrolled)
under the State plan under'' section 1902(a)(10)(A)(i)(VIII) of the
Act; or (2) ``. . . is otherwise eligible to enroll (or is enrolled)
under a waiver of such plan'' and meets the criteria of
1902(xx)(9)(A)(i)(II)(aa) and (bb). In this IFC, we establish a new
Sec. 435.551 to implement this statutory definition of applicable
individual.
For individuals applying for, or enrolled in, coverage under the
State plan, only individuals eligible for or enrolled in the adult
group under section 1902(a)(10)(A)(i)(VIII) of the Act (implemented at
Sec. 435.119 of the regulations) could be applicable individuals.
Individuals eligible for or enrolled in any other mandatory or optional
State plan eligibility groups are not applicable individuals subject to
the community engagement requirement. For example, individuals enrolled
under the State plan in the following groups are not applicable
individuals: the mandatory group for parents and other caretaker
relatives (under section 1931 of the Act and implemented at Sec.
435.110 of the regulations); and the optional group for individuals
under age 65 with incomes exceeding 133 percent of the Federal poverty
level (FPL) (under section 1902(a)(10)(A)(ii)(XX) of the Act and
implemented at Sec. 435.218 of the regulations). This includes
individuals eligible for or enrolled in mandatory and optional State
plan groups that are modified through a waiver authority under section
1115(a)(1) of the Act, as their underlying eligibility authority is
through the State plan.
Regardless of whether a State covers the adult group under the
State plan, a person could still be an applicable individual if that
person is ``otherwise'' eligible for or enrolled in Medicaid under
certain section 1115 demonstrations. Section 1902(xx)(9)(A)(i)(II) of
the Act specifies that an applicable individual includes an individual
``who is otherwise eligible to enroll (or is enrolled) under a waiver
of such plan that provides coverage that is equivalent to minimum
essential coverage [(MEC) \28\]. . .and has attained the age of 19 and
is under 65 years of age, is not pregnant, is not entitled to, or
enrolled for, benefits under part A of title XVIII, or enrolled for
benefits under part B of title XVIII, and is not otherwise eligible to
enroll under such plan.'' To be an applicable individual in this case,
an individual must be (1) eligible for, or enrolled in, coverage that
meets MEC requirements under demonstration expenditure authority under
section 1115(a)(2) of the Act (and not under the State plan), and (2)
at least 19 years of age and under 65 years of age, not pregnant, not
entitled to or enrolled for benefits under Medicare part A or part B,
and not otherwise eligible to enroll under the State plan. If a State
does not cover the adult group under the State plan and does not
otherwise provide coverage to a population described in section
1902(xx)(9)(A)(i)(II) of the Act under section 1115(a)(2) expenditure
authority, the State will not have any applicable individuals who will
be subject to the community engagement requirement. However, States
that cover the State plan adult group might also have a section 1115
demonstration population that meets the criteria described above and,
therefore, also have applicable individuals under the demonstration.
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\28\ MEC is defined in section 1902(xx)(9)(A)(i)(II)(aa) of the
Act as follows: ``as described in section 5000A(f)(1)(A) of the
Internal Revenue Code of 1986 and as determined in accordance with
standards prescribed by the Secretary in regulations.'' CMS does not
read the provision in the statute to in any way change the current
process for determining whether Medicaid coverage in section 1115
demonstrations is MEC.
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We do not consider section 1915(b) waivers or section 1915(c)
waivers to be ``a waiver of such plan'' for purposes of section
1902(xx)(9)(A)(i)(II) of the Act. This is because sections
1902(xx)(9)(A)(i)(I) and (II) of the Act define groups of individuals
who are ``eligible to enroll'' or are ``enrolled'' under either the
State plan or a waiver of the plan, whereas section 1915(b) and (c)
waivers give States the flexibility to waive certain requirements to
utilize managed care and long-term care delivery systems for
individuals enrolled under the State plan, rather than enabling
enrollment in Medicaid coverage for individuals who would not otherwise
be eligible to enroll in Medicaid under the State plan.
Similarly, we do not interpret section 1902(xx)(9)(A)(i)(II) of the
Act to describe section 1115 demonstrations that provide only section
1115(a)(1) waiver authority or that include section 1115(a)(2)
expenditure authority only for specific services (versus eligibility)
for groups covered under the State plan. Individuals whose coverage is
affected by these kinds of section 1115 demonstrations are eligible to
enroll (or are enrolled) in Medicaid through the State plan, not
through demonstration expenditure authority. Individuals who are
eligible to enroll (or are enrolled) in Medicaid under the State plan
would be applicable individuals only if they are eligible for or
enrolled in the State plan under section 1902(a)(10)(A)(i)(VIII) of the
Act (the adult group).
[[Page 33354]]
Due to the complex and often unique nature of section 1115
demonstrations and to support our rulemaking efforts, we are engaged in
a systematic review and analysis of approved section 1115(a)(2)
expenditure authority in demonstrations that create an eligibility
pathway for individuals who are not eligible under the State plan to
determine which demonstrations cover individuals who could be subject
to the community engagement requirement. Based on our review thus far,
many section 1115(a)(2) expenditure authority demonstration populations
do not meet the definition of an applicable individual. For example, a
number of demonstrations provide coverage only of limited Medicaid
benefits, such as only family planning benefits to a group eligible
only under section 1115(a)(2) expenditure authority. This coverage does
not meet MEC requirements, and thus the community engagement
requirement would not apply to individuals applying for or enrolled in
coverage under these demonstrations.
In other instances, a demonstration could cover a population under
section 1115(a)(2) expenditure authority that is not eligible under the
State plan and generally meets the criteria in section
1902(xx)(9)(A)(i)(II) of the Act, but the demonstration also includes
an eligibility criterion under which anyone eligible for the
demonstration coverage would always be a specified excluded individual,
as discussed in section II.E. of this IFC. For example, some section
1115(a)(2) expenditure authority demonstrations create an eligibility
pathway for coverage that is equivalent to MEC for a population of
individuals between age 19 and 64, who are not pregnant, not entitled
to or enrolled for Medicare, and who are not otherwise eligible to
enroll in Medicaid under the State plan, but who meet an institutional
level of care to receive home and community-based services (HCBS)
through the expenditure authority. Any individual in this population
would meet the definition of an applicable individual at section
1902(xx)(9)(A)(i)(II) of the Act, except that they would be a specified
excluded individual because they would be medically frail or otherwise
have special medical needs (under the definition established in this
rule at Sec. 435.554(c)(5)). Therefore, individuals in this
demonstration population would not be subject to the community
engagement requirement.
Additionally, our review identified several demonstrations
providing Medicaid eligibility under section 1115(a)(2) expenditure
authority to populations generally meeting the definition of an
applicable individual in section 1902(xx)(9)(A)(i)(II) of the Act, but
in which not all individuals would always meet the criteria of a
specified excluded individual or a mandatory exception for certain
populations. These demonstration populations could be subject to the
community engagement requirement.
As part of our section 1115 demonstration review and approval
process, we will evaluate proposals which seek to provide Medicaid
eligibility under section 1115(a)(2) expenditure authority to a
population not eligible under the State plan to determine if the
community engagement requirement might apply to the demonstration
population.
C. Demonstrating Community Engagement
Section 1902(xx)(2) of the Act specifies the ways by which an
applicable individual may demonstrate community engagement. See section
II.B. of this IFC for a discussion of the definition of an ``applicable
individual.'' The Secretary is authorized under section 1902(xx)(2) of
the Act to establish criteria for determining whether an applicable
individual has demonstrated community engagement. New Sec. 435.552
implements section 1902(xx)(2) of the Act.
Under section 1902(xx)(2) of the Act, an applicable individual
demonstrates community engagement for a month if, for such month, the
individual:
<bullet> Works not less than 80 hours;
<bullet> Completes not less than 80 hours of community service;
<bullet> Participates in a work program for not less than 80 hours;
<bullet> Is enrolled in an educational program at least half-time;
<bullet> Engages in any combination of the aforementioned
activities for a total of not less than 80 hours;
<bullet> Has a monthly income that is not less than the applicable
minimum wage requirement under section 6 of the Fair Labor Standards
Act of 1938 (Federal minimum wage) multiplied by 80 hours; or
<bullet> Is a seasonal worker (as described in section 45R(d)(5)(B)
of the Code of 1986) and has an average monthly income over the
preceding 6 months that is not less than the applicable Federal minimum
wage multiplied by 80 hours.
In this section, we describe each of the options for demonstrating
community engagement in further detail, first explaining what
constitutes work, community service, a work program, and an educational
program. To simplify administration, we have endeavored to align our
definitions of the activities and income requirements with existing
statutory or regulatory requirements in Medicaid and in other benefit
programs such as SNAP and the TANF program. Then, we explain what
constitutes enrollment status in an educational program and how hours
across activities can be combined. We conclude this section by
explaining additional ways, as described in the statute, in which an
applicable individual can demonstrate community engagement, including
by computing monthly income or average monthly income for seasonal
workers. We note that the statute requires States to make all of the
options for demonstrating community engagement listed in section
1902(xx)(2) of the Act available. States are not permitted to make only
a subset of these options available, such as by allowing individuals to
demonstrate community engagement through participation in a work
program but not by completing community service. Applicable individuals
must be allowed to demonstrate community engagement by meeting any one
or more of the conditions described at new Sec. 435.552.
1. Work
Under section 1902(xx)(2)(A) of the Act, an applicable individual
demonstrates community engagement if the individual works not less than
80 hours in such month. At new Sec. 435.552(b), we define work to
mean: work in exchange for money, work in exchange for goods or
services (``in-kind'' work), and unpaid work other than community
service (as defined and discussed below). Applicable individuals can
work in one or more ways, separately or combined, to meet the community
engagement requirement. Work in exchange for money can include many
occupations. However, an individual does not need to be an employee of
a company or organization to meet this definition. Section 1902(xx)(2)
of the Act does not specify particular work arrangements; rather, it
requires that individuals engage in meaningful activity in the
community, including working. Many individuals work for themselves by
being self-employed due to starting a business, owning a business, or
as an independent contractor, and these activities meet the definition
of work at Sec. 435.552(b).
In-kind and unpaid work also represent ways in which an individual
can engage in meaningful activity in the community. With a broad
definition of work, we recognize the reality of the wide array of work
arrangements and seek to enable individuals participating
[[Page 33355]]
in such arrangements to demonstrate community engagement. There are
jobs in various sectors, ranging from domestic service to specialized
facility management, where individuals may choose to accept in-kind
compensation in the form of non-monetary benefits like housing, meals,
or utilities. For example, an individual who performs duties as a
property manager or building superintendent may receive compensation in
the form of free or reduced rent. Under our definition of work at Sec.
435.552(b), the hours the individual spends performing these duties
would count toward meeting the 80-hour requirement.
Unpaid and in-kind work are also a way for individuals to obtain
necessary job skills and gain work experience prior to attaining paid
employment. Our definition of work, which does not require that an
individual receive payment for duties or activities performed for the
benefit of another individual or entity, accommodates situations where
individuals engage in unpaid work, including, but not limited to,
unpaid work as part of a trial period when applying for a job, or
unpaid work, such as an internship, to gain experience for a job or
industry. In contrast to community service (discussed in section
II.C.2. of this IFC), unpaid work can benefit an individual or private
entity and does not need to benefit the community. For example, an
individual can intern at a private office to gain experience with
bookkeeping and records management, but this internship would not be
community service.
The unpaid work of a family caregiver as defined at Sec.
435.554(a), who does not qualify as a specified excluded individual,
can also qualify as unpaid work under the definition at Sec.
435.552(b). We recognize that not all people who meet the definition of
a family caregiver will qualify as a specified excluded individual
under section 1902(xx)(9)(A)(ii)(III) of the Act, which this IFC
implements at Sec. 435.554. Caregiving hours that are below the 80-
hour caregiving threshold in Sec. 435.554(c)(3)(i)(C) and are provided
by a family caregiver as defined at Sec. 435.554(a) to a dependent
child 13 years of age and under or a disabled individual, with whom he
or she does not reside and is not related to, would count toward
demonstrating community engagement. For additional details about
implementation of the family caregiver definition and the criteria to
qualify as a specified excluded individual, see sections II.E.3.d. and
h. of this IFC.
Including in-kind and unpaid work in the definition of work
generally aligns with the Food and Nutrition Service's (FNS) regulatory
definition of working for SNAP at 7 CFR 273.24, which implements the
work requirement in title VIII of the Personal Responsibility and Work
Opportunity Reconciliation Act of 1996 (Pub. L. 104-193) enacted on
August 22, 1996 (PRWORA). Similar to section 1902(xx)(2)(A) of the Act,
PRWORA also does not define work. FNS developed the definition to
include in-kind and unpaid work.\29\ We are adopting a similar
definition for purposes of Medicaid community engagement, in keeping
with our principle of aligning with other existing public benefit work
requirements to the extent possible.
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\29\ FNS's definition of unpaid work states that the unpaid work
must be verified under standards established by the State agency.
Our definition does not include this verification language because
Medicaid has its own specific verification requirements that must be
followed for community engagement. Section II.I.6.a. of this IFC
includes information about verification requirements for unpaid
work.
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States will need to verify work hours when determining compliance
under Sec. 435.552(a). Additional information about verification is
discussed in section II.I.6.a. of this IFC.
2. Community Service
Under section 1902(xx)(2)(B) of the Act, an applicable individual
demonstrates community engagement if the individual completes not less
than 80 hours of community service in such month. SNAP does not
specifically include the term ``community service'' in its work
requirements (SNAP general work requirements are defined in section
6(d)(1) of the Food and Nutrition Act of 2008 and SNAP time limit work
requirements, formerly known as the for Able-Bodied Adults without
Dependents work requirements, are defined in section 6(o)(2) of such
Act). However, TANF defines community service programs at 45 CFR
261.2(h), as structured programs and embedded activities in which
individuals perform work for the direct benefit of the community under
the auspices of public or nonprofit organizations.\30\ In keeping with
our principle of aligning Medicaid community engagement definitions
with other benefit programs, we similarly define community service at
new Sec. 435.552(b) to mean unpaid work with a structured program that
is completed for the direct benefit of the community under the auspices
of public or nonprofit organizations (including embedded activities of
the program that allow an individual to develop skills necessary to
complete community service). While community service under this
definition is a type of unpaid work, it counts separately as a
qualifying activity and thus is not counted as work.
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\30\ While the Administration for Children and Families (ACF)
definition of community service program uses the term ``work'', ACF
states in the preamble of the 2006 Reauthorization of the Temporary
Assistance for Needy Families Program Interim final rule with
request for comments, that community service programs are an unpaid
work activity when discussing documentation requirements for unpaid
work activities: ``[o]ther unpaid work activities, including work
experience, community service programs. . .''. See: Reauthorization
of the Temporary Assistance for Needy Families Program, Medicaid
Program; Premiums and Cost Sharing 71 FR 37468 (June 29, 2006).
<a href="https://www.federalregister.gov/d/06-5743">https://www.federalregister.gov/d/06-5743</a>.
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The TANF definition of community service is more extensive than our
definition as it lists examples of fields (such as health, social
service, and environmental protection) in which community service
activities can be completed. It also includes a supervision
requirement. We do not include a list of specific fields in our
definition because we do not wish to inadvertently limit States or
individuals from seeking community service in emerging fields. For
example, technology is a field in which community service could be
completed, but it is not included in TANF's definition. In addition,
although our definition does not expressly require that qualifying
community service activities be supervised, our requirement that
community service be completed with a structured program under the
auspices of public or nonprofit organizations ensures that the
community service activities are monitored and operated with sufficient
oversight. This means that an individual cannot complete a community
service activity independently of an organization that fits the
description in the definition. In addition, in order to meet our
requirement that community service must be completed with a structured
program, the public or nonprofit organization must provide oversight of
the activity and have a process in place to track the community service
completed by individuals, including the type of community service
activity, dates and hours the community service is completed, and a
point of contact who can confirm the hours completed.
Consistent with the TANF definition at 45 CFR 261.2(h), while
community service should serve a useful community purpose, we also
acknowledge that when completing community service, there can be other
activities embedded within the community service work that an
individual performs under the auspices
[[Page 33356]]
of a public or nonprofit organization. These embedded activities allow
an individual to develop necessary skills so that they can complete the
community service. Because these activities help an individual complete
the community service, we have included them in the definition of
community service. For example, such embedded activities could include
attending training as part of the community service program, such as
attending a computer training class to learn a certain computer skill
to provide tech tutoring for seniors. Such training would count towards
an individual's community service hours because it is an integral part
of the community service that is being provided to the community and it
allows the individual to develop the skills needed to complete the
community service.
We recognize that community service needs and opportunities vary by
State and locality due to different local challenges. States are
responsible for determining which activities qualify as community
service under the definition at Sec. 435.552(b). In doing so, States
will need to assess whether the activity is with a structured program
and if the activity directly benefits the community by addressing a
community/civic or public need. The activity must also not serve a
partisan purpose. For example, community service activities could
include volunteering at a food bank, mentoring or tutoring youth,
supporting seniors through meal delivery, or cleaning public parks or
grounds. Community service activities would not include activities that
directly benefit only specific individuals (as opposed to being part of
an effort that directly benefits the broader community) or activities
that are purely recreational in nature. Examples of activities that do
not fall within the definition would include: helping to complete a
task for a specific individual that is not performed as part of a wider
effort benefiting the broader community (for example, helping a friend
move or helping an individual with yard work, versus providing
assistance with moving or yard work for an organization that provides
that assistance broadly to various members in the community), attending
a child's parent teacher conference or school events, or joining a
community recreational club (for example, dance or sports club).
Campaigning or volunteering for a partisan political candidate or
committee would also be excluded activities.
Under the definition at Sec. 435.552(b), community service must be
completed with a structured program under the auspices of public or
nonprofit organizations. However, a State must not restrict community
service to activities with an organization described in section
501(c)(3) of the Code as tax exempt. Such a narrow interpretation of
organizations in which community service can be completed ignores the
reality that there are various community organizations that operate
structured programs which provide services to benefit the community,
but which may not be a 501(c)(3) organization, such as local government
agencies, religious nonprofits (such as non-denominational ministries),
and smaller social service providers.
We also note that the statute at section 1902(xx)(2)(B) of the Act
does not require individuals to volunteer for community service.
Whether community service is completed voluntarily or because of a
mandate, such as court-ordered community service, the community service
still benefits the community. Thus, we believe it is appropriate to use
community service activities completed to fulfill a court order or
other mandate as countable hours towards meeting the Medicaid community
engagement requirement.
States will need to establish processes to verify an individual's
community service activities and hours. Additional information about
verification is discussed in section II.I.6.b. of this IFC.
3. Work Program
Under section 1902(xx)(2)(C) of the Act, an applicable individual
demonstrates community engagement if the individual participates in a
work program for not less than 80 hours in such month. Section
1902(xx)(9)(D) of the Act defines work program to have the meaning
given such term in section 6(o)(1) of the Food and Nutrition Act of
2008. Section 6(o)(1) in turn defines work program as: (1) a program
under title I of the Workforce Innovation and Opportunity Act (WIOA);
(2) a program under section 236 of the Trade Act of 1974; (3) a program
of employment and training operated or supervised by a State or
political subdivision of a State that meets standards approved by the
Governor of the State, including an employment and training program
under subsection (d)(4) of section 6 of the Food and Nutrition Act of
2008, other than a supervised job search program or job search training
program; (4) a program of employment and training for veterans operated
by the U.S. Department of Labor or the U.S. Department of Veterans
Affairs (VA), and approved by the Secretary of the U.S. Department of
Agriculture (USDA); and (5) a workforce partnership under subsection
(d)(4)(N) of section 6 of the Food and Nutrition Act of 2008. We
incorporate this definition into our regulation at Sec. 435.552(b)
with one modification as described further in this section. We
separately note that programs outside of these aforementioned work
programs, such as those operated by health providers that do not
qualify under the part of the definition related to programs operated
or supervised by a State, are not included in this definition. Also,
while some States partner with managed care plans to provide a range of
supported employment services to individuals receiving home and
community-based services under section 1915(c) waivers or as part of
section 1915(i) State plan services, these Medicaid-covered employment
services are different from work programs as defined at Sec.
435.552(b) and do not independently satisfy the work program community
engagement requirement. However, as discussed in section II.M. of this
IFC, managed care plans can provide valuable services to help their
enrollees meet community engagement obligations, such as referring
managed care enrollees to qualified work programs.
We note that the definition at section 6(o)(1) of the Food and
Nutrition Act of 2008 includes a program of employment and training
operated or supervised by a State or political subdivision of a State
that meets standards approved by the Governor of the State, including a
program under subsection (d)(4) of the Food and Nutrition Act of 2008
(SNAP Employment and Training (E&T) program), other than a supervised
job search program or job search training program. However, limited
supervised job search and job search training activities are allowable
SNAP E&T program components for the purposes of fulfilling the time
limit requirements. To align with SNAP regulations at 7 CFR
273.24(a)(3)(iii), we will permit a program of employment and training
that meets the definition of work program under Sec. 435.552(b) to
include supervised job search or job search training as a subsidiary
activity, as long as the job search activity is less than half of the
required hours. We recognize that there are employment and training
programs that may require or include some job search activity, such as
resume writing or mock interviews. However, we want to make sure that
the supervised job search or job search activity is not the primary
component of the employment and training program because we believe
that the focus
[[Page 33357]]
should be on obtaining skills to enable long-term self-sufficiency.\31\
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\31\ Wroblewska K, Steigelman C, J, et al. (2022). ``The Use of
Supervised Job Search, Job Search Training, and Integrated Job
Search in SNAP E&T: Three Cases Studies.'' U.S. Department of
Agriculture, Food and Nutrition Service. Prepared by Insight Policy
Research, Inc. <a href="https://fns-prod.azureedge.us/sites/default/files/resource-files/SNAPETJobSearch.pdf">https://fns-prod.azureedge.us/sites/default/files/resource-files/SNAPETJobSearch.pdf</a>.
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Also, we have received questions regarding whether job search
activities that are conducted to receive unemployment insurance will
count toward meeting the community engagement requirement. If the
unemployment insurance job search activities are conducted in a manner
that is consistent with the requirements of the work program, then they
will count towards meeting the community engagement requirement. We
encourage States to work with their State workforce agencies to
establish data sharing and align job search activities and
requirements.
We recognize the work programs under section 1902(xx)(9)(D) of the
Act include SNAP E&T programs, as provided under subsection (d)(4) of
section 6 of the Food and Nutrition Act of 2008 and implementing
regulations at 7 CFR 273.24(3)(iii) and 273.7(d) and (e). Since the
work program requirements that we are adopting here align with those in
SNAP under section 6 of the Food and Nutrition Act of 2008, the same
operational requirements for States' SNAP E&T programs would apply for
purposes of the Medicaid community engagement requirement, such as SNAP
State agencies being responsible for referring eligible SNAP
participants to SNAP E&T services and submitting an annual SNAP E&T
plan to FNS.
We are not requiring States to establish new work programs but are
also not prohibiting States from doing so. We also do not have the
authority to change oversight or operational requirements for existing
work programs meeting the definition at 1902(xx)(9)(D). States must,
however, provide information about work programs that meet these
requirements as part of the outreach sent to certain individuals about
how to comply with the community engagement requirement that is
required under section 1902(xx)(8)(A)(i) of the Act and as discussed in
section II.L. of this IFC.
States will need to verify work program activities and hours.
Information about verification is discussed in section II.I.6.c. of
this IFC.
4. Educational Program
Under section 1902(xx)(2)(D) of the Act, an applicable individual
demonstrates community engagement if the individual is enrolled in an
educational program at least half-time. We discuss what it means to be
enrolled ``at least half-time'' in section II.C.5. of this IFC. Section
1902(xx)(9)(B) of the Act defines the term educational program to
include: (1) an institution of higher education as defined in section
101 of the Higher Education Act of 1965; and (2) a program of career
and technical education as defined in section 3 of the Carl D. Perkins
Career and Technical Education Act of 2006. We incorporate these
definitions into our regulation at Sec. 435.552(b).
We also note that the definition of ``educational program'' at
section 1902(xx)(9)(B) of the Act is not exclusive, and we believe
additional educational activities such as high school and high school
equivalency programs should count toward demonstrating community
engagement. Although section 3(5) of the Carl D. Perkins Career and
Technical Education Act of 2006 includes public secondary school
programs, that law's definition of career and technical education (the
definition to which section 1902(xx)(9)(B)(ii) cross-references)
includes only secondary education programs that provide technical
skills proficiency. While there are some specialized secondary schools
(high schools) that meet this definition, many high schools do not
specialize in career and technical education. We recognize that even
though only persons aged 19 or older can be applicable individuals,
some applicable individuals may be enrolled in a high school or high
school program that does not provide technical skills proficiency. For
example, an individual's graduation from high school might be delayed
for various reasons, including starting school late, repeating a grade,
or returning to school after having to take a break. Additionally, we
recognize that applicable individuals will likely include individuals
who are age 19 or older and are studying to obtain a high school
equivalency certificate through a General Educational Development (GED)
program or other high school equivalency program. Completing high
school or earning a high school equivalency certificate is commonly a
prerequisite for employment and higher education and supports Medicaid
beneficiaries in achieving self-sufficiency. Moreover, in TANF,
satisfactory attendance at secondary school or in a course of study
leading to a certificate of general equivalence is included in the
definition of work activities at 45 CFR 261.2(l).
Thus, in defining an educational program, we adopt at Sec.
435.552(b) the definitions from section 1902(xx)(9)(B) of the Act: an
institution of higher education as defined in section 101 of the Higher
Education Act, or a program of career and technical education as
defined in section 3(5) of the Carl D. Perkins Career and Technical
Education Act of 2006. We are also including two additional types of
educational activity. First, we include in our definition of
educational program a high school as defined in title VIII of the
Elementary and Secondary Education Act (20 U.S.C. 7801et seq.). The
definition of high school at 20 U.S.C. 7801(28) is a secondary school
\32\ that grants a diploma, as defined by the State and includes, at
least, grade 12. Second, we include in our definition of educational
program a State-approved program of study leading to a certificate of
high school equivalence for an applicable individual who has not
received a high school diploma. We have included a State-approved
program in this definition (such as a GED program offered at a
community college) because we understand that there are various ways to
prepare for the high school equivalency test. However, independent
study and self-paced online preparation outside of a State-approved
program do not provide sufficient structure to qualify as an activity
for the purposes of community engagement. In addition, if the program
is not in-person, the State-approved program must be able to monitor
and document the program hours. These oversight methods will help with
counting hours for this activity if the individual is enrolled less
than half-time, and the program does not use credit hours. Information
about counting hours when an individual is enrolled less than half-time
is discussed further in section II.C.6. of this IFC.
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\32\ A secondary school is further defined at 20 U.S.C. 7801(45)
as a nonprofit institutional day or residential school, including a
public secondary charter school, that provides secondary education,
as determined under State law, except that the term does not include
any education beyond grade 12.
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5. Enrollment in an Educational Program at Least Half-Time
Under section 1902(xx)(2)(D) of the Act, an applicable individual
demonstrates community engagement if the individual is enrolled in an
educational program at least half-time. New Sec. 435.552(b) defines
educational program. At new Sec. 435.552(c), we specify how ``at least
half-time'' enrollment is determined.
[[Page 33358]]
We considered whether the State or the relevant educational
institution should determine a student's enrollment status (that is,
whether the student is enrolled at least half-time). The U.S.
Department of Education's (ED) definition of half-time status defers to
the institution to make its own determination as to whether an enrolled
student is carrying a half-time academic workload (see definition of
``half-time student'' in 34 CFR 668.2(b)). Additionally, in SNAP
regulations related to student eligibility, the institution of higher
education determines enrollment status (see 7 CFR 273.5(b)(10)
specifying the enrollment status of a single parent ``as determined by
the institution''). For consistency with existing standards in SNAP and
those of ED, we provide at Sec. 435.552(c) that the State shall use
the enrollment status determined by the school or institution (that is,
full-time, half-time, less than half-time). This standard applies to
all educational programs under new Sec. 435.552(b). We believe that
the school or institution is best able to determine enrollment status
because whether an individual is enrolled full-time, half-time, or less
than half-time is generally dependent on the type of school and the
curriculum. In addition, a student's enrollment status determined by
the institution is reported to the National Student Clearinghouse,
which is a data source that States can use to verify student enrollment
(see section II.I.6.d. of this IFC for additional information).
For consistency with SNAP regulations related to students, we are
adopting enrollment status requirements similar to those at 7 CFR
273.5(c). These requirements address when student enrollment starts and
ends and provide standards to follow during school recess. These
standards are necessary because there are periods when school may not
be in session due to scheduled breaks (for example, winter and summer
recess), and due to the short duration of the scheduled breaks, an
individual might not be able to complete another community engagement
activity. For example, if a student is enrolled in an institution of
higher education full-time and the institution has a 1-month winter
break, it is not reasonable to condition Medicaid eligibility on the
individual applying, interviewing, starting a job, and working for not
less than 80 hours in that 1-month period before going back to school.
Thus, at new Sec. 435.552(c)(1), the enrollment status of an
applicable individual begins on the first day of the school term.
At new Sec. 435.552(c)(2), the enrollment will continue through
normal periods of attendance, vacation and recess. The determination of
enrollment status during vacation and recess shall be based on the
student's status just prior to the school break. Per Sec.
435.552(c)(3), the enrollment status ends at the end of the month that
the student is expelled, withdraws, completes the school term and is
not registered for the next school term (excluding optional terms such
as winter or summer sessions), or graduates (unless the student is
enrolled in another educational program). For example, a full-time high
school student graduates from high school on May 15 and has enrolled
full-time in a community college, and the community college term starts
on August 21. The individual applies for Medicaid on July 1 in a State
that has a 1-month review period (as described in section II.H.2. of
this IFC) for community engagement at application. The State determines
that the individual is otherwise eligible in the adult group and is an
applicable individual subject to the community engagement requirement.
Because the individual is enrolled in community college with a start
date of August 21, the individual has applied for Medicaid during a
school recess period (school break). The enrollment status will be
based on the individual's enrollment status prior to the school break.
Prior to the school break, the individual was enrolled full-time as a
high school student, so the individual has met the community engagement
requirement.
For information about verifying enrollment in an educational
program, please see section II.I.6.d. of this IFC.
6. Enrollment in an Educational Program Less Than Half-Time
Under section 1902(xx)(2)(D) of the Act, an applicable individual
demonstrates community engagement if the individual is enrolled in an
educational program at least half-time. As noted in section II.C.4. of
this IFC, new Sec. 435.552(b) explains the meaning of educational
program, and Sec. 435.552(c) describes that full-time, half-time, or
less than half-time enrollment is to be determined by the institution
or school. However, consistent with section 1902(xx)(2)(E) of the Act,
education hours accrued by an individual enrolled in an educational
program less than half-time may be combined with hours performed for
other community engagement activities to count towards demonstrating
community engagement. Next, we discuss how educational program hours
should be counted when an individual is enrolled less than half-time.
As stated in new Sec. 435.552(d), when a school determines that an
applicable individual is enrolled less than half-time in an educational
program that uses credit hours, then 1 credit hour counts as 3
education hours per week during the individual's enrollment. For
example, 1 credit hour equals 1 hour of instruction, and we expect
students to spend 2 hours on out-of-class work for a total of 3 hours
of time spent in the educational program for the week. To calculate the
time spent in the educational program for a 1 credit hour course during
a 1-month period, this would be 3 hours a week multiplied by 4.33 weeks
(in a month) \33\ for a total of 12.99 hours in a month. This new
standard is based on the Carnegie Unit, which defines 1 unit of credit
as equal to 3 hours of student work per week (1 hour of lecture plus 2
hours of homework).\34\ The Carnegie Unit is used in the credit hour
definition at 34 CFR 600.2. As noted in ED guidance provided to
institutions and accrediting agencies regarding the credit hour, ``A
credit hour for Federal purposes is an institutionally established
equivalency that reasonably approximates some minimum amount of student
work reflective of the amount of work expected in a Carnegie unit: key
phrases being ``institutionally established,'' ``equivalency,''
``reasonably approximates,'' and ``minimum amount.'' \35\ Under the
definitions at 34 CFR 600.2, a credit hour must reasonably approximate
not less than 1 hour of classroom or direct faculty instruction and a
minimum of 2 hours of out-of-class student work each week, or at least
an equivalent amount of work for other academic activities as
established by the institution.\36\
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\33\ On average, there are 4.33 weeks in a month. This is
calculated by dividing the total number of weeks in a year (52), by
the total number of months (12).
\34\ Adler KM (2020). ``Determining Carnegie Units: Student
Engagement in Online Courses without a Residential Equivalent.''
Online Journal of Distance Learning Administration, 23(1). <a href="https://ojdla.com/articles/determining-carnegie-units-student-engagement-in-online-courses-without-a-residential-equivalent">https://ojdla.com/articles/determining-carnegie-units-student-engagement-in-online-courses-without-a-residential-equivalent</a>.
\35\ United States Department of Education, Office of
Postsecondary Education, ``Guidance to Institutions and Accrediting
Agencies Regarding a Credit Hour as Defined in the Final Regulations
Published on October 29, 2010,'' (March 18, 2011). <a href="https://fsapartners.ed.gov/sites/default/files/attachments/dpcletters/GEN1106.pdf">https://fsapartners.ed.gov/sites/default/files/attachments/dpcletters/GEN1106.pdf</a>.
\36\ The regulation further provides that this is for
``approximately fifteen weeks for one semester or trimester hour of
credit, or 10 to 12 weeks for one quarter hour of credit, or the
equivalent amount of work over a different period of time.''
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We decided upon this credit hour standard because it allows for
consistency across schools and programs and provides a straightforward
way to account for instructional time and student work. This standard
is also
[[Page 33359]]
consistent with the ED standards described here. For example, ED
provides standards that institutions can use to determine full-time and
half-time student status for purposes of participation in financial
assistance programs. The following ED standards are illustrative. The
full-time student standard for a program that measures progress in
credit hours is 12 semester hours for an academic term (see full-time
student definition at 34 CFR 668.2(b)). A half-time student should have
a workload, as determined by the institution, that amounts to half of
the workload of the applicable minimum requirement of a full-time
student (see half-time student definition at 34 CFR 668.2(b)). This
means that, as determined by the institution, 6 semester hours for an
academic term could be sufficient for half-time enrollment, and would
suffice to demonstrate community engagement under Sec. 435.552(a)(4).
However, if an individual's institution determines that 6 credit/
semester hours is insufficient for half-time enrollment, a State would
use our standard to convert that 6 credit/semester hours to monthly
hours of educational activity. Under our standard, 6 credit hours
converts to 77.94 hours of monthly activity for community engagement (6
credit hours x 3 x 4.33 = 77.94), which is close to, but slightly less
than, the 80 hours of activity needed to demonstrate community
engagement for a month. This would be an appropriate outcome for a
student with a less than half-time course load. We therefore believe
that our standard is reasonable and is a fair measurement of time spent
on instruction and independent study hours. This standard applies to
all educational programs that use credit hours included in the
definition at Sec. 435.552(b). We considered adopting a different
standard for high school and high school equivalency programs. However,
we believe doing so would introduce additional administrative
complexity without meaningful benefits for States or individuals. High
school and high school equivalency students are developing academic
skills for independent learning, and counting the hours they need to do
so towards their community engagement hours is consistent with the
purpose of the community engagement requirement.
To summarize the standard introduced in this IFC, in cases where
the educational institution considers 6 credit/semester hours or fewer
to be less than half-time enrollment, multiplying the number of credit
hours by 3 to provide the weekly number of hours of educational
activity, and then by 4.33 to determine an average monthly number
produces the following:
[GRAPHIC] [TIFF OMITTED] TR03JN26.019
For educational programs that do not use credit hours, if an
individual is enrolled less than half-time, then the hours spent
attending class and participating in educational activities will count
towards meeting the requirement. For example, 1 hour of instruction
will count as 1 hour of activity, 2 hours of hands-on training will
count as 2 hours of activity, 3 hours of lab work will count as 3 hours
of activity, 4 hours of clinical activity will count as 4 hours of
activity, and so forth. We believe that this standard will primarily
apply to educational programs that train individuals for industry
certifications and require individuals to learn and practice technical
skills, such as welding, phlebotomy, cosmetology, and precision
machining. We decided upon this standard because these types of
educational programs generally require a specific number of training
hours for certification, so the time spent training is an appropriate
way to count the educational program hours. Also, SNAP and TANF use
similar standards under their respective work requirements.\37\ SNAP's
time limit work requirements specify at 7 CFR 273.24(a)(1) that
fulfilling the work requirement can mean participating in and complying
with the requirements of a work program for 20 hours per week. A work
program at 7 CFR 273.24(a)(3) includes an employment and training
program under 7 CFR 273.7(e), which includes allowable educational
program activities such as courses or programs of study. According to 7
CFR 273.7(e)(4)(i), the time spent in an employment and training
program component is determined by the State agency. States can specify
participation hours in their FNS SNAP E&T State Plan, for example
specifying for an educational component that participants engage in a
5-day training, for 4 hours per day.\38\
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\37\ Under SNAP or TANF, individuals receiving benefits may be
enrolled in educational programs that use credit hours but still
have their time counted based on hours in class or participation. As
explained above, we developed the credit hour standard for
educational programs that use credit hours to account more fully for
the educational process typical in such programs.
\38\ This example is from California's FNS SNAP E&T State Plan
submission for FY26.
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TANF's definitions at 45 CFR 261.2(i) through (l) include hours
spent participating in vocational educational training, job skills
training directly related to employment, education directly related to
employment, and satisfactory attendance at a secondary school or course
of study leading to a certificate of general equivalence. For TANF,
States submit a Work Verification Plan detailing how they verify and
document work participation hours and activities. TANF's Work
Verification Plan Guide \39\ also includes examples of work activity
descriptions that would be approved for each countable work activity.
For example, for vocational educational training, the
[[Page 33360]]
Work Verification Plan Guide specifies that ``Actual hours spent in
class as well as time spent performing clinical requirements, lab work
or other ancillary activities required for approved vocational
educational training programs are considered to be a part of the
primary activity for which it is required and is countable.'' \40\
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\39\ Office of Management and Budget (OMB) #0970-0338, ``Work
Verification Plan Guide,'' expires 10/31/2026. Available at: <a href="https://acf.gov/sites/default/files/documents/ofa/Work-verification-plan-guidance-valid-thru-2026-10.pdf">https://acf.gov/sites/default/files/documents/ofa/Work-verification-plan-guidance-valid-thru-2026-10.pdf</a>.
\40\ Ibid.
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To be clear, when individuals are enrolled less than half-time in
an educational program that uses credit hours, States should apply the
credit hour standard. However, if the educational program does not use
credit hours, then the hours spent attending class and participating in
educational activities count towards meeting community engagement. We
considered having States convert attendance and participation into
credit hours so that there would only be one way to count hours for
less than half-time enrollment. However, this would be more burdensome
for States, with little meaningful difference for individuals. We
welcome comments on any other reasonable approaches.
7. Combination of Activities
Under section 1902(xx)(2)(E) of the Act, an applicable individual
demonstrates community engagement if the individual engages in any
combination of work, community service, participation in a work
program, and enrollment in an educational program less than half-time.
The combined hours for the activities must be a total of not less than
80 hours for such month.
As specified at new Sec. 435.552(e)(1), a State would only need to
combine an individual's educational program hours with hours spent
performing other activities if the individual is enrolled in the
educational program less than half-time. If the applicable individual
were enrolled in an educational program at least half-time, then that
individual would already have demonstrated community engagement as
specified at Sec. 435.552(a)(4). At new Sec. 435.552(e)(2), we
specify that the hours for work, community service, and participating
in a work program must be determined separately and based on the time
spent performing those activities in such month. As specified at new
Sec. 435.552(e)(3), States must calculate the hours for less than
half-time enrollment in an educational program as described in Sec.
435.552(d).
New Sec. 435.552(e)(4) specifies that once the State determines an
individual's hours for work, completing community service,
participating in a work program, and less than half-time enrollment in
an educational program in such month, the State must add these hours
together to obtain the total hours for all activities. The combined
time for all activities must be a total of not less than 80 hours for
an applicable individual to meet the community engagement requirement
as described at Sec. 435.552(e). However, the State might not need to
determine an applicable individual's total number of hours for all
types of community engagement activity if the applicable individual
demonstrates they met the 80-hour requirement through any combination
of activities. For example, consider an applicable individual who is
enrolled in community college for 4 credit hours, which converts to
51.96 hours of activity, works for pay for 30 hours, and participates
in community service. Because the individual's education and work
activity totals 81.96 hours for the month, in the interest of
efficiency, we encourage a State to conclude that the individual has
met their community engagement requirement for the month and not
consider the individual's community service activity, as it is not
necessary to meet the community engagement requirement.
8. Monthly Income and Average Monthly Income for Seasonal Workers
Under section 1902(xx)(2)(F) of the Act, an applicable individual
demonstrates community engagement for a month if ``the individual has a
monthly income that is not less than the applicable minimum wage
requirement under section 6 of the Fair Labor Standards Act of 1938
(FLSA), multiplied by 80 hours.'' We implement this provision at new
Sec. 435.552(f)(1). In 2026, the Federal minimum wage is $7.25 per
hour,\41\ which multiplied by 80 equals $580. We interpret the
``applicable'' minimum wage to mean the Federal minimum wage under
section 6 of the FLSA (29 U.S.C. 206(a)(1)(C)) that is in effect at the
time a State applies the monthly income threshold to assess compliance
with the community engagement requirement in case of future amendments
to section 6 of the FLSA. As discussed further below, we do not use
alternative minimum wage amounts in the FLSA for the purpose of
identifying the monthly income threshold for demonstrating compliance
with the community engagement requirement. Under section 3(m) of the
FLSA,\42\ employers may pay certain ``tipped employee[s]'' a lower
wage, provided the wage plus earned tips is at least equal to the
minimum wage under section 6 of such Act. This provision is outside of
section 6 of the FLSA, and thus States may not use a tipped wage
(regardless of the industry or type of work) to identify the income
threshold for demonstrating community engagement based on monthly
income.
---------------------------------------------------------------------------
\41\ 29 U.S.C. 206(a)(1)(C).
\42\ 29 U.S.C. 203(m).
---------------------------------------------------------------------------
Another lower wage that is in section 6(g) of the FLSA is a minimum
wage of $4.25 per hour for individuals under age 20 who are in their
first 90 consecutive calendar days of employment, which could be
relevant to a 19-year-old applicable individual. However, to the extent
that employers avail themselves of this lower introductory wage, we
believe it would be extremely difficult in practice for a State
Medicaid agency to identify to whom this lower wage requirement would
apply and to adjust the monthly income threshold only for those
individuals. Moreover, this lower introductory wage is temporary--for
only the first 90 calendar days of employment--making it even less
likely that a State will encounter an affected individual at the point
of evaluating compliance with community engagement. Therefore, for
simplicity of administration of this provision, we interpret the
Federal minimum wage to be the single, general minimum wage at section
6(a)(1)(C) of the FLSA for all applicable individuals. In addition, as
discussed in section II.I.6. of this IFC, States must first attempt to
verify community engagement on an ex parte basis, including hours
worked, regardless of the existence of a lower introductory wage in a
State.
We further recognize that individual States may have a generally
applicable State minimum wage that is higher than the Federal minimum
wage (or in limited circumstances lower or no minimum wage). Because
section 1902(xx)(2)(F) of the Act references only section 6 of the FLSA
(that is, the Federal minimum wage) and does not provide for the use of
alternative State minimum wages, States may not use such State-specific
minimum wages in place of the applicable Federal minimum wage to
calculate the monthly income threshold for individuals to demonstrate
compliance with community engagement under Sec. 435.552(f)(1).
Under section 1902(xx)(2)(G) of the Act, an applicable individual
demonstrates compliance with community engagement for a month if the
individual is a seasonal worker as described in section 45R(d)(5)(B) of
the Code and has an average monthly income over the preceding 6 months
that is not less than the applicable
[[Page 33361]]
Federal minimum wage requirement under section 6 of the FLSA multiplied
by 80 hours. Section 45R(d)(5)(B) of the Code defines a seasonal worker
as a worker who performs labor or services on a seasonal basis as
defined by the Secretary of Labor, including workers whose ``employment
pertains to or is of the kind exclusively performed at certain seasons
or periods of the year and which, from its nature, may not be
continuous or carried on throughout the year'' (29 CFR 500.20(s)(1))
and retail workers employed exclusively during holiday seasons. We
implement these provisions at new Sec. 435.552(g)(1) and (2). As with
monthly income under Sec. 435.552(f), States must use the Federal
minimum wage in making this calculation.
The statute at section 1902(xx)(2)(F) and (G) of the Act refers to
an individual's ``monthly income'' and ``average monthly income,'' but
does not further define how States should calculate monthly income for
these purposes. For the calculation of an applicable individual's
monthly income under new Sec. 435.552(f) and average monthly income
under new Sec. 435.552(g), we define ``monthly income'' to be the same
as the individual's household income used for financial eligibility for
Medicaid. Most applicable individuals are eligible for or enrolled in
the adult group under Sec. 435.119, which is a group that has an
income standard based on MAGI using the MAGI-based methodologies at
Sec. 435.603. Similarly, most section 1115 demonstrations that have
applicable individuals (as discussed in section II.B. of this IFC) have
an income standard based on MAGI and use MAGI-based methodologies for
the relevant demonstration population.
We considered using different interpretations of ``monthly income''
for the calculation. For example, we considered counting only earned
income because it could align with the other work-related ways to
demonstrate compliance. However, using only earned income for this
purpose would be inconsistent with how ``income'' is defined elsewhere
in the Medicaid statute. Specifically, section 1902(e)(14)(A) of the
Act dictates that ``[n]otwithstanding. . .any other provision of this
title, except as provided in subparagraph (D), for purposes of
determining income eligibility for medical assistance under the State
plan or under any waiver of such plan and for any other purpose
applicable under the plan or waiver for which a determination of income
is required . . . , a State shall use the modified adjusted gross
income of an individual and, in the case of an individual in a family
greater than one, the household income of such family.'' (Emphasis
added.) Section 1902(e)(14)(D) of the Act, which lists the exceptions
to the mandatory use of MAGI-based household income, does not include
an exception relating to the determination of income for applicable
individuals for the purposes of assessing community engagement.
Additionally, neither section 1902(xx) of the Act nor section 71119 of
the WFTC legislation specifies that section 1902(xx) supersedes section
1902(e)(14) of the Act, nor does section 1902(xx) of the Act contain
its own definition of ``monthly income'' or mandate that a particular
methodology be used to calculate ``monthly income.'' Nothing in section
1902(xx) of the Act or section 71119 of the WFTC legislation suggests
that section 1902(e)(14) of the Act should not apply when determining
income for purposes of section 1902(xx).
Under new Sec. 435.552(f)(2) and (g)(3), we establish that States
must use the MAGI-based methodologies at Sec. 435.603 when making
income determinations for demonstrating community engagement. A
contrary reading of the statute would require that States, after
determining an individual income-eligible for the adult group, apply a
separate and distinct income determination for such individuals in
evaluating their demonstration of community engagement. There is no
indication in section 1902(xx)(2) of the Act or elsewhere that the
MAGI-based income provisions of section 1902(e)(14)(A) of the Act
should not apply to the calculations under section 1902(xx)(2)(F) and
(G) of the Act. Therefore, under Sec. 435.552, we are interpreting
section 1902(xx)(2)(F) and (G) of the Act in a manner that is
consistent with section 1902(e)(14) of the Act. We specify that States
must use the individual's MAGI-based income as defined at Sec. 435.603
in assessing an individual's monthly income for the purpose of
determining if an individual demonstrates community engagement under
Sec. 435.552(f) or (g).
The use of MAGI-based methodologies is required under Sec.
435.552(f) and (g) for all applicable individuals, including those
whose eligibility or enrollment is under a section 1115 demonstration
rather than the State plan. Even if a State does not have an income
test or uses a non-MAGI methodology for determining financial
eligibility for a population of applicable individuals eligible only
under section 1115 demonstration authority, we nevertheless require
States to use MAGI-based methodologies for the purpose of determining
income under Sec. 435.552(f) and (g). We believe that establishing a
uniform methodology is necessary for the consistent and fair treatment
of all applicable individuals across States, regardless of whether they
are eligible for or enrolled in the State plan or a section 1115
demonstration. We recognize that requiring the use of MAGI-based
methodologies for section 1115 demonstration populations that do not
use such methodologies for underlying financial eligibility could
present an administrative burden for affected States. However, sections
1902(xx)(2)(F) and (G) of the Act require income counting, and we
believe any additional State burden from using MAGI-based methodologies
in these situations is outweighed by the benefits of requiring
consistent methodologies within and across States, rather than creating
different methodologies to count income for the community engagement
requirement for each of the implicated section 1115 demonstrations.
Thus, States must use the individual's MAGI-based income, as
defined under Sec. 435.603(e), for their MAGI-based household as
defined under Sec. 435.603(d) and (f), for purposes of Sec.
435.552(f) and (g). The countable income under Sec. 435.603(e)
generally includes earned income as well as countable unearned income,
meaning that States must take into account all of this income for
purposes of Sec. 435.552(f) and (g). Under Sec. 435.603(d) and (f),
household income is the total income of everyone in the individual's
household. Although sections 1902(xx)(2)(F) and (G) of the Act refer to
the income of ``the individual,'' all Medicaid applicants and
beneficiaries have their eligibility determined on an individual basis,
and, under Sec. 435.603(d), States must determine individuals'
Medicaid financial eligibility using household income, which includes
the income of every individual included in the individual's household.
Finally, under Sec. 435.603(h), Medicaid financial eligibility is
generally based on the current month at the point when eligibility for
Medicaid is being determined, with certain options available to States
(including the use of a reasonably predictable changes methodology
under Sec. 435.603(h)(3), as discussed further in this IFC). For the
purposes of demonstrating community engagement under Sec. 435.552(f)
and (g), we decided to apply the requirement to use ``current monthly
household income and family size'' in Sec. 435.603(h) to the month
that the State is evaluating for the purpose of community engagement,
rather than to the month of application or renewal. That is, States
generally
[[Page 33362]]
must evaluate the monthly income for the month or months of the review
period, as defined in section II.H. of this IFC, to determine whether
an applicable individual is demonstrating community engagement in that
month. We believe this is the most appropriate and logical application
of the income counting methodology for States to use for the community
engagement requirement. We implement this requirement at Sec.
435.552(f)(2) and (g)(2).
As a general example, if the State conducts financial eligibility
for an applicant and determines that the individual appears to be an
applicable individual eligible for the State plan adult group and has a
monthly household MAGI-based income of $650 (which is verified through
information available to the State) in the required number of months of
the review period, as defined in section II.H. of this IFC, then the
State would use the verified $650 income, which is greater than $580
(applicable Federal minimum wage multiplied by 80), to determine that
the individual demonstrated community engagement under Sec.
435.552(f).
In addition, our intent is for States to use data sources and
programming logic readily available to them rather than create new
methodologies and systems specific to community engagement. We believe
it will be more efficient for States to implement calculations based on
existing methodologies, rather than applying one income methodology for
determining financial eligibility and a different methodology to
determine monthly or average monthly income as a condition of
eligibility under community engagement.
We have received questions regarding States' options when averaging
seasonal workers' monthly income under section 1902(xx)(2)(G) of the
Act. States have an existing option to use a ``reasonably predictable
changes'' methodology when using MAGI-based methodologies to determine
household income, which, as discussed earlier in this section of this
IFC, is the income used for demonstrating compliance under Sec.
435.552(f) and (g). Specifically, Sec. 435.603(h)(3) permits States to
adopt (through a State plan election) a reasonable method to account
for reasonably predictable increases or decreases (or both) in future
income to determine monthly income. This option can help make income
determinations for applicants and beneficiaries more accurate over a
period of time and is particularly useful for averaging seasonal worker
income over a period of up to 12 months. A reasonably predictable
changes methodology takes predictable future changes into account by
including a prorated portion of reasonably predictable future income in
the individual's monthly income to smooth out predictable fluctuations
in income.
For example, suppose an individual in a State with a 12-month
reasonably predictable changes in income methodology expects to have
steady monthly income of $500 and expects (based on the previous year)
to have $400 per month in additional countable income in the months of
October through December, for a total of $1,200 of additional countable
income. Suppose further that the State is determining monthly income
for August for the purpose of the community engagement requirement. The
State prorates the total seasonal income to equal $100 ($1,200/12 =
$100) in additional monthly income for August (and in each of the 12
months). The monthly income is determined to be $600 ($500 steady
income plus $100 prorated seasonal income). Note that because the State
uses a 12-month methodology, this calculation would be the same in any
month of the year. Thus, while the prorated amount is based on expected
future income, the methodology is used to determine the monthly income
for each month in that 12-month period, including the month(s) of the
review period (as defined in section II.H. of this IFC) the State is
assessing to determine community engagement compliance. Such a
reasonably predictable changes methodology, in States that elect it, is
an integral part of their MAGI-based methodologies, and therefore
States must use their reasonably predictable changes methodology to
determine monthly income when an individual has fluctuating income that
is subject to the State's methodology.
For the purpose of the community engagement requirement, States
with a MAGI-based reasonably predictable changes methodology for
seasonal workers include a prorated portion of reasonably predictable
future income in monthly income added to stable or non-fluctuating
income (if any), and this total average monthly income will effectively
be the monthly income used to assess community engagement under section
1902(xx)(2)(G) of the Act. As another example, consider an individual
who is employed from April through September, earning $1,500 per month,
and unemployed with no income for the remaining 6 months of the year.
If the individual applies for Medicaid in December, and the State has
elected reasonably predictable increases and decreases in income over
12 months, the State will use the prorated MAGI-based monthly income to
determine financial eligibility and also to determine compliance with
the community engagement requirement. In this case, the individual's
calculated monthly income is $750 ($1,500 multiplied by 6, then divided
by 12) in December for financial eligibility and $750 in November (or
in the months of the relevant review period, as defined in section
II.H. of this IFC) for demonstrating community engagement. The average
monthly income over the previous 6 months would also be $750.
Alternatively, if the individual applies in July when earning income,
and the other facts were the same (including that the State takes into
consideration reasonably predictable future decreases in income), the
outcome would still be a calculated monthly income of $750 for
financial eligibility and for demonstrating community engagement using
average monthly income.
Most States currently elect the option to use a reasonable method
to account for reasonably predictable changes, and among those States,
most elect both reasonably predictable increases and decreases in
future income. Some States only account for reasonably predictable
future decreases. Because accounting only for reasonably predictable
future decreases generally decreases countable household income, it may
result in some seasonal workers not reaching the $580 per month
(Federal minimum wage multiplied by 80) threshold under section
1902(xx)(2)(G) of the Act. We further note that a MAGI-based reasonably
predictable changes methodology applies broadly to all MAGI-based
eligibility determinations, including for the adult group and
applicable section 1115 demonstrations, and must be used consistently
and in the same manner for financial eligibility and for compliance
with the community engagement requirement for applicable individuals.
If a State does not use a reasonably predictable changes
methodology, then for the purpose of demonstrating community engagement
for seasonal workers, the State would use the individual's average
income over the preceding 6 months, as provided at section
1902(xx)(2)(G) of the Act. The ``preceding 6 months'' verified by the
State would be the 6 months preceding a month of the review period for
which the State is assessing compliance with the community engagement
requirement. Consider the facts of the previous example, except that
the State does not elect a reasonably predictable changes methodology,
and the State requires an applicable individual to demonstrate
community engagement for
[[Page 33363]]
1 month at application. The seasonal worker applies in July and is an
applicable individual, so the relevant review period to demonstrate
community engagement is the month of June. The State will average the
income from December through May to determine if the individual
demonstrates community engagement in June, the month before
application. In this case, the individual has 2 months of seasonal
employment, which averaged over 6 months equals $500 (2 months at
$1,500 per month, then divided by 6). Because $500 is below $580, this
individual is not considered to be demonstrating community engagement
in June based on the 6-month average monthly income for seasonal
workers. This outcome contrasts with the prior example using an income
counting methodology that accounts for reasonably predictable changes.
Similarly, at renewal, the State will average the income for the 6
months preceding the month being assessed for compliance. Thus, if a
seasonal worker who is an applicable individual has a review period
that spans from July through December, the average income from January
to June is used to assess compliance in July, from February to July to
assess compliance in August, from March to August to assess compliance
in September, etc. The State will continue assessing each month in the
review period until the State either verifies compliance for the
required number of months (including verifying if the applicable
individual demonstrated community engagement on a different basis, that
is, through an activity or combination of activities, or is deemed to
have demonstrated community engagement because of an exception) or has
assessed all the months in the review period.
We have also received several questions regarding situations in
which an individual's monthly income falls short of the amount required
to meet the community engagement requirement under the monthly or
average monthly income criteria. For example, we have been asked
whether, if the State verifies $380 in monthly income for the
individual (which is short of the $580/month requirements at Sec.
435.552(f) and (g) assuming a minimum wage of $7.25/hour), the State
could use that income towards meeting an individual's community
engagement requirement. Section 1902(xx)(2) of the Act does not address
this scenario but does provide the Secretary with the authority to
establish criteria for determining whether an applicable individual
meets the conditions for demonstrating community engagement. Section
1902(xx)(2)(A) of the Act includes work as a community engagement
activity. Consistent with our statutory authority to establish the
criteria for demonstrating community engagement, at new Sec.
435.552(e)(2)(i) and (ii) we permit income to be used as a proxy for
calculating work hours because many income verification data sources,
such as quarterly wage data, include individual earned income and thus
can be used to derive the number of hours worked under Sec.
435.552(a)(1). If the individual's verified income is below the Federal
minimum wage multiplied by 80 hours, and if the State does not have
information regarding the number of hours worked, then it would be
reasonable for States to have the option to use income to calculate a
number of hours worked by dividing the income for the month by the
applicable Federal minimum wage. Thus, if the State verifies $380 in
monthly income, then using the current Federal minimum wage of $7.25,
the individual can be credited with having worked 52 hours for the
month ($380 divided by $7.25). The individual would then need to
participate in an additional 28 hours (80-52 = 28) of community
engagement activities to meet the requirement for the month.
We recognize that States will be using the individual's MAGI-based
income for their MAGI-based household when converting monthly income to
hours worked. While we are providing States with the option to use
income to determine hours worked, this option must only be used when
the monthly income is less than the applicable Federal minimum wage
multiplied by 80 hours and the State does not have information
regarding the number of hours worked. In these circumstances, the State
must use a reasonable method to allocate hours, between members of the
household. Providing States flexibility to convert monthly income to
hours worked for purposes of calculating an applicable individual's
work hours is reasonable because the concept underlying the monthly
income and average monthly income criteria at sections 1902(xx)(2)(F)
and (G) of the Act is that monthly income can be a proxy for hours
worked. We do not see a basis for prohibiting States from using a
similar methodology to determine hours worked if an individual has
monthly income below the amount that equates to 80 hours at minimum
wage, the State has no documentation regarding number of hours worked
and uses a reasonable methodology to allocate hours, as necessary.
Additionally, some States already use monthly income to determine self-
employment work hours when verifying compliance with SNAP work
requirements. We reiterate that when this proxy approach results in the
work hours calculated as less than 80, those hours would then have to
be combined with hours from another activity to meet the community
engagement requirement.
Please see section II.I.6.f. of this IFC for information about
verification of the monthly income and average monthly income
requirements.
D. Mandatory Exceptions for Certain Individuals
Section 1902(xx)(3)(A) of the Act establishes mandatory exceptions
from demonstrating community engagement via the pathways described in
Sec. 435.552(a) (see section II.C. of this IFC for more information
regarding demonstrating compliance) for certain applicable individuals.
States must deem an applicable individual compliant for a month if the
individual meets the mandatory exception criteria (which are further
described in this section of this IFC). New Sec. 435.553 implements
and interprets the mandatory exceptions in section 1902(xx)(3)(A) of
the Act.
New Sec. 435.553(a) implements section 1902(xx)(3)(A)(i) of the
Act, which establishes mandatory exceptions for applicable individuals
if, for part or all of a month, the individual was: (1) under the age
of 19; (2) entitled to, or enrolled for benefits under Medicare part A,
or enrolled for benefits under Medicare part B; (3) described in any of
the mandatory eligibility groups in section 1902(a)(10)(A)(i)(I)
through (VII) of the Act; or (4) a specified excluded individual as
defined in section 1902(xx)(9)(A)(ii) of the Act (see section II.E. of
this IFC for an explanation of specified excluded individuals, and
section II.F. of this IFC for a discussion of the similarities and
differences between mandatory exceptions and specified excluded
individuals). States must determine whether an applicable individual
met exception criteria for part or all of a relevant month. We
interpret the statutory references to ``a month'' and ``such month'' to
refer to any month in the State's review period (described further in
section II.H. of this IFC). This could be a month during the State's
review period when determining eligibility at application, a month
during an individual's eligibility period at renewal, and, at State
option, a month during the relevant alternative review period during
which the State elects to conduct more frequent verifications of
[[Page 33364]]
community engagement compliance (as described in section II.H. of this
IFC).
Because compliance with community engagement is assessed for a time
period that predates an individual's application or renewal date (as
described in more detail in section II.H.1 of this IFC), the mandatory
exceptions provide protections, for example, for beneficiaries who were
previously excluded from the requirement to demonstrate community
engagement but whose exclusion ends, or who were enrolled in another
eligibility group and, following a redetermination, transition to an
eligibility group consisting of applicable individuals. These
exceptions can allow such beneficiaries time to understand their rights
and responsibilities and demonstrate compliance with community
engagement as it was not a condition of their Medicaid eligibility
previously.
For example, a beneficiary enrolled in the adult group has been
excluded from the community engagement requirement because they have a
dependent child who is age 13, but their child turns 14 during the
individual's eligibility period. During the beneficiary's renewal, the
State determines the individual is now an applicable individual subject
to the community engagement requirement. The State requires
beneficiaries to demonstrate 1 month of community engagement activity
at renewal. Because the beneficiary was a specified excluded individual
as a result of having a dependent child under the age of 14 for part or
all of at least 1 month during the review period, which aligns with the
eligibility period in this scenario, they meet the mandatory exception
criteria for at least 1 month during the review period (see section
II.H.3. of this IFC) and thus are deemed compliant with community
engagement during the review period at renewal. Their eligibility would
be renewed with proper notice of the determination consistent with
Sec. 435.917(b)(1); this notice would be accompanied by the outreach
notice content described at new Sec. 435.561(c) which includes
information on how to comply with the requirement to demonstrate
community engagement and the consequences of noncompliance, consistent
with Sec. 435.561(b) (described in section II.L. of this IFC). Going
forward, the individual would be subject to the community engagement
requirement.
New Sec. 435.553(b) implements section 1902(xx)(3)(A)(ii) of the
Act, which establishes an exception for incarcerated individuals.\43\
Under the exception, an applicable individual is deemed compliant with
community engagement for a month if ``at any point during the 3-month
period ending on the first day of such month, the individual was an
inmate of a public institution.'' Unlike the other mandatory
exceptions, which require the State to deem an applicable individual as
demonstrating community engagement in a month if the individual meets
the exception in that month, the exception for individuals who were
previously inmates of a public institution applies to a 3-month period
prior to the month in which the State reviews the individual for
compliance with community engagement. We believe that the 3-month
timeframe for this exception reflects the significance of the
transition from a public institution to a community setting. This
policy aligns with Congress' recent efforts to support individuals in
attaining self-sufficiency during the transition period following
incarceration.\44\ In addition to this mandatory exception, inmates of
a public institution are defined as ``specified excluded individuals''
at section 1902(xx)(9)(A)(ii)(VIII) of the Act, discussed further in
section II.E.8. of this IFC.
---------------------------------------------------------------------------
\43\ For purposes of this discussion, ``incarcerated'' has the
same meaning as ``inmate of a public institution'' as defined at
Sec. 435.1010.
\44\ Section 1902(a)(84)(A), as amended by Division G, Title I,
Section 205 of the CAA, 2024 requires States to suspend rather than
terminate Medicaid eligibility during periods of incarceration for
all Medicaid-eligible individuals; Section 1002 of the SUPPORT Act
directed the Secretary of HHS to develop guidance on how section
1115 demonstrations can be used to support incarcerated individuals
transitioning to the community.
---------------------------------------------------------------------------
When a State assesses whether it can deem compliance with community
engagement for a month for someone who was previously incarcerated, it
will need to determine when an individual's incarceration ended in
relation to the month(s) for which the State is determining compliance.
For example, an individual was an inmate of a public institution and
was released on March 15. The individual applies for Medicaid on June 1
in a State that has a 1-month review period for community engagement at
application (see section II.H.1. of this IFC for further discussion of
the review period). The State determines the individual is eligible in
the adult group and is an applicable individual, so must assess whether
the individual met or is deemed to have met the community engagement
requirement in May (the month prior to the month of application). To
apply the exception for incarcerated individuals, the State would
assess whether the individual was an inmate at any point in the 3-month
period prior to May 1. Accordingly, the State would determine whether
the individual was an inmate in February, March, or April. Because the
individual was an inmate in March, the State would deem the individual
to have met the community engagement requirement and would enroll the
individual in the adult group.
We note that an applicable individual can be deemed compliant only
for the month(s) in which the individual meets the mandatory exception
criteria. States that require applicable individuals to demonstrate
compliance with community engagement for more than 1 month during the
review period will need to verify that an applicable individual is
excepted, demonstrates community engagement, or meets a combination of
these community engagement criteria for the total number of months
specified by the State in the review period.
E. Specified Excluded Individuals
Section 1902(xx)(9)(A)(ii) of the Act lists nine categories of
individuals meeting the definition of a ``specified excluded
individual.'' These individuals are excluded from the definition of
``applicable individual'' at section 1902(xx)(9)(A)(i) of the Act;
therefore, for the nine categories of specified excluded individuals,
community engagement is not a condition of eligibility, and such
individuals do not need to demonstrate community engagement to qualify
for the State plan adult group or for eligibility under an applicable
section 1115 demonstration. New Sec. 435.554 implements the statutory
definition of specified excluded individuals, as further discussed in
this section. If a State determines someone to be a specified excluded
individual at application, renewal, or, if elected by the State, at the
time of a more frequent verification of community engagement
compliance, it must not determine whether that person met the community
engagement requirement during the applicable community engagement
review period (see section II.H.1. of this IFC for more information).
Similarly, while States must deem an applicable individual compliant
with the community engagement requirement for a month if during any
part of that month that person was a specified excluded individual,
this deeming requirement does not apply if a State has already
determined that the person is a specified excluded individual at
application, renewal, or at the time of a more frequent verification,
because only an applicable individual must
[[Page 33365]]
demonstrate community engagement. Therefore, States must not deem
specified excluded individuals compliant with the community engagement
requirement. We explain the distinction between mandatory exceptions
and specified excluded individuals in more detail in section II.F. of
this IFC.
Several groups of specified excluded individuals are, by
definition, not usually eligible under the State plan adult group,
described at section 1902(a)(10)(A)(i)(VIII) of the Act, and many may
be eligible through a separate eligibility group (for example, the
pregnant women group, described at Sec. 435.116) for which community
engagement does not apply. However, these exclusions are necessary for
individuals who may be eligible to enroll or are enrolled in the State
plan adult group or an applicable section 1115 demonstration, as
described in section II.B. of this IFC, but still meet the exclusion
criteria.
New Sec. 435.554 implements and interprets section
1902(xx)(9)(A)(ii) of the Act. We intend to apply existing Medicaid
definitions where possible to align with existing eligibility systems
and structures. Where terms used to describe specified excluded
individuals do not have precedent in Medicaid, or our interpretation of
the statutory language differs from existing Medicaid definitions, we
establish definitions through this IFC. Section II.I.7. of this IFC
addresses verification requirements regarding specified excluded
individuals.
1. Former Foster Care Children
Section 1902(xx)(9)(A)(ii)(I) of the Act provides that an
individual ``who is described in'' section 1902(a)(10)(A)(i)(IX) of the
Act, which refers to the eligibility group serving former foster care
children (FFCC group), is a specified excluded individual. The FFCC
group generally serves individuals who were enrolled in Medicaid while
in foster care, then exited foster care (or ``aged out'') without an
adoption or other permanency, and are under age 26. The FFCC group was
originally limited to individuals who had been in foster care in the
State in which they subsequently sought Medicaid coverage and were not
described in any other mandatory eligibility groups under section
1902(a)(10)(A)(i)(I) through (VII) of the Act. Section 1002(a) of the
Substance Use Disorder Prevention that Promotes Opioid Recovery and
Treatment for Patients and Communities Act (SUPPORT Act; Pub. L. 115-
271) modified the original eligibility criteria for the FFCC group in
section 1902(a)(10)(A)(i)(IX) of the Act to expand eligibility in the
group to individuals who had been in foster care in other States and
who may be otherwise described in a separate mandatory eligibility
group under section 1902(a)(10)(A)(i)(I) through (VII) of the Act (so
long as they are not enrolled in such other group). However, the
amendment was effective exclusively for those individuals who turn age
18 on or after January 1, 2023. This means that, under the State plan
requirements, slightly different eligibility criteria for the FFCC
group apply to individuals under age 26 who turned age 18 on or before
December 31, 2022, and those who turn age 18 on or after January 1,
2023.\45\
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\45\ CMCS State Health Official (SHO) letter #22-003, ``Coverage
of Youth Formerly in Foster Care in Medicaid.'' (December 16, 2022).
Available at: <a href="https://www.medicaid.gov/federal-policy-guidance/downloads/sho22003.pdf">https://www.medicaid.gov/federal-policy-guidance/downloads/sho22003.pdf</a>.
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We have considered whether the reference in section
1902(xx)(9)(A)(ii)(I) of the Act to the FFCC group encompasses both the
original version and SUPPORT Act version of section
1902(a)(10)(A)(i)(IX) of the Act, or if it is specific only to the
latter one. We are interpreting section 1902(xx)(9)(A)(ii)(I) of the
Act to apply the exclusion to individuals who meet the eligibility
criteria under the SUPPORT Act, regardless of when they turned age 18,
for the following reasons.
The phrase ``described in'' could be read to exactly mirror the
phased-in implementation of the eligibility criteria in section
1902(a)(10)(A)(i)(IX) of the Act and apply the relevant criteria to
individuals based on when they turned age 18 for the purpose of the
specified excluded individual category. That means, in reference to
youth formerly in foster care, an individual under age 26 who turned
age 18 before January 1, 2023, would only be a specified excluded
individual if he or she meets the original criteria for the FFCC group
(specifically: in the same State and not eligible for another group).
Someone under age 26 who turned age 18 on or after January 1, 2023,
would be a specified excluded individual if he or she meets the
expanded criteria for the FFCC group under the SUPPORT Act.
However, we do not believe this is the best reading of section
1902(xx)(9)(A)(ii)(I) of the Act, because the Act directs an
eligibility hierarchy for the FFCC group. That means that a strict
reading of the exclusion is likely to create an empty exclusion
category. Clause (XVII) in the language following section
1902(a)(10)(G) of the Act provides that, ``. . . if an individual is
described in subclause (IX) of subparagraph (A)(i) and is also
described in subclause (VIII) of that subparagraph, the medical
assistance shall be made available to the individual through subclause
(IX) instead of through subclause (VIII).'' This language means that
individuals eligible for both the adult group and the FFCC group must
be enrolled in the FFCC group. This eligibility hierarchy means that a
strict reading of ``described in'' in section 1902(xx)(9)(A)(ii)(I) of
the Act that is equivalent to ``eligible for'' the FFCC group per the
SUPPORT Act phase-in of the eligibility criteria by age would render
the exclusion meaningless as a null set of individuals. Under that
reading, by operation of the language following section 1902(a)(10)(G)
of the Act, all the individuals who are eligible for the FFCC group
would by definition not be in the adult group and thus never would be
applicable individuals to whom the exclusion category might apply.
Because a strict reading of the reference to section
1902(a)(10)(A)(i)(IX) of the Act in section 1902(xx)(9)(A)(ii)(I) would
render that exclusion category a nullity, we interpret the exclusion to
apply to persons meeting the current SUPPORT Act definition of the FFCC
group, even in circumstances where they would not qualify for
eligibility under section 1902(a)(10)(A)(i)(IX) of the Act due to when
they turned 18.
This interpretation also furthers administrative simplicity. The
population of individuals formerly in foster care is relatively small;
and the population of individuals formerly in foster care who do not
meet the State plan requirements is even smaller. For example, some
States operating section 1115 demonstrations to apply the SUPPORT Act
criteria to eligible individuals who turned 18 before January 1, 2023,
report very low enrollment numbers (sometimes in the single digits).
The administrative work for States to identify and apply the correct
eligibility criteria to the population is high compared to the small
size of the population. We implement this definition at new Sec.
435.554(c)(1).
This policy means that States must use a single set of eligibility
criteria, under the SUPPORT Act changes to the FFCC group, for this
category of specified excluded individual, regardless of whether the
individual turned age 18 on or after January 1, 2023. Thus, an
individual in the adult group or an applicable section 1115
demonstration may be a specified excluded individual as long as he or
she meets the criteria for an individual
[[Page 33366]]
described in the FFCC group: (1) is under age 26; (2) is not enrolled
in an eligibility group described in section 1902(a)(10)(A)(i)(I)
through (VII) of the Act, even if they meet the eligibility
requirements for such group; (3) was in foster care under the
responsibility of any State upon attaining age 18 (or such higher age
as the State has elected in its title IV-E plan); and (4) was enrolled
in Medicaid in any State while in such foster care. For example,
suppose an individual ages out of foster care (while enrolled in
Medicaid) at age 21 in State A in 2024 and subsequently moves to State
B. Because this individual turned age 18 in 2021, the SUPPORT Act rules
for the FFCC group do not apply to the individual. State B covers the
adult group but does not have a section 1115 demonstration to cover
former foster care youth from other States. When the individual applies
for Medicaid in State B, he meets the eligibility requirements for the
adult group, and the State enrolls him in that group. In 2027, the
individual is in the adult group and still under age 26. Because the
individual meets the current description of the FFCC group, despite not
being enrolled in the group, the individual is a specified excluded
individual and not subject to the community engagement requirement.
2. American Indians
Section 1902(xx)(9)(A)(ii)(II) of the Act defines as specified
excluded individuals an individual ``who: (aa) is an Indian or Urban
Indian (as such terms are defined in paragraphs (13) and (28) of
section 4 of the Indian Health Care Improvement Act; (bb) is a
California Indian described in section 809(a) of such Act; or (cc) has
otherwise been determined eligible as an Indian for the Indian Health
Service under regulations issued by the Secretary.'' CMS has previously
issued regulations that define ``Indian'' to implement various
protections for individual Indians, Indian tribes, and tribal
organizations as it relates to Medicaid premiums and cost sharing, as
required by sections 1916(j), 1916A(b)(3)(A)(vii), and
1916A(b)(3)(B)(x) of the Act.\46\ The existing definition at Sec.
447.51 incorporates each of the specific groups listed in section
1902(xx)(9)(A)(ii)(II)(aa) through (cc) of the Act; therefore, we adopt
the existing definition of ``Indian'' at Sec. 447.51 for the community
engagement exclusion at the new Sec. 435.554(c)(2). In other places
throughout this IFC, we refer to this population as American Indians.
We believe adopting this definition will promote alignment with
existing Medicaid protections for American Indians and will allow
States to use existing data used for cost sharing to effectuate this
community engagement exclusion. Notably, unlike other exclusions which
may change from month to month or be time-limited, States will not be
required to (and may not) reverify someone's status as an American
Indian for exclusion from the community engagement requirement.
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\46\ Medicaid Program; Premiums and Cost Sharing 75 FR 30243
(May 28, 2010). <a href="https://www.federalregister.gov/d/2010-12954">https://www.federalregister.gov/d/2010-12954</a>.
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3. Parent, Guardian, Caretaker Relative, or Family Caregiver of a
Dependent Child 13 Years of Age and Under or a Disabled Individual
Section 1902(xx)(9)(A)(ii)(III) of the Act establishes an exclusion
for parents, guardians, caretaker relatives, and family caregivers (as
defined in section 2 of the Recognize, Assist, Include, Support, and
Engage Family Caregivers Act of 2017 (RAISE Family Caregivers Act; Pub.
L. 115-119), of a dependent child 13 years of age and under or a
disabled individual. The terms ``caretaker relative'' and ``dependent
child'' are existing Medicaid terms defined in regulation that we are
building upon for purposes of this exclusion. The terms parent,
guardian, family caregiver, and disabled individual are either new to
Medicaid, or are not defined in regulation to determine Medicaid
eligibility. Each category of excluded individuals established by
section 1902(xx)(9)(A)(ii)(III) of the Act is defined in relation to a
dependent child aged 13 and under or a disabled individual. We define
the terms caretaker relative, dependent child, disabled individual,
family caregiver, guardian and parent at Sec. 435.554(a). For example,
as we describe in more detail below, for purposes of the exclusion at
1902(xx)(9)(A)(ii)(III) of the Act, we are defining dependent child at
Sec. 435.554(a) to mean ``a child 13 years of age or under who relies
on another individual for care'' and all specified excluded individual-
related references to dependent child throughout the remainder of this
preamble reflect this regulatory definition. Additionally, to qualify
as a specified excluded individual, those meeting the definition of
family caregiver at Sec. 435.554(a) must also meet certain criteria
specified at new Sec. 435.554(c)(3)(i).
a. Definition of Caretaker Relative
Current CMS regulations define a caretaker relative at Sec. 435.4.
The ``caretaker relative'' definition generally implements section
1905(a)(ii) of the Act (``relatives specified in section 406(b)(1) with
whom a child is living if such child is (or would, if needy, be) a
dependent child under part A of title IV.''). Such references to title
IV-A of the Act are to the former Aid to Families with Dependent
Children (AFDC) program, as it existed on July 16, 1996. AFDC was
replaced with the TANF block grant by PRWORA. In de-linking receipt of
cash assistance from Medicaid, PRWORA also established categorical
eligibility for low-income families under section 1931 of the Act. The
definition of caretaker relative is used for the population of
categorically needy parents and other caretaker relatives that is now
implemented in regulations at Sec. 435.110. Section 435.4 defines a
caretaker relative as a parent or other relative (related by blood,
adoption, or marriage) living with a dependent child, who assumes
primary responsibility for the dependent child's care. Section 435.4
specifies who qualifies as a relative for such purposes, and includes a
child's father, mother, grandfather, grandmother, brother, sister,
stepfather, stepmother, stepbrother, stepsister, aunt, uncle, first
cousin, nephew, niece, or the spouse of such parent or relative, even
after the marriage is terminated by death or divorce. The definition
also provides States the option to include other adults: additional
relatives of the child by blood (including those of half-blood),
adoption, or marriage; a domestic partner of the parent or other
caretaker relative; or any adult with whom the child is living and who
assumes primary responsibility for the child's care.
Use of the term ``caretaker relative'' in our regulations describes
a specific relationship with a child that defines the categorical
Medicaid eligibility group at Sec. 435.110.\47\ Because States have
experience implementing the Sec. 435.110 eligibility group and
associated policies based on the existing definition in Sec. 435.4, we
believe it is appropriate to align the definition of ``caretaker
relative'' in section 1902(xx)(9)(A)(ii)(II) of the Act with that
definition. However, we acknowledge that, in addition to a dependent
child age 13 or under, the exclusion also applies to caretaker
relatives of a ``disabled individual'' (defined later in this section).
Therefore, if we were to use the existing definition at Sec. 435.4
without any changes, the definition would not align with the exclusion
in
[[Page 33367]]
the statute. As such, for purposes of this exclusion from the community
engagement requirement, at a new Sec. 435.554(a) we establish a
definition of caretaker relative, based on the relationships listed in
the existing definition at Sec. 435.4, to apply the definition to
caretaker relatives of both dependent children and disabled
individuals, as established in section 1902(xx)(9)(A)(ii)(III) of the
Act. We also specify additional relationships (husband, wife, son,
daughter, stepson, stepdaughter, grandson, granddaughter) under which
individuals could qualify as a caretaker relative of a disabled
individual (these additional relationships are not relevant for
dependent children age 13 and under because of their age). Like the
definition in Sec. 435.4, the new definition requires that the
caretaker relative assume primary responsibility for the dependent
child's or disabled individual's care and live with the dependent child
or disabled individual who is receiving the care.
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\47\ Medicaid Program; Eligibility Changes Under the Affordable
Care Act of 2010 77 FR 17144 (March 23, 2012). <a href="https://www.federalregister.gov/d/2012-6560">https://www.federalregister.gov/d/2012-6560</a>.
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If a State has elected to expand the definition of ``caretaker
relative'' to additional relatives under paragraph (3) of the caretaker
relative definition at Sec. 435.4, the State must apply the same
elections when determining whether an individual is a ``caretaker
relative'' of a dependent child or a disabled individual for purposes
of the exclusion described at section 1902(xx)(9)(A)(ii)(III) of the
Act. We believe that aligning the elections of additional relatives
across the eligibility group for parents and other caretaker relatives
at Sec. 435.110 and this community engagement exclusion would prevent
beneficiary confusion and potential disruption of coverage for certain
caretakers who transition between the parent and caretaker relative
group and a group consisting of applicable individuals. We also believe
alignment will create administrative simplicity for States and better
understanding of the policy for beneficiaries.
For example, suppose a beneficiary is the second cousin of, and
lives with, a 10-year-old child who is dependent on the beneficiary for
care. Because their State elected the option under paragraph (3) of the
caretaker relative definition at Sec. 435.4, the beneficiary is
eligible for the ``parents and other caretaker relatives'' eligibility
group. The beneficiary subsequently experiences an increase in unearned
income and is determined ineligible for the ``parents and other
caretaker relatives'' group and is then determined eligible for the
adult group. If the State uses a consistent definition of relationships
for caretaker relative, the State would determine the individual to be
a specified excluded individual under the exclusion described at
section 1902(xx)(9)(A)(ii)(III) of the Act. The beneficiary would not
be subject to the community engagement requirement, and the State would
not need to determine whether the individual demonstrated compliance,
which is consistent with the beneficiary's previous status as a
caretaker relative. However, if the State used a different relationship
election for the exclusion, the State would need to conduct a separate
analysis of the relationship between the adult and the dependent child,
adding to the complexity of the redetermination process for the State
and potentially resulting in confusion or a disruption of coverage for
the caretaker relative.
b. Definition of Parent
Because the statute separately lists ``parent'' in addition to
``caretaker relative'' in section 1902(xx)(9)(A)(ii)(III) of the Act,
we interpret ``parent'' to mean something different from a ``caretaker
relative.'' Section 1902(xx)(9)(A)(ii)(III) of the Act does not define
``parent,'' and parenthood is generally governed by State law.
Therefore, at new Sec. 435.554(a), we define for purposes of section
1902(xx)(9)(A)(ii)(III) of the Act to mean an individual with the legal
status of a mother or father, including by adoption, in accordance with
applicable State law, to another individual, which is consistent with
common definitions of the term.\48\ Consistent with other groups listed
in the exclusion established at section 1902(xx)(9)(A)(ii)(III) of the
Act, the parent must provide some level of care to the dependent child
or disabled individual for whom they are a parent. For example, an
estranged parent without a relationship with their child would not be
considered a specified excluded individual under the category of
parent. We recognize that many parents who live with and are primarily
responsible for their dependent child or adult disabled child will also
meet the definition in this regulation of ``caretaker relative.'' This
definition of parent provides for parents who do not meet the
definition of ``caretaker relative'' but who meet this definition of
``parent'' to be considered a specified excluded individual.
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\48\ Black's Law Dictionary (12th ed. 2024) s.v. ``Parent,''
accessed May 1, 2026.
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c. Definition of Guardian
Section 1902(xx)(9)(A)(ii)(III) of the Act also separately lists a
``guardian,'' which is not defined under section 1902(xx) of the Act or
defined elsewhere in the Act or CMS regulations. At Sec. 435.554(a),
we define ``guardian'' for purposes of section 1902(xx)(9)(A)(ii)(III)
of the Act to mean an adult appointed by a court to care for and make
personal decisions on behalf of an individual who cannot care for
themselves, which is consistent with the common meaning of the
term.\49\
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\49\ Merriam-Webster Dictionary Online, s.v. ``Guardian,''
accessed March 21, 2026, <a href="https://www.merriam-webster.com/dictionary/guardian">https://www.merriam-webster.com/dictionary/guardian</a>.
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Because guardianship is governed by State law, we considered how
other Federal agencies refer to or define guardianship when developing
our definition. The Department of Justice (DOJ) describes guardianship
as the appointment by a court of a person or entity to make personal,
property decisions, or both for an individual whom the court finds
cannot make decisions for themselves.\50\ DOJ also explains that each
State has its own set of guardianship laws, and terminology may
vary.\51\
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\50\ ``Guardianship'' U.S. Department of Justice, accessed on
March 3, 2026. <a href="https://www.justice.gov/elderjustice/guardianship">https://www.justice.gov/elderjustice/guardianship</a>.
\51\ ``Guardianship: Key Concepts and Resources.'' U.S.
Department of Justice, last modified on February 18, 2026. <a href="https://www.justice.gov/elderjustice/guardianship">https://www.justice.gov/elderjustice/guardianship</a>-key-concepts-and-
resources.
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In the definition of ``guardian'' we establish in Sec. 435.554(a),
an individual has the legal status of a ``guardian'' when the
individual is appointed by a court. DOJ's description also refers to
personal and/or financial responsibilities. For the definition
established at Sec. 435.554(a), we specify that a guardian has been
appointed by a court to care for and make personal decisions for an
individual who cannot care for themselves. We believe that guardianship
as it relates to the responsibility for another person's care, rather
than financial responsibilities, is more aligned with the purposes of
the exclusion.
d. Definition of Family Caregiver
Section 1902(xx)(9)(A)(ii)(III) of the Act includes a ``family
caregiver (as defined in section 2 of the RAISE Family Caregivers Act)
of a dependent child 13 years of age and under or a disabled
individual'' as a specified excluded individual.
The RAISE Family Caregivers Act directed the Secretary of the U.S.
Department of Health and Human Services (HHS) to develop and make
[[Page 33368]]
publicly available a family caregiving strategy that identified
recommended actions for recognizing and supporting family caregivers.
To guide the development of this strategy, Section 2 of the RAISE
Family Caregivers Act defined ``family caregiver'' as an adult family
member or other individual who has a significant relationship with, and
who provides a broad range of assistance to, an individual with a
chronic or other health condition, disability, or functional
limitation. This definition encompasses a broad range of caregiver
relationships and assistance provided to capture the full landscape of
caregiving in the U.S. to inform the national caregiving strategy.
Section 1902(xx)(9)(A)(ii)(III) of the Act requires CMS to use the
RAISE Family Caregivers Act definition of family caregiver when
determining whether an individual qualifies as a specified excluded
individual, but it also limits care recipients to ``a dependent child
13 years of age and under or a disabled individual'' (both of which are
defined later in this section). Because the care recipients specified
in section 1902(xx)(9)(A)(ii)(III) of the Act differ from those
referenced in the RAISE Family Caregivers Act definition, it is
necessary to establish a definition of ``family caregiver'' for
purposes of identifying specified excluded individuals that
incorporates applicable components of the RAISE Family Caregivers Act
definition while aligning with the care recipients specified in
1902(xx)(9)(A)(ii)(III) of the Act. As such, at new Sec. 435.554(a),
we define family caregiver as an adult family member or other
individual who has a significant relationship with, and who provides
care within a broad range of assistance to, a dependent child or a
disabled individual. This definition of family caregiver largely aligns
with the RAISE Family Caregivers Act definition but includes
modifications to support implementation of section
1902(xx)(9)(A)(ii)(III) of the Act, as further discussed below.
We are generally incorporating the significant relationship and
activity-based components of the RAISE Family Caregivers Act definition
into the definition of family caregiver at Sec. 435.554(a),
recognizing that a family caregiver is not limited to legally
recognized relatives or members of the same household and that
providing a ``broad range of assistance'' (as specified in the RAISE
Family Caregivers Act definition) to an individual may consist of any
number of activities necessitated by individual health status. However,
the RAISE Family Caregivers Act definition encompasses caregiving for a
broad range of individuals including those with a chronic health
condition, disability, or functional limitation while section
1902(xx)(9)(A)(ii)(III) of the Act expressly limits the exclusion to
family caregivers ``of a dependent child age 13 years and under or a
disabled individual.'' We do not interpret the statutory cross-
reference to the RAISE Family Caregivers Act definition of family
caregiver in section 1902(xx)(9)(A)(ii)(III) of the Act as authorizing
expansion of the community engagement exclusion beyond the care
recipient populations expressly specified in that section of the Act.
In addition, because ``a dependent child 13 years of age and under'' is
specified in section 1902(xx)(9)(A)(ii)(III) but is not referenced in
the RAISE Family Caregivers Act definition, we are adding this cohort
of individual to the set of care recipients included in our definition
of family caregiver at Sec. 435.554(a).
Together, these modifications appropriately harmonize the RAISE
Family Caregivers Act definition of family caregiver with the scope of
care recipients specified at section 1902(xx)(9)(A)(ii)(III) of the Act
and ensure that the exclusion is applied only to family caregivers who
provide assistance to a dependent child or a disabled individual.
(Notably, as outlined further in this section, there is no upper age
limit for the ``disabled individual'' referenced in section
1902(xx)(9)(A)(ii)(III) of the Act, meaning that individuals of any age
with a disability would qualify under that term.)
Additionally, to reflect the varied and individualized nature of
caregiving arrangements, we opted to modify the RAISE Family Caregivers
Act definition slightly in Sec. 435.554(a) to refer to ``care within a
broad range of assistance'' to ensure that States do not require that a
family caregiver provide multiple forms of assistance to a dependent
child or a disabled individual to qualify as a specified excluded
individual. For additional details about the criteria a family
caregiver must meet to qualify as a specific excluded individual, see
section II.E.3.h. of this IFC.
e. Definition of Dependent Child
Section 1902(xx)(9)(A)(ii)(III) of the Act provides an exclusion
from the community engagement requirement for an individual who is a
parent, guardian, caretaker relative, or family caregiver of a
``dependent child 13 years of age and under.'' In Sec. 435.554(a), we
define dependent child to mean a child 13 years of age or under who
relies on another individual for care.
``Dependent child'' already has a specific Medicaid definition; in
developing definitions for this community engagement exclusion, we
considered whether it is appropriate to apply the existing definition
of dependent child, and decided it is not, for the reasons discussed
below.
In 2012, we established a definition of a ``dependent child'' in
Sec. 435.4,\52\ noting that our definition was grounded in section
1931 of the Act. (``Consistent with section 1931 of the Act, we propose
Medicaid definitions of `caretaker relative' and `dependent child' at
Sec. 435.4'').\53\ In implementing the mandate under subsections (a)
and (b) of section 1931 of the Act to apply the eligibility
requirements of the former AFDC program (as it existed on July 16,
1996) to low-income families, the definition of ``dependent child'' in
Sec. 435.4 incorporates each State's choice with regard to the AFDC
``deprivation'' requirement. A dependent child under Sec. 435.4 must
be ``deprived of parental support by reason of the death, absence from
the home, physical or mental incapacity, or unemployment of at least
one parent, unless the State has elected in its State plan to eliminate
such deprivation requirement.'' When we implemented the final rule
defining ``caretaker relative'' in 2012, we noted that many States had
elected to eliminate the deprivation requirement from their definition
of ``dependent child,'' applying only an age standard to the term. In
addition, section 1902(xx)(9)(A)(ii)(III) of the Act provides an
exclusion from the community engagement requirement for an individual
who is a parent of a dependent child 13 years of age and under, which
is in conflict with the deprivation requirement. Because section
1902(xx)(9)(A)(ii)(III) of the Act does not refer to section 1931 of
the Act and is in conflict with the deprivation requirement in Sec.
435.4, and because most States have eliminated the deprivation
requirement, we decided against adopting the existing definition of
dependent child at Sec. 435.4 for purposes of section
1902(xx)(9)(A)(ii)(III) of the Act.
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\52\ Medicaid Program; Eligibility Changes Under the Affordable
Care Act of 2010. 77 FR 17144 (March 23, 2012). <a href="https://www.federalregister.gov/d/2012-6560">https://www.federalregister.gov/d/2012-6560</a>.
\53\ Medicaid Program; Eligibility Changes Under the Affordable
Care Act of 2010. 76 FR 51148 (August 17, 2011). <a href="https://www.federalregister.gov/d/2011-20756">https://www.federalregister.gov/d/2011-20756</a>.
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In establishing a definition of dependent child for purposes of
exclusion from the community
[[Page 33369]]
engagement requirement, we also considered how ``dependent'' is defined
as it relates to the work requirements in the SNAP program. Notably,
the WFTC legislation made changes to the exemptions for the SNAP time
limit work requirement that align with the exclusion established at
section 1902(xx)(9)(A)(ii)(III) of the Act. Section 10102 of the WFTC
legislation amended section 6(o) of the Food and Nutrition Act of 2008
to apply an exemption from the time limit work requirement to ``a
parent or other member of a household with responsibility for a
dependent child under 14 years of age'' (the exemption previously
applied to those responsible for a dependent under 18 years of age).
Unlike the existing definition in Medicaid, SNAP does not apply a
deprivation requirement for a child 13 years of age and under to be
considered a dependent.
While we determined it was not appropriate to apply the deprivation
requirement to the new definition of ``dependent child'' at Sec.
435.554(a) for the reasons we discuss in the preceding paragraphs, we
recognize that dependent children still rely on adults for care (for
example, housing, food, medical care, education, etc.). Therefore, we
include a child's reliance on another individual for care in the new
definition. Because most States have removed their deprivation
requirement for dependent children under Medicaid and to align policy
with SNAP (as was done in the WFTC legislation that aligned the age
limits for dependent children for community engagement exclusions in
Medicaid and time-limit work requirement exemptions in SNAP), we
establish a new definition of ``dependent child'' at Sec. 435.554(a)
to mean a child 13 years of age or under who relies on another
individual for care, and only for the purpose of determining if a
person is a specified excluded individual under section
1902(xx)(9)(A)(ii)(III) of the Act.
f. Definition of Disabled Individual
Section 1902(xx)(9)(A)(ii)(III) of the Act provides an exclusion
from the community engagement requirement for an individual who is a
parent, guardian, caretaker relative, or family caregiver of a disabled
individual. The statute does not define the term ``disabled'' or
``disabled individual,'' nor does it include a cross-reference to an
existing statutory or regulatory definition of disability. Instead,
Section 1902(xx)(9)(A)(ii)(III) of the Act focuses on the caregiver and
that person's relationship to the care recipient, not on whether the
care recipient has previously been determined disabled by the Social
Security Administration (SSA) or been identified as disabled within the
Medicaid program or by other eligibility criteria established by
Federal law.
In developing a regulatory definition, we considered several
possible approaches. First, we considered adopting the SSA definition
of disability used for purposes of Supplemental Security Income (SSI)
and Social Security Disability Insurance (SSDI). That definition
generally requires that a person be unable to engage in substantial
gainful activity due to a medically determinable impairment expected to
last at least 12 months or result in death. We determined that this
standard is closely tied to cash assistance eligibility and work
incapacity determinations and may not be well aligned with the
structure or purpose of this caregiver exclusion. Section
1902(xx)(9)(A)(ii)(III) of the Act does not require that the disabled
individual be unable to work, nor does it condition the exclusion on
the disabled individual's receipt of SSI or SSDI. Limiting the
exclusion to disabled individuals with a formal SSA disability
determination could exclude individuals who provide assistance to
disabled individuals with a broad range of functional limitations whom
the statute appears to encompass.
Second, we considered other disability definitions used in Federal
statutes and programs, including the definition of ``individual with a
disability'' under the Rehabilitation Act of 1973 and the Americans
with Disabilities Act (ADA). These statutes are generally aligned in
that an individual has a disability if the individual has a physical or
mental impairment that substantially limits one or more major life
activities, has a record of such an impairment, or is regarded as
having such an impairment. These definitions are not tied to work
incapacity or eligibility for cash assistance and instead focus on
functional limitation. The ADA definition is also a well-established
Federal standard that applies across a wide range of programs and
contexts and is familiar to States and interested parties.
Finally, we considered permitting States to define ``disabled
individual'' for purposes of the exclusion. However, the absence of a
Federal standard could lead to inconsistent application across States
and uncertainty for beneficiaries.
After considering these options, we are adopting a definition of
disabled individual at new Sec. 435.554(a) that aligns with the ADA
definition of ``disability'' at 28 CFR 35.108. Under this definition,
disabled individual means an individual who meets the ADA definition of
disability at 28 CFR 35.108. An individual need not be eligible for
Medicaid or other Federal programs on the basis of a disability to be a
disabled individual under this definition.
As previously stated, section 1902(xx)(9)(A)(ii)(III) of the Act
does not specify an upper age limit when referencing a ``disabled
individual.'' This term could, therefore, include an older adult who
requires assistance of varying scope in performing activities of daily
living (ADLs) (bathing, dressing, toileting, eating, etc.) or other
activities that keep older adults living at home and participating in
community life. We encourage States to ensure that educational
materials on this community engagement exclusion are sufficiently clear
so that individuals providing supports to older adults understand that
they could qualify as a specified excluded individual through the
family caregiver component at section 1902(xx)(9)(A)(ii)(III) of the
Act. We also acknowledge that there is no lower age limit to ``disabled
individual,'' meaning that the term could apply to individuals from
birth, although we note that there is overlap through the age of 13
with references in this same exclusion category to ``dependent child 13
years of age and under.''
g. Applicability of Parent, Caretaker Relative, Guardian, or Family
Caregiver Exclusion to Multiple Individuals in a Residence
Interested parties requested that we explain how the exclusion
under section 1902(xx)(9)(A)(ii)(III) of the Act will apply in homes
with multiple individuals who may be a parent, caretaker relative,
guardian, or family caregiver. We considered limiting the exclusion to
one person per residence or allowing multiple individuals who reside
together to qualify for the exclusion. In Medicaid, there is no
precedent for limiting the number of individuals who reside together
and are eligible for an exclusion to the application of a policy (for
example, cost sharing exemptions, outlined at Sec. 447.56), as most
existing exclusions/exceptions in Medicaid are established based on an
individual's eligibility factors, not (like this exclusion) their
relation to another individual. Further, the statutory language at
section 1902(xx)(9)(A)(ii)(III) does not specify that to qualify as a
specified excluded individual there must be a one-to-one ratio of the
individual to the person receiving care.
[[Page 33370]]
We also considered how FNS within USDA implements similar
exemptions for SNAP work requirements. The time limit work requirement
under SNAP exempts individuals who have someone under age 14 in their
SNAP household.\54\ In SNAP, a household is defined as everyone who
lives together and purchases and prepares meals together.\55\ Although
the SNAP terminology for a household is slightly different from the
Medicaid terminology we describe in this section, FNS does not limit
these exemptions from SNAP work requirements to a single person in a
household. Instead, the time limit exemption applies to everyone living
in the SNAP household with someone 13 years of age and under. This
approach does not require SNAP programs to determine if there are other
caregivers caring for the same dependent child when determining
exemptions from the time limit work requirement.
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\54\ SNAP Work Requirements. U.S. Department of Agriculture Food
and Nutrition Services, last updated August 29, 2025, <a href="https://www.fns.usda.gov/snap/work-requirements">https://www.fns.usda.gov/snap/work-requirements</a>.
\55\ 7 CFR 273.1.
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We acknowledge that multiple individuals who could qualify for this
exclusion may reside together. Consistent with our interpretation of
the statute and existing SNAP policy, we are promulgating at new Sec.
435.554(c)(3)(ii) a policy that allows multiple parents, caretaker
relatives, guardians, and/or family caregivers in a single residence to
qualify for the exclusion, provided that they meet the definitions and
criteria discussed in this section. CMS believes that this policy
closely aligns with what is allowed under SNAP and is consistent with
section 1902(xx) of the Act, while minimizing administrative burden for
States and beneficiaries.
h. Criteria for the Family Caregiver Exclusion
We interpret the inclusion of family caregivers as a component of
the exclusions at section 1902(xx)(9)(A)(ii)(III) of the Act as
recognizing not only the critical role family caregivers play, but also
that these caregiving responsibilities, when regularly occurring and
not solely incidental in nature, meaningfully limit a family
caregiver's ability to participate in work or other community
engagement activities. This interpretation is supported by the cross-
reference to the RAISE Family Caregivers Act's definition of family
caregiver, which emphasizes the significant relationship between the
caregiver and the care recipient and recognizes that caregiving
involves the provision of a broad range of assistance.
In implementing this provision, we considered whether to adopt a
specific, uniform definition of ``significant relationship'' but opted
not to do so as we recognize that caregiving relationships and the
assistance provided varies widely. However, to give practical effect to
the significant relationship element of the RAISE Family Caregivers Act
definition of family caregiver while avoiding an overbroad application
of the exclusion, we are establishing criteria to ensure the caregiving
relationship is significant enough to justify exclusion from the
community engagement requirement. States must apply these criteria to
identify caregiving relationships that are sufficiently significant to
qualify the family caregiver as a specified excluded individual through
section 1902(xx)(9)(A)(ii)(III) of the Act. These criteria do not
redefine who a family caregiver is but instead should be applied when
States determine if an individual who meets the family caregiver
definition at Sec. 435.554(a) qualifies as a specified excluded
individual. These criteria apply to all family caregivers regardless of
whether the individual is a paid or an unpaid family caregiver, as the
purpose of the exclusion is to recognize the time and responsibility
associated with being a family caregiver, regardless of compensation.
To simplify State administration and reduce beneficiary confusion,
the criteria that pertain to a ``relative,'' as described below, are
structured to align with the relationships recognized under the
caretaker relative definition as discussed earlier in this section and
defined at Sec. 435.554(a). Given that section 1902(xx)(9)(A)(ii)(III)
of the Act lists family caregivers and caretaker relatives as separate
and distinct groups subject to the exclusion, we are not requiring that
a family caregiver reside with or assume primary responsibility for the
care of the dependent child or disabled individual. This reflects the
varied and individualized nature of family caregiving arrangements and
ensures the family caregiver exclusion operates separately and apart
from the caretaker relative exclusion while allowing States to build on
existing administrative infrastructure and relationship determinations.
As implemented at a new Sec. 435.554(c)(3)(i), an individual who
is a family caregiver as defined at Sec. 435.554(a) is a specified
excluded individual if he or she meets one of the following criteria:
1. The individual primarily resides with a dependent child or
disabled individual, as these terms are defined earlier, for whom he or
she provides assistance that occurs on a regular basis and is not
solely incidental in nature;
2. The individual is a relative (as specified in the ``caretaker
relative'' definition at Sec. 435.554(a) without regard to the
requirements to live with and to assume primary responsibility) of a
dependent child or disabled individual, as these terms are defined
earlier, for whom he or she provides assistance that occurs on a
regular basis and is not solely incidental in nature, and with whom he
or she does not reside; or
3. The individual does not reside with and is not a relative (as
specified in the ``caretaker relative'' definition at Sec. 435.554(a)
without regard to the requirements to live with and to assume primary
responsibility) of a dependent child or disabled individual, as these
terms are defined earlier, for whom he or she provides not less than 80
hours of assistance that is not solely incidental in nature per month.
We view shared residence with the care recipient and familial
relationship to the care recipient as consistent with ongoing
caregiving responsibility and as strong evidence of the ``significant
relationship'' specified in the RAISE Family Caregivers Act definition
of family caregiver. According to Pew Research Center, 10 percent of
all U.S. adults say they are a caregiver for a parent age 65 or
older.\56\ The full extent of the care provided by family caregivers to
individuals with whom they live or to whom they are related is
difficult to fully quantify, as often this care and support is
unrecognized and unpaid. Family caregivers who live with the recipient
of that care are more likely to be involved in daily, more intensive,
round-the-clock care, assistance, or supervision. Relatives of care
recipients are also often called upon to provide extensive support at
all hours, particularly if they live close to the care recipient.
Caring for relatives occurs both within and across households, and with
more older adults choosing to remain in their own homes and
communities, the prevalence of long-distance caregivers has increased
to approximately 15 percent (5 to 7 million) of all family
caregivers.\57\
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\56\ Parker, K. ``Family Caregiving in an Aging America.'' Pew
Research Center, February 2026. <a href="https://www.pewresearch.org/wp-content/uploads/sites/20/2026/02/ST_2026.2.26_family-caregivers_report.pdf">https://www.pewresearch.org/wp-content/uploads/sites/20/2026/02/ST_2026.2.26_family-caregivers_report.pdf</a>.
\57\ Sadick, B. ``How to Provide Long-Distance Caregiving.''
U.S. News, June 3, 2025. <a href="https://health.usnews.com/senior-care/articles/how-to-provide-long-distance-caregiving">https://health.usnews.com/senior-care/articles/how-to-provide-long-distance-caregiving</a>.
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[[Page 33371]]
For these reasons, we believe that co-residence and familial
relationship are sufficient indicators to establish an ongoing
significant caregiving relationship, particularly given the often
personal and intense nature of the care provided by family caregivers
who live with or are related to the care recipient, the regularly
occurring provision of that care, and the impact of that care to the
care recipient. As such, family caregivers who live with or are related
to a dependent child or a disabled individual for whom they provide
assistance that occurs on a regular basis and is not solely incidental
in nature are not required to demonstrate provision of a minimum number
of caregiving hours under this regulation. As described in section
II.I.7.c. of this IFC, States are required to obtain sufficient
information, including documentation when applicable, to verify an
individual's status as a specified excluded individual through the
family caregiver component of section 1902(xx)(9)(A)(ii)(III) of the
Act.
We also recognize that some individuals provide caregiving supports
to non-relatives with whom they do not reside. While the majority of
family caregivers provide care for a relative, 11 percent care for a
friend, neighbor, or other nonrelative.\58\ The intensity of care
provided in these situations varies widely from limited, episodic, or
incidental assistance to substantial, ongoing hands-on support. While
we recognize that even limited assistance may help an individual with a
disability remain in their own home, as noted at the beginning of this
section, we interpret the inclusion of family caregivers as a component
of the exclusions at section 1902(xx)(9)(A)(ii)(III) of the Act as
recognizing individuals whose caregiving responsibilities meaningfully
limit their ability to participate in work or other community
engagement activities. As such, we believe it is necessary to establish
a clear and practical standard for family caregivers who do not live
with, and are not related to, the recipient of the care he or she
provides.
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\58\ AARP and National Alliance for Caregiving. (2025).
``Caregiving in the U.S.'' <a href="https://www.aarp.org/content/dam/aarp/ppi/topics/ltss/family-caregiving/caregiving-in-us-2025.doi.10.26419-2fppi.00373.001.pdf">https://www.aarp.org/content/dam/aarp/ppi/topics/ltss/family-caregiving/caregiving-in-us-2025.doi.10.26419-2fppi.00373.001.pdf</a>.
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The 80-hour per month threshold reflects a sustained and regular
commitment of time providing care, roughly equivalent to an average of
20 hours per week. This level of caregiving demonstrates a significant
relationship with the care recipient and indicates an active caregiving
role comparable to part-time employment, job training, or other
community activities that would otherwise satisfy the community
engagement requirement. The threshold also serves a program integrity
function by reducing the likelihood that an individual will qualify as
a specified excluded individual under the family caregiver component at
section 1902(xx)(9)(A)(ii)(III) of the Act based on informal or
sporadic assistance, helping ensure the exclusion is reserved for
individuals with caregiving responsibilities that are significant
enough to justify exclusion from the community engagement requirement.
We also considered State administration of these requirements, and
the 80-hour threshold also provides a clear, objective benchmark that
States can administer consistently. Without a defined minimum threshold
of caregiving, States would be required to make subjective judgements
about the sufficiency of caregiving activities, increasing the risk of
inconsistent decisions and uneven application across States. This
standard reduces subjectivity, supports more uniform implementation
across States, and promotes more predictable outcomes for States and
beneficiaries.
We recognize that a person who meets the family caregiver
definition in Sec. 435.554(a) might provide significant and meaningful
caregiving to a dependent child or a disabled individual to whom he or
she is neither related nor resides with, but that he or she might not
qualify as a specified excluded individual because the hours of
assistance provided do not reach the 80-hour per month threshold. Such
a person would be an applicable individual unless eligible for other
exclusions. However, as noted earlier in section II.C.1. of this IFC,
the hours of assistance provided by such an individual would count as
unpaid work under Sec. 435.552(b) and the individual would only need
to engage in additional activities sufficient to reach the 80-hour
threshold to comply with the community engagement requirement. For
example, if an individual provides 55 hours per month of assistance to
a non-relative who he or she does not live with, those 55 hours would
count towards compliance with the community engagement requirement, and
the family caregiver would need 25 additional hours a month of the
activities listed in section 1902(xx)(2) of the Act, such as community
service or participation in an educational program, to demonstrate
compliance.
To summarize, we are implementing at new Sec. 435.554(c)(3)(i) the
family caregiver component of the exclusion at section
1902(xx)(9)(A)(ii)(III) of the Act by considering the following to be
specified excluded individuals: individuals who meet the definition of
a family caregiver at Sec. 435.554(a) who reside with or are a
relative (as specified in the caretaker relative definition at Sec.
435.554(a) without regard to the requirements to live with or to assume
primary responsibility) of a dependent child or a disabled individual
for whom he or she provides assistance that occurs on a regular basis
and is not solely incidental in nature, or who provide not less than 80
hours of assistance that is not solely incidental in nature per month
to a dependent child or a disabled individual to whom they are not
related and with whom they do not reside. We believe this approach
allows us to give practical effect to the ``significant relationship''
element of the RAISE Family Caregivers Act without constraining States
to a single definition and that the criteria are reliable indicators
that a caregiving relationship is ongoing, meaningful, and not merely
incidental or episodic. Co-residency and familial relationship
generally reflect an inherent level of connection and responsibility,
while the minimum hours threshold for family caregivers who do not live
with and are not related to a dependent child or disabled individual
ensures that the family caregiver exclusion applies where there is a
demonstrable and sustained caregiving role. The criteria also provide
clear standards while recognizing and preserving the varied and
individualized nature of caregiving arrangements.
Finally, as States implement the family caregiver component of the
exclusion at section 1902(xx)(9)(A)(ii)(III) of the Act, they must
ensure that they are conducting outreach consistent with the Medicaid
outreach requirements at Sec. 435.561. We also encourage States to
consider general public outreach efforts to complement the required
outreach so the public can clearly understand which individuals may
qualify as a specified excluded individual under the family caregiver
component. Individuals who are family caregivers may not realize that
they qualify for an exclusion to the community engagement requirement
and will need clear, consumer friendly information to help them
understand whether they are excluded. For more information on Medicaid
outreach requirements, see Sec. 435.561 and the related discussion in
section II.L. of this IFC.
[[Page 33372]]
4. Veteran With a Disability Rated as Total
Section 1902(xx)(9)(A)(ii)(IV) of the Act creates an exclusion for
veterans with a total disability rating. The statute references 38
U.S.C. 1155, which provides VA the authority to create a schedule for
rating disabilities. VA assigns disability ratings based on the
severity of a veteran's service-connected condition(s), which is stated
as a percentage. For purposes of community engagement, a total, or 100
percent, disability rating from VA is necessary to qualify for the
exclusion. VA may assign total disability ratings that are permanent or
temporary; either would qualify an individual for the exclusion, if
rated at 100 percent. New Sec. 435.554(c)(4) adopts this ``veteran
with a disability rated as total'' definition for purposes of the
community engagement exclusion at section 1902(xx)(9)(A)(ii)(IV) of the
Act.
Some veterans receive total disability based on individual
unemployability (TDIU), which allows veterans with service-connected
disabilities to receive 100 percent compensation if they cannot secure
or maintain ``substantial gainful employment,'' even if their combined
rating is below 100 percent. These veterans, due to receipt of 100
percent compensation, must be treated by States in the same manner as
all other veterans who have a combined disability rating of 100
percent, thus meeting the exclusion.
Some veterans will receive a permanent and total (P&T) disability
which means that a veteran has a 100 percent (total) disability rating,
and their condition is considered static (permanent) with no
expectation of improvement. While a veteran only needs a total (100
percent) VA disability rating to meet the exclusion, States are not
permitted to reverify a permanent disability determination. Conversely,
temporary disabilities assigned by the VA, which are sometimes time-
limited or are expected to improve over time, will require
reverification at least once every 12 months. For more information
about verification requirements and recommended data sources for
veterans with total disability ratings, see section II.I.7.d. of this
IFC.
5. An Individual Who is Medically Frail or Otherwise has Special
Medical Needs
a. Background
The definition of a specified excluded individual at section
1902(xx)(9)(A)(ii)(V) of the Act includes an individual who is
medically frail or otherwise has special medical needs (henceforth
referred to as medically frail). Specifically, section
1902(xx)(9)(A)(ii)(V) of the Act provides that specified excluded
individuals must include an individual, ``(V) who is medically frail or
otherwise has special medical needs (as defined by the Secretary),
including an individual--(aa) who is blind or disabled (as defined in
section 1614 of the Act); (bb) with a substance use disorder (SUD);
(cc) with a disabling mental disorder; (dd) with a physical,
intellectual or developmental disability that significantly impairs
their ability to perform 1 or more ADLs; or (ee) with a serious or
complex medical condition.'' We are defining medically frail
individuals as individuals who meet one or more of the five categories
identified at section 1902(xx)(9)(A)(ii)(V) of the Act. As described in
more detail in section II.E.5.b. of this IFC, at Sec. 435.554(c)(5) we
define medically frail individuals for the purposes of the community
engagement exclusion.
The community engagement requirement has the potential to empower
Medicaid beneficiaries through employment, education, or volunteer
service so they can escape isolation and dependency, build confidence,
achieve self-sufficiency and prosperity, and improve health. However,
this mandatory exclusion from the community engagement requirement
protects access to necessary health care services for individuals who
are medically frail and may have physical or behavioral health
conditions that significantly impair their ability to consistently work
or participate in other community engagement activities defined at
Sec. 435.552.
Section 1937(a)(2)(B)(vi) of the Act exempts individuals who are
medically frail, including individuals eligible under the State plan
adult group, from mandatory enrollment in a benchmark or benchmark-
equivalent benefit package (which we refer to as an alternative benefit
plan (ABP)), that does not offer all services at the same or higher
amount, duration, and scope covered under the State's traditional
Medicaid State plan. We are not adopting the ABP medically frail
definition for purposes of the community engagement medically frail
exclusion for the reasons stated in this section of the preamble. While
the medically frail exclusions for purposes of ABP and community
engagement both apply to individuals eligible under the adult group,
they are distinct from each other in that they are in two different
sections of the statute that apply to different aspects of the Medicaid
program. The medically frail exclusion for the ABP only impacts an
individual's Medicaid benefit package selection, while the medically
frail exclusion under the community engagement requirement determines
if an individual needs to demonstrate community engagement to maintain
Medicaid eligibility.
Section 1937(a)(2)(B)(vi) of the Act provides that individuals who
are medically frail should be identified in accordance with regulations
issued by the Secretary. That regulation, Sec. 440.315(f), provides
that States must identify individuals who are medically frail for
purposes of the ABP requirements, and that the State's definition for
that purpose must at least include those individuals described in Sec.
438.50(d)(3), individuals with disabling mental disorders (including
children with serious emotional disturbances and adults with serious
mental illness), individuals with chronic SUDs, individuals with
serious and complex medical conditions, individuals with a physical,
intellectual or developmental disability that significantly impairs
their ability to perform one or more ADLs, or individuals with a
disability determination based on Social Security criteria or in States
that apply more restrictive criteria than the SSI \59\ program, the
State plan criteria.\60\
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\60\ The community engagement requirement does not apply to
children under the age of 19 and therefore is not applicable to the
individuals described in Sec. 438.50(d)(3) or children with serious
emotional disturbances. The regulation at Sec. 438.50(d)(3)
includes children under the age of 19 eligible for SSI under Title
XVI of the Act; eligible under section 1902(e)(3) of the Act; in
foster care or other out-of-home placement; receiving foster care or
adoption assistance; or receiving services through a family-
centered, community-based, coordinated care system that receives
grant funds under section 501(a)(1)(D) of Title V of the Act, and is
defined by the State in terms of either program participation or
special health care needs.
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The ABP definition of medically frail at Sec. 440.315(f) is very
similar to the community engagement medically frail definition at
section 1902(xx)(9)(A)(ii)(V) of the Act. However, unlike the
definition at Sec. 440.315(f), the community engagement medically
frail definition specifically includes blind individuals; uses the term
``or'' instead of ``and'' for individuals with serious or complex
medical conditions; does not include children under the a
[…truncated; see source link]Indexed from Federal Register on June 3, 2026.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.