A coalition of 25 states and the District of Columbia is suing the Trump Administration over its implementation of new federal Medicaid work requirements, arguing that the Centers for Medicare & Medicaid Services (CMS) went beyond what Congress authorized when it established rules governing exemptions for people with serious medical conditions.

The dispute stems from the 2025 budget reconciliation law signed by President Donald Trump, which requires most adults covered through the Affordable Care Act’s Medicaid expansion to demonstrate at least 80 hours per month of employment, education, job training or community service to maintain eligibility. The requirements take effect on January 1, 2027, although states may implement them earlier. Certain populations—including some parents and caregivers, pregnant women and people who are medically frail—are exempt.

The lawsuit, Commonwealth of Massachusetts v. Oz, does not primarily challenge Congress’ authority to establish Medicaid work requirements. Instead, the states are challenging how CMS interpreted and implemented several of the law’s exemptions.

CMS’ June interim final rule requires a person seeking the “medically frail” exemption to have a condition that significantly impairs the individual’s ability to satisfy the work requirement. This means a person cannot automatically qualify simply because they have a condition like cancer, heart disease or ALS. Instead, the state must assess each situation and whether that condition “substantially limits” the person’s ability to work.

The states argue Congress didn’t include that additional limitation, thus medically frail people and those with special medical needs to be categorically excluded. They also object to CMS’ use of a 12-month look-back period in determining medical frailty, restrictions on states’ ability to accept self-attestation and the Agency’s interpretation of exemptions for short-term emergencies.

Massachusetts, California and New Jersey are among the states leading the case. Other plaintiffs include Arizona, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maine, Maryland, Michigan, Minnesota, Nevada, New Mexico, New York, North Carolina, Oregon, Rhode Island, Vermont, Virginia, Washington and Wisconsin, along with the District of Columbia and the governors of Kentucky and Pennsylvania.

The states argue the rule  conflicts with the statute Congress enacted and could result in eligible beneficiaries losing coverage because of paperwork and verification requirements rather than because they failed to satisfy the underlying requirement. They also argue the federal government improperly changed states’ obligations after states had already begun building systems to implement the law. The Trump Administration maintains the rule is necessary to establish a workable national framework for implementing the requirements.

The states have not yet succeeded in stopping the rules. In July, U.S. District Judge Richard Stearns denied their request for a preliminary injunction, finding they had not demonstrated imminent irreparable harm. The case remains pending, with a summary-judgment hearing scheduled for Oct. 20.

The stakes extend well beyond the lawsuit. The Congressional Budget Office estimates the Medicaid work requirement provisions will reduce federal Medicaid spending by about $326 billion over 10 years and increase the number of uninsured Americans by roughly 5.3 million in 2034.