MISSOULA, Mont. — For Tywon Pugh, a 46-year-old Montana resident battling recurrent seizures and the devastating loss of his wife, Medicaid is not a bureaucratic safety net; it is an absolute lifeline. The subsidized coverage pays for the prescriptions that keep his seizures at bay and holds the promise of an addiction treatment program. Yet, as sweeping new federal mandates take effect, Pugh finds himself trapped in a precarious dilemma: prove he is working to keep his healthcare, or lose it entirely because he cannot.

In the spring of 2026, the federal government finalized regulations requiring millions of Medicaid beneficiaries to prove they are working, volunteering, or attending school to maintain their coverage. While states have until January to begin these compliance checks, conservative-leaning states like Montana, Arkansas, and Nebraska have already initiated early implementation phases.

The Exemption Gap

The Trump administration’s federal work requirements include specific exemptions for individuals with disabilities, those over 64, pregnant people, and Native Americans. However, the administration explicitly decided that homelessness is not a medical condition and cannot serve as an automatic exemption. This federal mandate overrides previous state-level proposals in Montana, Arizona, Kentucky, and Utah, which had sought to include homelessness as a valid exemption from work requirements.

Federal officials maintain that states must strictly adhere to the federal list of exemptions. The Centers for Medicare & Medicaid Services (CMS) confirmed to KFF Health News that states cannot unilaterally expand these categories. This rigid stance comes at a time when homelessness in the United States has surged by 27% between 2013 and 2025, leaving approximately 746,000 people without stable housing last year alone.

“It took everyone by surprise,” said Jennifer Tolbert, deputy director of KFF’s Program on Medicaid and the Uninsured, noting that the federal regulations are far stricter than many states anticipated, even those ideologically aligned with work requirements.

Projections and Pushback

CMS Administrator Mehmet Oz has championed the regulations as a “path to prosperity,” asserting the necessity of pushing beneficiaries toward employment. However, the policy has triggered fierce legal and political backlash. In June, 25 predominantly Democratic-led states sued the Trump administration, arguing that the medical frailty standard required to claim an exemption is virtually impossible for vulnerable enrollees to navigate and overly burdensome for state agencies to assess.

The Congressional Budget Office projects that these stringent work requirements will increase the number of uninsured Americans by more than 5 million by 2034. In Montana, the state plans to begin disenrolling non-compliant Medicaid recipients as early as October, raising immediate alarms among healthcare providers.

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

The Bureaucratic Reality on the Ground

While federal officials suggest that many homeless individuals might qualify under the “too sick to work” exemption, the infrastructure to automatically verify this through existing medical records is not yet operational in many states. Those who are not automatically exempted face a daunting 30-day window to prove their case—a monumental task for individuals lacking a permanent address, reliable transportation, or consistent access to their medical documentation.

Dustin Goss, a case manager at the Samaritan House homeless shelter in Kalispell, Montana, warned that the policy ignores the brutal reality of survival. “You can’t really worry about getting paperwork done when you don’t know where you’re eating today,” Goss explained. Furthermore, clients who do find informal or temporary work, such as manual labor or day gigs, often lack the formal pay stubs required by the state to prove compliance.

The Official Policy Discourse

Medicaid Work Rule Leaves Homeless People in the Cold - KFF Health News. kffhealthnews.org

— Larry Levitt (@larry_levitt) August 6, 2026

Further reading: Read the full investigative report and patient profiles at KFF Health News.