As the United States marches toward revamped Medicaid work reporting mandates set to go live in 2027, a new policy brief urges policymakers to act now. More specifically, the authors warn that those living with mental health conditions could lose critical care without early intervention.
Drafted by the National Alliance on Mental Illness (NAMI) and the Legal Action Center (LAC), the report sketches out an explicit roadmap to help shore up existing safeguards and cut through administrative hurdles. But, perhaps most importantly, the authors want to ensure continuity of care for some of the nation’s most vulnerable populations.
A New Era of Medicaid Rules
On July 4, 2025, President Trump signed P.L. 119-21 into law. Among other things, the wide ranging legislation overhauled who qualifies for Medicaid and how we pay for it. Tucked among its hundreds of provisions is a new requirement for adults ages 19 to 64 covered under Medicaid expansion. Starting in 2027, covered individuals must complete and report at least 80 hours of work, job training, education, or community service every month. Failure to do so could result in a loss of coverage.
While most enrollees can comply with this new mandate, the law’s administrative demands could still pose challenges for those with fluctuating mental health conditions.
“Too many people with mental health conditions could lose Medicaid due to unnecessary administrative hurdles when they should be protected,” NAMI Chief Advocacy Officer Hannah Wesolowski said in a statement. “This report serves as a roadmap for policymakers to protect people with mental health conditions and reduce these coverage losses.”
Medicaid’s ‘Medically Frail’ Exemption
Lawmakers included exemptions for people with “special medical needs,” including those who are “medically frail,” which explicitly covers anyone with “a disabling mental disorder.”
Yet, as the report’s authors point out, the law never defines the phrase. And that leaves states with a lot of room for interpretation. The legislation also requires the Department of Health and Human Services to issue rules by mid-2026. But how the department interprets “disabling mental disorder” will determine the fate of millions who depend on the program.
The authors – among others – urge regulators to adopt the broadest possible definition, while urging states to recognize any mental health condition that could be disabling, regardless of whether an individual has a formal diagnosis.
“Mental health conditions fluctuate,” the authors explain. “They can be disabling one month but not the next – and requiring constant verification would be both impractical and cruel.”
Simplifying Proof. And Requalification.
The brief calls for policies that demand less red tape. The authors note that the law itself doesn’t require states to verify exemptions. And that means that states can, if they want, accept self-attestation. The lobbyists at NAMI and LAC recommend that states leverage existing Medicaid data to flag individuals who’d probably qualify for an exemption. That includes those who receive psychiatric medications or therapy.
When data matching isn’t possible, the authors contend that states should allow simple self-identification through the Medicaid application itself. And if state policymakers insist on third-party verification, they suggest that the process should be as simple as possible. Requiring multiple steps or frequent renewals, the authors warn, would only put more people at the risk of losing coverage.
Because most mental health conditions are chronic or recurrent, the authors advise against forcing beneficiaries to re-verify their status once or twice a year. Instead, they argue that states should allow individuals to confirm their status at renewal time. Half of the states already use this model for existing “medically frail” determinations, the report’s authors note.
Strengthening the Safety Net
Aside from the slew of technical fixes, NAMI and LAC call for proactive, inclusive policies to safeguard care.
Their recommendations include:
- Proactive screening: States should identify eligible individuals before terminating coverage. That includes checking for alternate eligibility pathways.
- Peer support expansion: Medicaid should reimburse services provided by peer support specialists.
- Universal mental-health screening: Routine screenings can identify conditions early and help individuals qualify for exemptions.
- Integrated care: States should expand models that coordinate mental- and physical-health treatment.
- Sustaining community services: States should preserve reimbursement rates and supplement funding to prevent service cuts amid increasing budget pressures.
- Parity enforcement: Better oversight of insurers and managed-care organizations under the Mental Health Parity and Addiction Equity Act would help ensure equitable access to treatment.
The Stakes
Finally, the authors stress that while federal lawmakers frame the new rules as promoting “personal responsibility,” their impact in the real world could be devastating. And research has already confirmed that similar work-reporting requirements in Arkansas (and a handful of other states) has kicked tens of thousands off of Medicaid.
Without safeguards, the authors warn, people with depression, anxiety, schizophrenia, or bipolar disorder could fall through the cracks – losing not only insurance but access to medication, therapy, and stability.
“Access to treatment shouldn’t depend on paperwork,” the authors conclude. “For people with mental illness, health coverage is often the first step toward recovery – and the foundation for a life in community, work, and wellness.”
Further Reading
Mental Health Progress Stalls At A Crossroads
