Missouri lawmakers Wednesday once again discussed a request for $294.6 million — including $35 million in state general revenue — to help the state implement federally mandated changes to safety net programs.
Starting Jan. 1, 2027, the One Big Beautiful Bill Act passed by Congress last summer will require states to verify that Medicaid enrollees ages 19-64 in the expansion population are working, volunteering or attending school for at least 80 hours a month to qualify or keep their coverage. The law also requires states to check enrollees’ eligibility twice a year rather than annually.
Gov. Mike Kehoe’s spending plan for fiscal year 2027 would allocate $12.5 million in state and federal funding for extra staff time to implement the new requirements. The proposed budget also recommends another $33 million in state and federal funding for needed system upgrades.
Social Services Director Jess Bax told the Senate Appropriations Committee on Wednesday that the federal law has imposed “an extremely aggressive timeline.” And the U.S. Centers for Medicare and Medicaid has yet to offer states detailed guidance.
As the department builds the software systems needed to implement the federal law, Missouri lawmakers are discussing a plan to write Medicaid work requirements into the state Constitution.
The plan, sponsored by Republican state Rep. Darin Chappell of Rogersville, would put the question to voters in November.
Chappell has described his proposal as a way to ensure work requirements continue in Missouri even if the federal law changes. Chappell told lawmakers in January that his intent is “to mirror what has been done at the national level already.”
But advocates and Medicaid experts in Missouri say the language in Chappell’s proposal could lock the department into a stricter version of Medicaid work requirements than the federal law requires — and that this could result in more Missourians losing access to health insurance due to procedural errors. It could also come at a massive financial cost to the state.
Medicaid eligibility changes in the federal law could cause 130,000 Missourians to become uninsured in the next decade, according to one estimate from Princeton University. The changes would apply only to Missourians covered through the Medicaid expansion voters approved in 2020. As of Feb. 20, 346,753 people were enrolled in MO HealthNet under that adult expansion category.
The federal law allows states to make some choices about how to verify that Medicaid applicants or enrollees met work requirements.
For instance, states can make temporary exceptions to work requirements in months when someone has been hospitalized, lived in a county or city with a federally-declared emergency or traveled for an extended period to receive medical treatment. The federal law also specifies mandatory exemptions, including for people who are pregnant, disabled or undergoing treatment for a substance use disorder.
Chappell told The Independent that he doesn’t intend for his proposal to take short-term hardship exemptions off the table. But some advocates and experts said language in his proposal suggests any optional exemptions from work requirements would require the legislature to pass a law.
Chappell’s proposal indicates that the department “shall not seek or implement” any exemptions other than those mandated in the federal law “unless a general statute law expressly authorizes the implementation of the exemption.”
Emily Kalmer, Missouri government relations director for the American Cancer Society, told The Independent that short-term exceptions for hospitalization or medical travel could ensure cancer patients and survivors don’t experience interruptions of critical care.
“We don’t want Missouri to take away options that are provided for in the federal law that may be necessary for people to continue their health coverage,” Kalmer said.
Chappell said there should be potential for the department to grant short-term exceptions.
“Obviously those things would have to be taken into account, and it would be dependent on the department to use some executive branch judgment,” Chappell said. “That’s the balance of power.”
Jay Hardenbrook, advocacy director for AARP Missouri, told The Independent that he is concerned Chappell’s proposal will not allow the department to exempt caregivers of older Missourians.
The federal law requires states to provide an exemption for parents or guardians of children under 13 or caregivers of disabled individuals. But Hardenbrook said that an exemption for caregivers of elderly individuals is expected to be optional for states.
“We would like our state to accept those as exemptions from the work requirement, and really this kind of hijacks the whole process,” Hardenbrook said.
Kalmer said that while the federal law mandates an exemption for people who are “medically frail,” the federal government hasn’t specified who falls in that category.
It’s important for caregivers to maintain access to insurance coverage, Kalmer said, so that they can take care of their own health.
“There is a perception that Medicaid pays people,” Kalmer said. “…We’re talking about preserving access to health insurance.”
The federal law will impose harsher financial penalties on states for their Medicaid error rates, as well as their errors in administering the Supplemental Nutrition Assistance Program.
Bax told lawmakers Wednesday that while the federal government in the past has waived penalties for states on performance improvement plans, that option was repealed.
“Federal law would have to change for [the Centers for Medicare & Medicaid Services] to not carry out these financial penalties,” Bax said.
Missouri could face a federal clawback of $1.2 billion starting in October 2029 if it doesn’t get its Medicaid error rate below 3%. That potential penalty is based on the state’s Medicaid error rate of 35.3% in 2019, the last federal audit before the COVID-19 pandemic.
In 2025, Missouri’s Medicaid error rate was much lower, at 2.4%, but recent rates reflect laxer requirements during the pandemic that have since been tightened, according to a document shared with The Independent by the department.
Although clawbacks wouldn’t begin until 2029, Missouri’s Medicaid error rates starting July 1 will be used to determine penalties.
In addition to technological upgrades, Kehoe recommended $9.2 million — including $2.3 million in general revenue — to hire 60 contractors to help the department eliminate a backlog of 90,000 Medicaid renewals before the implementation deadline for the federal law.
Outstanding renewals, as well as overpayments, underpayments and missing documentation, contribute to states’ error rates, according to KFF.
Federal audits hold states to their own policies instead of minimum requirements in federal law. That means if Missouri decides to check enrollees’ eligibility more often or require more documentation than the federal law, it could face penalties for any resulting errors.
Chappell told The Independent that under his proposal, the department would check enrollees’ compliance with work requirements every six months, at renewal, based on their completion of the requirements in the preceding month.
His proposal indicates that no one “shall remain enrolled in MO HealthNet in any month unless the individual has demonstrated compliance with work requirements.”
Baylee Watts, a spokesperson for the department, told The Independent in an email Tuesday that every six months, the department will require Missourians to “demonstrate compliance” with work requirements “for at least one of the previous six months.”
The department is still waiting for some answers about the verification standards it will have to use when someone applies for Medicaid, Bax told lawmakers. While the federal law indicates states can check someone’s compliance in the preceding one to three months, she said, it isn’t clear whether the department can count the month when someone applied.
Chappell’s proposal would require Missourians to submit documentation showing they meet work requirement exemptions.
Joel Ferber, director of advocacy at Legal Services of Eastern Missouri, said the federal law “appears to allow self-declaration of exemptions,” though there’s some ambiguity.
The federal law also “clearly requires” states to determine exemptions using data sources available to them, Ferber said, “rather than placing the burden on individuals to submit their own paperwork.”
Watts said that while the department plans to maximize its use of these data sources, “it will be the responsibility of the participant to provide the necessary documentation” when it can’t verify information.
Brian Colby, vice president of the Missouri Budget Project, said the more paperwork the department is required to process, the longer it will take to process applications and renewals, and the greater the potential cost to the state.
“Any time you apply some rule or regulation, there’s a cost,” Colby said. “…If there has to be some documentation to prove your exemption, that’s extra work.”
Requiring extra documentation, Colby said, could contribute to the state’s error rate.
“If you don’t have it during an audit, is that an error?” he said.
Bax told lawmakers that even though the federal government may not issue final guidance on Medicaid work requirements before summer, the department is building the systems it will need to implement the federal law.
“We have yet to receive some of those answers, so we’re doing the best that we can to build in as many of the requirements as possible,” Bax said.
Colby said that as the department builds these systems, additional requirements in a potential constitutional amendment could further complicate a task that already has many unknowns.
“This could not be a worse time,” Colby said. “They’re actually building the plane while they’re flying it.”
