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Understanding the Intersection of Medicaid and Work

Medicaid is the nation’s public health insurance program for people with low incomes. Overall, the Medicaid program covers more than 70 million Americans, or 1 in 5, including many with complex and costly needs for care. Historically, nonelderly, non-disabled adults accounted for a small share (27%) of Medicaid enrollees; however, the enactment and implementation of the Affordable Care Act (ACA) has expanded coverage to nonelderly adults with income up to 138% FPL, or $16,394 for an individual in 2016. As of January 2017, 32 states have implemented the ACA Medicaid expansion. By design, the expansion extended coverage to the working poor (both parents and childless adults), most of whom do not otherwise have access to affordable coverage. With the expansion to more “able-bodied” adults, questions have arisen about tying work to eligibility.

President Trump may consider waiver proposals with a work requirement, and the Administration and leaders in Congress are considering proposals to repeal the ACA and to transform Medicaid from an entitlement program with guaranteed federal matching dollars for states to a block grant with no entitlement and capped funding. Such proposals would grant states additional flexibility to design and administer their programs and potentially include an option to allow states to impose a work requirement for Medicaid beneficiaries, which is not allowed under current law.  This issue brief examines the work status of non-elderly, non-disabled adults with Medicaid coverage to understand the potential implications of work requirement proposals in Medicaid.

Key Takeaways
This brief provides an overview of work status of non-disabled, adult Medicaid enrollees and examines some of the policy proposals around tying Medicaid coverage to work.

  • Among non-disabled, non-elderly Medicaid adults (including parents and childless adults — the group targeted by the Medicaid expansion) nearly 8 in 10 live in working families, and a majority are working themselves. However, nearly half of working Medicaid enrollees are employed by small firms, and many work in industries with low ESI offer rates.
  • Among the non-disabled, non-elderly adult Medicaid enrollees who were not working, most report major impediments to their ability to work.
  • Under current law, states cannot impose a work requirement as a condition of Medicaid eligibility, but some states have sought to impose a work requirement for the Medicaid expansion population through waivers; the prior administration did not approve these requests.  The issue of work requirements may be re-examined by the new administration and may be debated in Congress as part of broader efforts to restructure Medicaid financing and core federal requirements.


Among non-disabled, non-elderly adults with Medicaid coverage—those most likely to be in the workforce—nearly 8 in 10 live in working families, and a majority are working themselves.
Because policies around work requirements would apply to primarily to non-disabled adults (parents and childless adults), we focus this analysis on this group. Data show that among the 24 million non-disabled adults (ages 19-64) enrolled in Medicaid in 2015, 6 in 10 (59%) are working themselves (Figure 1). A larger share, nearly 8 in 10 (78%), are in families with at least one worker, with nearly two-thirds (64%) with a full-time worker and another 15% with a part-time worker; one of the adults in such families may not work, often due to caregiving or other non-work responsibilities. Because states that expanded Medicaid under the ACA cover adults with family incomes at higher levels than those that did not, adults in Medicaid expansion states are more likely to be in working families or working themselves than those in non-expansion states (Table 1).

Figure 1: Work status of non-disabled, adult Medicaid enrollees, 2015

Figure 1: Work status of non-disabled, adult Medicaid enrollees, 2015

Most Medicaid enrollees who work are working full-time for the full year. Among non-disabled Medicaid enrollees who work, the majority (51%) worked full-time for the entire year, and most (84%) worked at the same job for the entire year (data not shown). Many (59%) are working 40 hours a week or longer. By definition (that is, in order to meet Medicaid eligibility criteria), these individuals are working low-wage jobs. For example, an individual working full-time for the full year at the federal minimum wage would earn an annual salary of just over $15,000 a year, or about 125% of poverty, below the 138% FPL range targeted by the ACA Medicaid expansion. Among non-disabled Medicaid enrollees who work part-time, many cite economic reasons such as inability to find full-time work (12%) or slack business conditions (12%) as the reason they work part-time versus full-time. Other major reasons are attendance at school (13%) or other family obligations (11%).

Nearly half of working Medicaid enrollees are employed by small firms, and many work in industries with low ESI offer rates.  Working Medicaid enrollees work in firms and industries that often have limited employer-based coverage options. Four in ten workers in this group work for small firms with fewer than 50 employees that will not be subject to ACA penalties for not offering coverage (Figure 2). Further, many firms do not offer coverage to part-time workers. Four in ten workers in this group work in industries with historically low insurance rates, such as the agriculture and service industries. A closer look by specific industry shows that one-third of working Medicaid enrollees are employed in ten industries, with one in 10 enrollees working in restaurants or food services (Figure 3). The Medicaid expansion was designed to reach low-income adults left out of the employer-based system, so, it is not surprising that among those who work, most are unlikely to have access to health coverage through a job. 

Figure 2: Work characteristics of working adult Medicaid enrollees, 2015

Figure 2: Work characteristics of working adult Medicaid enrollees, 2015

Figure 3: Industries with largest number of workers covered by Medicaid, 2015

Figure 3: Industries with largest number of workers covered by Medicaid, 2015

Research shows that Medicaid expansion has not negatively affected labor market participation, and some research indicates that Medicaid coverage supports work. A comprehensive review of research on the ACA Medicaid expansion found that there is no significant negative effect of the ACA Medicaid expansion on employment rates and other measures of employment and employee behavior (such as transitions from employment to non-employment, the rate of job switches, transitions from full- to part-time employment, labor force participation, and usual hours worked per week). In addition, focus groups, state studies, and anecdotal reports highlight examples of Medicaid coverage supporting work and helping enrollees transition into new careers. For example, individuals have reported that receiving medication for conditions like asthma or rheumatoid arthritis through Medicaid is critical in supporting their ability to work.

Among the non-disabled, non-elderly Medicaid enrollees who were not working, most report major impediments to their ability to work.  Even though individuals qualifying for Medicaid on the basis of a disability through SSI were excluded from this group, more than one-third of those not working reported that illness or disability was the primary reason for not working. Another 28% reported that they were taking care of home or family; 18% were in school; 8% were looking for work and another 8% were retired (Figure 4). Women accounted for 62% of Medicaid enrollees who were not working in 2015.

Figure 4: Main reasons for not working among non-disabled, adult Medicaid enrollees, 2015

Figure 4: Main reasons for not working among non-disabled, adult Medicaid enrollees, 2015

Under current law, states cannot impose a work requirement as a condition of Medicaid eligibility. As with other core requirements, the Medicaid statute sets minimum eligibility standards, and states are able to expand coverage beyond these minimum levels. Prior to the ACA, individuals had to meet not only income and resource requirements but also categorical requirements to be eligible for the program. These categorical requirements provided coverage pathways for adults who were pregnant women or parents as well as individuals with disabilities, but other adults without dependent children were largely excluded from coverage. The ACA was designed to fill in gaps in coverage and effectively eliminate these categorical eligibility requirements by establishing a uniform income threshold for most adults. All states have expanded coverage for children and individuals with disabilities, most states have expanded coverage for pregnant women, and 32 states have adopted the Medicaid expansion coverage.  While states can expand coverage, they are not allowed to impose other eligibility requirements that are not in the law.

Some states have proposed tying Medicaid eligibility to work requirements using waiver authority. Under Section 1115 of the Social Security Act, the Secretary of HHS can waive certain provisions of Medicaid as long as the Secretary determines that the initiative is a “research and demonstration project” that “furthers the purposes” of the program. In implementing the ACA Medicaid expansion, a number of states considered proposals to impose a work requirement including Arizona, Indiana, Montana, New Hampshire and Pennsylvania.  The Obama administration did not approve waivers that would condition Medicaid eligibility on work on the grounds that they did not meet the waiver test to further the purpose of the program which is to provide health coverage. Montana and Indiana offer voluntary state-funded work referral programs for their waiver populations and have experienced low participation to date. Notably, the Indiana waiver extension request that was submitted to CMS on January 31, 2017, did not include a request for a work requirement in HIP 2.0.

With the expansion of coverage under the ACA to more “able-bodied” adults, the issue of work requirements may be re-examined by the new administration and may be debated in Congress; however, the potential impact of these programs is unclear. Kentucky has a waiver pending that would transition its current Medicaid expansion from a state plan amendment to a waiver. Among other changes, the waiver would require up to 20 hours per month of employment activities as a condition of eligibility for most adults. Failure to meet the required work hours would result in suspended benefits until the person complies for a full month. Other states may also seek such requirements through waivers requests. By design, the expansion extended coverage to the working poor, most of whom do not otherwise have access to affordable coverage. Given that almost 8 in 10 adult Medicaid enrollees are in a working family and six in ten are already working themselves, work requirements would have a narrow reach and could negatively affect those who are not working due to impediments such as illness and care-giving responsibilities.

Rachel Garfield and Robin Rudowitz are with the Kaiser Family Foundation. Anthony Damico is an independent consultant to the Kaiser Family Foundation.

Table 1: Family and Own Work Status of Nondisabled, Nonelderly Adult Medicaid Enrollees, 2015
State Share in Working Family Share Working Themselves
Expansion states (median) 81% 62%
Alaska 83% 66%
Arizona 81% 62%
Arkansas 76% 56%
California 81% 61%
Colorado 88% 67%
Connecticut 87% 65%
Delaware 83% 60%
DC 71% 57%
Hawaii 79% 61%
Illinois 79% 59%
Indiana 79% 63%
Iowa 91% 73%
Kentucky 66% 51%
Maryland 81% 63%
Massachusetts 82% 65%
Michigan 70% 53%
Minnesota 85% 73%
Nevada 86% 65%
New Hampshire 74% 60%
New Jersey 83% 62%
New Mexico 80% 63%
New York 81% 59%
North Dakota 80% 71%
Ohio 81% 66%
Oregon 82% 66%
Pennsylvania 72% 55%
Rhode Island 79% 62%
Vermont 77% 68%
Washington 87% 70%
West Virginia 70% 56%
Non-expansion states (median) 73% 58%
Alabama 59% 39%
Florida 73% 52%
Georgia 69% 48%
Idaho 81% 64%
Kansas 78% 64%
Louisiana* 70% 52%
Maine 83% 61%
Mississippi 65% 46%
Missouri 69% 59%
Montana* 77% 60%
Nebraska 66% 58%
North Carolina 74% 48%
Oklahoma 71% 56%
South Carolina 75% 59%
South Dakota 67% 54%
Tennessee 71% 50%
Texas 73% 49%
Utah 79% 58%
Virginia 79% 60%
Wisconsin 81% 61%
Wyoming 83% 71%
NOTE: Louisiana and Montana expanded Medicaid in 2016. Because these data are for 2015, they are classified as non-expansion states in this analysis.
SOURCE: Kaiser Family Foundation analysis of March 2016 Current Population Survey.

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Filling the need for trusted information on national health issues, the Kaiser Family Foundation is a nonprofit organization based in Menlo Park, California.