Federal Medicaid work rule excludes homelessness as automatic exemption

Montana plans to begin Medicaid coverage removals in October

The federal government finalized regulations this spring requiring millions of people who receive Medicaid benefits to prove they are working, volunteering, or going to school to keep their coverage. States have until January to begin the checks, most states will start in January 2027, and Montana, Arkansas, and Nebraska have already begun implementing the requirements. Montana plans to start removing enrollees from coverage in October 2026 if they cannot demonstrate they are in compliance.

The regulations exempt people with disabilities, those older than 64, pregnant people, and Native Americans, among others. Enrollees without a clear-cut qualification — such as age or disability status — must prove they are too sick to work. The administration decided that homelessness is not a medical condition and cannot count as an automatic exemption. Several states have tried to treat it that way: at least four, including Montana, proposed policies that included homelessness as an exemption, but federal officials said that is not allowed. In an email to KFF Health News, the Centers for Medicare & Medicaid Services declined to comment on the record and confirmed that states must stick to the federal government’s list.

Homelessness in the U.S. has increased 27% from 2013 to 2025, according to Department of Housing and Urban Development data, and about 746,000 people were homeless last year. Many, like Pugh, qualified for Medicaid, although the number of enrollees who are homeless is hard to measure. In 2023, for example, 55% of patients in one of the nation’s roughly 300 Health Care for the Homeless centers were enrolled in Medicaid.

Jennifer Tolbert, deputy director of KFF’s Program on Medicaid and the Uninsured, said the federal regulations are far stricter than many states expected, even those on board with work requirements. “It took everyone by surprise,” Tolbert said. KFF is a health information nonprofit that includes KFF Health News.

Mehmet Oz, who leads CMS, touted the regulations as a “path to prosperity” during a press conference in June. “We need to get people to try to work,” Oz said. That month, 25 mostly Democratic-led states sued the Trump administration over the rules, arguing the medical-frailty standard would be too hard for enrollees to meet and for states to assess. The Congressional Budget Office projects the requirements will add more than 5 million people to the nation’s uninsured by 2034.

The discrepancy between state and federal exemption lists extends beyond homeless people. Montana lawmakers planned to excuse people fleeing domestic violence and caregivers of hospitalized family members — two groups not on the federal list. “These are simply parties that, due to a number of conditions, cannot meet those requirements,” Republican Rep. Ed Buttrey said in 2019, when Montana passed its first Medicaid work requirement bill. Buttrey did not comment for this article.

Federal officials say many homeless people could still qualify for an exemption, such as being too sick to work. But Montana’s system to mechanically check exemptions through medical records isn’t ready; Jon Ebelt, a health department spokesperson, said it should be in place by October. Anyone not automatically exempt has 30 days to prove their case.

For Tywon Pugh, those 30 days look different without a home. Pugh has seizures that make finding and keeping a job hard; when one cost him his last job, at a fast-food restaurant in Missoula, he said his manager called him “a liability to the job site.” After he lost work in the past, his wife of 10 years covered their rent while he tended the house until his next job. His wife died last year and Pugh became homeless. His problem with alcohol worsened, which made his seizures harder to control. “When she died, my whole base was depleted,” he said.

Medicaid pays for the prescriptions that keep Pugh’s seizures at bay. The coverage would also pay for an addiction clinic he has tried to get into, he said, but he was told there’s a waitlist. His goal, Pugh said, has been to get healthy enough to work again.

“My Medicaid is still active, but when are they gonna cut that off from me?” Pugh said. “I can’t get employed. How am I supposed to survive?”

One day in June, with temperatures hovering around 90 degrees, Pugh visited Watershed Navigation Center, a refuge run by Partnership Health Center for people without steady housing to have a meal or see a doctor. His doctor, Atarah Sidey, told him the neurology clinic that managed his seizures had dismissed him after he missed three appointments. She referred him to the other neurologist in town and talked about finding treatment for his addiction. “It’s just that if I don’t make the effort at changing, it ain’t gonna work, and I’m going to end up found on the side of the road somewhere,” Pugh told Sidey. “You got this, though, Tywon,” she answered as he nodded. “You can do this.”

Service providers in Montana said they worry people who qualify for exemptions will get lost in bureaucracy. “You can’t really worry about getting paperwork done when you don’t know where you’re eating today,” said Dustin Goss, a case manager at Samaritan House, a shelter in Kalispell. Cassidy Kipp, who heads Samaritan House, said clients who have safe housing and stabilize very often find work — but they often start with temporary and informal jobs, such as cleaning a rental housing — that don’t come with a pay stub. Kaitlyn Bosshardt, a social worker at Partnership Health Center in Missoula, said she has seen more people priced out of long-term rentals as housing costs outpace paychecks, with limited affordable housing and rental support.

Partnership Health Center is one of roughly 1,400 health centers nationwide that receive federal funding to serve patients based on what they can afford, so people who lose Medicaid can continue getting care there. But organizations representing health centers say if too many patients lose coverage, some clinics can’t fill the financial hole. What’s more, these clinics generally don’t provide specialty care.

Pugh may qualify for a pass due to his seizures, but access to doctors has been difficult. The anniversary of his wife’s death just passed; he typically has to find a new place to sleep outside each night, and he says he lost his wallet and important documents on a camping night. With Medicaid-covered addiction treatment centers overbooked, he said he has relied on willpower to avoid alcohol. “I’m taking it one day at a time,” he said. By late July, he had connected with a social worker to help keep his Medicaid, was waiting for treatment space at a Missoula addiction center, and had two job applications pending.

In the hard moments, Pugh said he imagines his wife telling him to stay calm, and to not lose hope. “I just don’t wanna lose hope in the meantime,” he said.