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The Trump administration recently released guidance outlining the new Medicaid work requirements that will take effect on Jan. 1, 2027, under H.R. 1. Buried in the details is a decision with potentially enormous consequences: Homelessness alone will not qualify someone for an exemption.
At first glance, that might sound reasonable. Homelessness is not by itself an impediment to work. Many people experiencing homelessness can and do work. A 2021 analysis from the University of Chicago’s Becker Friedman Institute found that more than half of sheltered adults and roughly 40% of unsheltered adults worked while experiencing homelessness.
However, national and California data show that many people experiencing homelessness have disabilities, chronic illnesses, or serious behavioral health conditions that should qualify them for exemptions from work requirements. That is the heart of the problem. The people most at risk under these rules are not healthy adults avoiding work. They are disproportionately people managing serious mental illness, substance use disorders, chronic disease, or functional limitations.
Exemptions on Paper, Not in Practice
The California Statewide Study of People Experiencing Homelessness, conducted by University of California, San Francisco (UCSF), illustrates the extent of health conditions among people experiencing homelessness. While 66% of participants experienced symptoms of depression, anxiety, or psychosis, only one in four received mental health treatment. Six in 10 reported at least one chronic health condition, and more than one-third reported difficulty with basic activities of daily living such as bathing, dressing, or eating. Yet only 39% had a regular source of primary care.
On paper, many people experiencing homelessness would qualify for medical exemptions. In practice, obtaining one requires clinical documentation and sustained contact with health care systems that unhoused people struggle to access consistently. The exemption may exist, but the ability to claim it does not.
Consider the logistics. A person sleeping in a vehicle, cycling through shelters, or living on the street may have no fixed mailing address to receive reporting paperwork and limited access to email or a reliable phone. Notices go unseen. Deadlines pass. And reporting requirements land on top of the relentless daily juggle of finding a safe place to sleep, food to eat, and somewhere to bathe. Even unhoused people who are working, and people who plainly qualify for an exemption, can be knocked off coverage simply because the paperwork never reached them due to the lack of a mailing address.
A Contradiction in Federal Policy
This is not speculation. Before H.R. 1 imposed work requirements as a national policy, several states experimented with their own work requirement rules. The evidence from those states bears out the risk. In Arkansas, the first state to fully implement Medicaid work requirements before courts halted them, about 18,000 people lost coverage within months, with the losses driven largely by confusion and reporting failures rather than actual ineligibility. Georgia is the only state with some experience operating a Medicaid expansion program conditioned on work requirements. Its Pathways to Coverage program launched its program in 2023 with expectations of enrolling at least 100,000 members. But by May 2026, active enrollment had only reached about 17,700 people. The state has spent tens of millions of dollars, much of it on administration rather than care, while the documentation burden keeps eligible people out.
In these circumstances, coverage is lost not because someone is ineligible, but because the administrative process itself becomes an obstacle course. And when people experiencing homelessness lose Medicaid, the consequences compound. Their health deteriorates, and their ability to work, stabilize, and ultimately exit homelessness is jeopardized further. That is the precise opposite of the policy’s stated goals.
The contradiction with the federal administration’s own stated priorities is striking. While evidence points to homelessness as a problem rooted in insufficient housing and housing affordability, this administration has framed homelessness as a problem rooted in untreated mental illness and substance use disorders. It has made expanded treatment a centerpiece of its homelessness strategy. Yet Medicaid is the single largest payer for exactly those services. If the administration genuinely believes treatment is the answer, the logical policy is to make Medicaid easier to obtain and keep, not harder.
A Better Path for States
Nowhere are the stakes higher than in California, which is home to nearly one-third of the nation’s unsheltered population. California has spent years building a more robust homelessness response that includes Medi-Cal (California’s Medicaid program), using street medicine and initiatives like CalAIM’s Community Supports and Enhanced Care Management to connect unhoused residents to housing supports, behavioral health care, and coordinated services. That infrastructure only works if people are enrolled in Medi-Cal in the first place. Work-reporting requirements that push eligible people off coverage would sever them from the very programs California designed to help them exit homelessness.
There is precedent for a better approach. Even states that support work requirements have recognized that people experiencing homelessness present unique implementation challenges. Utah adopted Medicaid work requirements while explicitly exempting people experiencing homelessness. Several other states have proposed or requested similar exemptions through their Medicaid waiver proposals. These decisions reflect the growing recognition that homelessness creates unique administrative barriers that make compliance extraordinarily difficult, even for people who work or would otherwise qualify for an exemption.
Reasonable people can disagree about work requirements. But whatever one’s view, sound policy should distinguish between encouraging work and erecting bureaucratic hurdles that strip vulnerable people of coverage they are legally entitled to receive.
Coverage Should Follow Need
Twenty-five states and the District of Columbia have sued the Trump administration, arguing the federal rule creates unnecessary paperwork barriers that will cause eligible people, particularly medically frail people, to lose Medicaid coverage. If federal officials are unwilling to exempt homelessness itself, they should at least give states the flexibility to create simplified pathways for documenting exemptions, to reduce reporting burdens, and to protect coverage during periods of instability.
The question is straightforward: Do we want Medicaid eligibility determined by a person’s health and circumstances, or by their ability to manage paperwork while living on the street?
For thousands of Americans experiencing homelessness, and for a disproportionate share of them here in California, the answer could determine whether they receive medical care or lose it.
CHCF supports the Stay Covered Coalition, which will be sharing practical resources with organizations helping unhoused people maintain their Medicaid coverage. The coalition plans to convene partners and learning spaces across health care, housing, homelessness, and government systems in an effort to reduce avoidable coverage losses and strengthen access to care.
