Twenty-five states and the District of Columbia sued the United States federal government on 29 June 2026 over how Medicaid work requirements were written, arguing the rule narrowed the exemption for medically frail people. Canada attaches no such test to health coverage, but its home-care gaps show up as waits and unmet need.
By the Living Unlimited Team
Most people who depend on funded care do not follow health policy for fun. They follow it because a rule change three provinces or one border away can decide whether the support that gets them out of bed, to work, or through the week still shows up next month. A lawsuit filed in the United States this summer is that kind of rule change. It is worth understanding on its own terms, and it is worth using as a mirror for the quieter gaps in Canada’s own home-care system.
Here is what happened, reported as fact, with no verdict from us on who is right.
What the lawsuit is about
On 29 June 2026, a coalition of 25 states and the District of Columbia filed suit in the United States District Court for the District of Massachusetts against the federal Centers for Medicare and Medicaid Services (CMS) and the Department of Health and Human Services over how the agency wrote the rules for new Medicaid work requirements. The case is Commonwealth of Massachusetts et al. v. Oz et al., docket number 1:26-cv-12962, and you can follow it on the O’Neill Institute’s Health Care Litigation Tracker. You will see the coalition described as both 25 and 26: the Massachusetts Attorney General’s office counts 26 by including the District of Columbia, while Georgetown’s Center for Children and Families lists 25 states plus DC. The requirements themselves come from a 2025 federal law; the fight is over the fine print CMS added when it turned that law into a regulation, an interim final rule issued on 3 June 2026.
The requirement itself is that adults covered through Medicaid expansion work, go to school or volunteer for at least 80 hours a month to keep their coverage. Under the law, many people must prove it monthly and reapply for coverage every six months instead of once a year. It takes effect on 1 January 2027.
The states’ central objection is about a group the law calls “medically frail.” Under the statute that category covers five groups: people who are blind or have a disability, people with a physical, intellectual or developmental disability that limits their ability to perform one or more activities of daily living, people with a substance use disorder, people with a disabling mental disorder, and people with a serious or complex medical condition. The wording of that fourth item matters to the argument, because the statute says limits while the phrase the states are fighting over, significantly impairs, is the one CMS added. Anyone in those groups is supposed to be exempt from documenting work, job training, volunteering or school hours to keep their coverage. The states argue that CMS narrowed the exemption in the interim final rule by adding a test that was not in the law: a person now qualifies only if their condition also “significantly impairs the individual’s ability to comply with the community engagement requirement.” Put plainly, as the Philadelphia Inquirer reported, people will need to prove “not only that they are ‘medically frail,’ but also that their illness is so severe they are unable to work.” The states say Congress never wrote it that way, and that CMS overstepped.
The rule also narrows two categories from the inside. On substance use disorder, KFF’s analysis of the interim final rule reports that the category applies whether or not a person is in an active treatment program, but does not cover anyone who has been in active recovery for five years or more. On serious or complex medical conditions, KFF reports that the rule sets a new definition requiring a severe level of acuity, a higher bar than the older understanding of the phrase, which took in people for whom keeping coverage is what protects them from serious harm if treatment stops. Conditions such as HIV and cancer are examples of conditions CMS says could reasonably be expected to make someone medically frail; they are not automatic exemptions, and no category is. For all five, KFF reports, the state must decide both that the condition meets the definition and that it significantly impairs the person’s ability to work or take part in qualifying activities.
The numbers attached to the case are large. Pennsylvania, one of the states in the coalition, expects 310,000 residents to lose Medicaid when the new rules take effect. The Congressional Budget Office projects that the 2025 law as a whole will increase the number of uninsured Americans by 10 million in 2034, measured against CBO’s January 2025 baseline. Among the law’s Medicaid and CHIP cuts specifically, Georgetown’s Center for Children and Families reports that the work reporting requirement is the largest single contributor, adding 5.3 million to the uninsured count in 2034 before interactions with the law’s other provisions are accounted for. The 5.3 million is a component figure calculated that way, not a clean slice of the 10 million total.
Separately, on 21 July 2026 the Department of Health and Human Services deferred more than 1 billion US dollars in Medicaid payments to California and Minnesota over claims it says need further documentation, roughly 867.5 million for California and 199 million for Minnesota. What those disputed claims are for is the part that matters here. Most of the Minnesota review covered in-home and personal care, and almost half of the California deferral is for in-home services for seniors and people with disabilities. Federal officials say the money is paused rather than cut and will be released once the states produce the documentation. Both states reject the federal account of their programs, and California’s Medicaid director says the growth in its in-home spending reflects a deliberate move to keep people out of more expensive facility care.
The timeline matters for anyone watching. States had to notify Medicaid members of the new requirements by 31 August 2026, and the work requirements are set to take effect on 1 January 2027. The states asked the court to pause the contested provisions before that clock ran out, and on 29 July 2026 the court said no. Judge Richard Stearns ruled that the states had not shown the kind of irreparable harm that emergency relief requires, noting that the 1 January date was set by Congress rather than by CMS and that CMS has said it will reimburse states for 90 per cent of the costs of setting the requirements up. The denial means preparations continue on schedule while the underlying case, which the judge acknowledged raises “difficult issues” about how much authority Congress handed the agency, moves ahead. One further lever is easy to miss: both the statute and the rule let a state ask to delay implementation six months at a time, though not past 31 December 2028, by showing a good-faith effort to comply, and the plaintiff states have already requested a six-month delay of the 1 January 2027 date.
Why the states call this a coverage rule, not a jobs rule
The phrase “work requirements” makes it sound like a policy about jobs. The states frame it differently. The Massachusetts Attorney General’s office says the interim final rule creates administrative burdens that raise the risk that eligible people, including those already working and those who qualify for exemptions, “will lose health coverage because of paperwork and reporting requirements,” and says past Medicaid work requirement programs have shown that such hurdles cause eligible individuals to lose coverage.
The concern the states raise is not that people who can work will refuse to. It is that people who already qualify for an exemption will lose coverage anyway because the exemption is now harder to prove, the documentation is burdensome, and a missed form or a mislabelled condition drops someone off the rolls. Coverage in these programs often decides something bigger than a doctor’s visit. In systems that fund home and community-based care, losing Medicaid eligibility can mean losing the support that lets a person stay in their own home rather than move into an institution.
Where Canada’s home-care gaps sit
Canada does not run Medicaid, and it does not attach work-reporting tests to health coverage the way the American proposal does. Home and community care here is delivered province by province, funded publicly, and generally not tied to a community-engagement requirement. That is a real difference, and we are not going to pretend the two systems face the same threat. (For a parallel case of an overseas support system being overhauled while Canadians watch for lessons, see Australia Is Rewriting the NDIS.)
What Canada has instead is a gap of a different shape: care that people are entitled to in principle but cannot always get in practice. Canadian benefits can be hard to hold onto for reasons of their own; our plain-language guide to the Disability Tax Credit and the Canada Disability Benefit walks through how eligibility actually works here.
Statistics Canada reported that in 2021, among Canadians who accessed home care services, roughly 475,000 people, about 1.6 per cent of the population, reported unmet home care needs. Unmet need was highest among Canadians aged 65 and older, higher among females across all age groups, and higher for people in the lowest household income quintile (3.3 per cent) than in the highest (0.5 per cent, a figure Statistics Canada flags for caution). On wait times, the Canadian Institute for Health Information reports that in 2024 to 2025 half of people waited a few days for a first home care service while one in ten waited about a month. That national picture is partial: CIHI holds no data for Quebec, Nova Scotia, New Brunswick, Yukon or Nunavut, and only partial coverage in several other jurisdictions, so the figure describes some of the country rather than all of it.
The system-level picture is tighter still. CIHI also tracks people who no longer need a hospital bed but stay in one because home care has not been arranged. In 2024, about one in ten hospital patients discharged to home care waited for those services or supports first, and among the people who waited, half were out within eight days while one in ten waited 41 days or longer. Quebec has no equivalent data, so it is not in that number. In Ontario, the Ontario Long Term Care Association reports that more than 50,000 people are waiting for long-term care, that the waitlist has doubled in the past 10 years, and that half of the people who do get a place wait at least 165 days. That pushes more demand onto home care and supportive housing that are already stretched.
So the American story and the Canadian one are not the same story. One is about a rule that could remove coverage people qualify for. The other is about coverage that exists on paper but arrives late, partially, or not at all. Both land in the same place for the person at the centre of them: the difference between staying in your own home and losing that choice.
What to watch
If you or someone you support relies on funded care, the practical takeaway is not panic, it is attention. In the United States, the request for emergency relief has been denied, so the case now moves through the federal courts on its merits, and the 31 August notification date and the 1 January 2027 start date are the markers to watch. In Canada, the levers are provincial: home-care wait times, unmet-need reporting, and long-term-care waitlists are all tracked publicly, and they are the numbers that tell you whether the care you are entitled to is actually reaching people.
This is reporting, not advice. For your own coverage or your family’s, a case manager, a legal clinic, or a disability advocacy organization in your province can tell you what applies to your situation.
Frequently asked questions
What is the Medicaid work requirements lawsuit about?
On 29 June 2026 a coalition of 25 states and the District of Columbia filed suit in the United States District Court for the District of Massachusetts against the Centers for Medicare and Medicaid Services and the Department of Health and Human Services. The case is Commonwealth of Massachusetts et al. v. Oz et al., docket number 1:26-cv-12962. The requirements themselves come from a 2025 federal law; the dispute is over the fine print CMS added when it turned that law into an interim final rule issued on 3 June 2026.
Who counts as medically frail, and why is that contested?
The statute covers five groups: people who are blind or have a disability, people with a physical, intellectual or developmental disability that limits one or more activities of daily living, people with a substance use disorder, people with a disabling mental disorder, and people with a serious or complex medical condition. The states argue that CMS narrowed the exemption by adding a test that was not in the law, so that a person now qualifies only if their condition also significantly impairs their ability to comply with the community engagement requirement. The states say Congress never wrote it that way. The court has not ruled on the merits.
What are the dates to watch?
The requirement is that adults covered through Medicaid expansion work, go to school or volunteer for at least 80 hours a month, with monthly proof for many people and reapplication every six months instead of once a year. States had to notify Medicaid members by 31 August 2026, and the requirements take effect on 1 January 2027. On 29 July 2026 Judge Richard Stearns denied the states’ request to pause the contested provisions, so preparations continue while the case proceeds. Both the statute and the rule let a state ask to delay implementation six months at a time, though not past 31 December 2028.
Does Canada attach work requirements to health coverage?
No. Canada does not run Medicaid and does not tie health coverage to a community-engagement requirement. Home and community care here is delivered province by province, funded publicly, and generally not tied to a work-reporting test. The gap in Canada is a different shape: care that people are entitled to in principle but cannot always get in practice.
How long do Canadians wait for home care?
Statistics Canada reported that in 2021, among Canadians who accessed home care services, roughly 475,000 people, about 1.6 per cent of the population, reported unmet home care needs, with unmet need highest among Canadians aged 65 and older and among people in the lowest household income quintile. The Canadian Institute for Health Information reports that in 2024 to 2025 half of people waited a few days for a first home care service while one in ten waited about a month. CIHI holds no data for Quebec, Nova Scotia, New Brunswick, Yukon or Nunavut, so that picture describes some of the country rather than all of it.
Sources
- Office of the Attorney General, Commonwealth of Massachusetts, “AG Campbell Sues Trump Administration Over Unlawful Medicaid Work Requirements Rule” (29 June 2026).
- Georgetown University Center for Children and Families, “Medicaid Work Reporting Requirements: States Ask a Federal Court to Protect Medically Frail Individuals from CMS Overreach” (2 July 2026, updated 14 July 2026).
- O’Neill Institute, Georgetown Law, Health Care Litigation Tracker: Commonwealth of Massachusetts et al. v. Oz et al.
- The Philadelphia Inquirer, “Pennsylvania is among 25 states suing over federal Medicaid rules they say ‘overstep’ the law” (10 July 2026).
- Stateline, “Judge rejects states’ bid to block Medicaid work rules” (31 July 2026).
- The American Journal of Managed Care, “Judge Denies Preliminary Injunction in Medicaid Work Requirements Case” (30 July 2026).
- Georgetown University Center for Children and Families, “New CBO Health Coverage Estimates of Budget Reconciliation Law” (14 August 2025).
- Healthcare Dive, “Trump administration pauses $1B in Medicaid payments to California, Minnesota” (21 July 2026).
- Statistics Canada, Health of Canadians: Access to health care, catalogue no. 82-570-X, sections 10.0 and 11.0 (2023), reporting 2021 Canadian Community Health Survey data.
- Amaya Diana, Jennifer Tolbert and Robin Rudowitz, “The Medical Frailty Exemption from Medicaid Work Requirements: Key Takeaways from the CMS Interim Final Rule”, KFF, 23 June 2026. Source for the five statutory categories, the five-year active recovery exclusion and the active treatment clarification, the new severe-acuity definition of a serious or complex condition, and the requirement that states apply the impairment test to all five categories.
- Canadian Institute for Health Information, Wait Times for Home Care Services.
- Canadian Institute for Health Information, Hospital Stay Extended Until Home Care Services or Supports Ready.
- Ontario Long Term Care Association, The Data: Long-Term Care in Ontario.
