Arizona has been working on Medicaid work requirements for several years. AHCCCS (our state Medicaid agency) even received federal approval for a waiver to start work requirements in 2024 due to a law signed by Ducey in 2015.
But before the program could launch Congress passed HR1, which set new, national work requirements for every state.
Because of that change, Arizona will now begin work requirements on the same timeline as the rest of the country. Right now, that start date is expected to be January 2027.
AHCCCS says they don’t plan to start work requirements early using the old waiver. Instead, they’ll move forward under the new rules in HR1.
What HR1 Means for Arizona
HR1 makes work requirements part of federal law. It also limits the federal government’s ability to change or weaken those rules. Even though Mehmet Oz is in charge of CMS, HR1 doesn’t give him the power to create new, nationwide policy. Congress wrote HR1 so states (not CMS) decide the details of who’s exempt, as long as states stay within the boundaries of the law.
But- if a state proposes exemptions that Oz thinks are too broad he can argue that the state is outside the HR1 guardrails and can decide not to approve their state plan.
This means Arizona should have the flexibility to define things like:
- Who’s “medically frail” (e.g. able bodied)
- Who counts as a caregiver
- What counts as a temporary illness
- What hardship or “good cause” exemptions look like
- What documentation people need to show
- How work hours will be checked
Oz can review a state’s choices, but he can’t rewrite the rules or add new exempt groups. His job (via HR1) is to make sure Arizona’s following HR1, not to micromanage the program.
UPDATE: View CMS Guidance for Work & Community Engagement Requirements
UPDATE: View the American Hospital Association’s Take on the Work/Community Engagement Requirements
What AHCCCS Has Done So Far
Think of what AHCCCS is doing right now as grading a road before construction begins. They know the path they need to take, but they’re still waiting for instructions about the exact “route and materials” required. CMS says more guidance will come by June 2026.
Much of the planning AHCCCS has already completed for its earlier waiver can now be reused. I expect them to use many of the same definitions and processes they developed last year. This helps keep the work moving while they wait for more federal direction.
AHCCCS is also looking at how people will report their work activities. They haven’t yet decided whether this tool will be inside Health-e-Arizona Plus or linked to it, but the goal is to make the process as simple as possible for members.
CMS has also encouraged states to reuse systems they already have, such as the work-verification tools used for SNAP. This could make it easier for members who already report work information for other programs.
Costs and Planning
AHCCCS has estimated the costs of getting ready for the 2027 start date. You can find these on pages 7 and 195 of their FY 2027 budget request: : FY2027 AHCCCS Budget.
These numbers may change as Arizona learns more from CMS and moves further down the implementation road.
Editorial Note: In my experience rewriting code on a legacy computer program to bolt on a new set of circumstances is fraught with challenges. Usually, the person that wrote the initial code is long gone and often the code documentation is lost or never existed – making it super hard for the programmers.
Add to that government agencies often don’t have the funds to get started writing the code and or don’t have the parameters they need to make the changes in time. This often leads to the deployment of untested programs that have all kinds of glitches. In this case – the glitches will end up with persons who meet the work requirements being unable to prove it to the agency that they do and then losing all health insurance.
Time is a critical factor. Let’s hope AHCCCS has things sufficiently lined up to be able to execute this effectively in 13 months.
