Medicaid Program; Community Engagement Requirement for Certain Individuals

Section 1902(xx)(9)(A)(ii) of the Act lists nine categories of individuals meeting the definition of a “specified excluded individual.” These individuals are excluded from the definition of “applicable individual” at section 1902(xx)(9)(A)(i) of the Act; therefore, for the nine categories of specified excluded individuals, community engagement is not a condition of eligibility, and such individuals do not need to demonstrate community engagement to qualify for the State plan adult group or for eligibility under an applicable section 1115 demonstration. New Sec. 435.554 implements the statutory definition of specified excluded individuals, as further discussed in this section. If a State determines someone to be a specified excluded individual at application, renewal, or, if elected by the State, at the time of a more frequent verification of community engagement compliance, it must not determine whether that person met the community engagement requirement during the applicable community engagement review period (see section II.H.1. of this IFC for more information). Similarly, while States must deem an applicable individual compliant with the community engagement requirement for a month if during any part of that month that person was a specified excluded individual, this deeming requirement does not apply if a State has already determined that the person is a specified excluded individual at application, renewal, or at the time of a more frequent verification, because only an applicable individual must

demonstrate community engagement. Therefore, States must not deem specified excluded individuals compliant with the community engagement requirement. We explain the distinction between mandatory exceptions and specified excluded individuals in more detail in section II.F. of this IFC.

Several groups of specified excluded individuals are, by definition, not usually eligible under the State plan adult group, described at section 1902(a)(10)(A)(i)(VIII) of the Act, and many may be eligible through a separate eligibility group (for example, the pregnant women group, described at Sec. 435.116) for which community engagement does not apply. However, these exclusions are necessary for individuals who may be eligible to enroll or are enrolled in the State plan adult group or an applicable section 1115 demonstration, as described in section II.B. of this IFC, but still meet the exclusion criteria.

New Sec. 435.554 implements and interprets section 1902(xx)(9)(A)(ii) of the Act. We intend to apply existing Medicaid definitions where possible to align with existing eligibility systems and structures. Where terms used to describe specified excluded individuals do not have precedent in Medicaid, or our interpretation of the statutory language differs from existing Medicaid definitions, we establish definitions through this IFC. Section II.I.7. of this IFC addresses verification requirements regarding specified excluded individuals. 1. Former Foster Care Children

Section 1902(xx)(9)(A)(ii)(I) of the Act provides that an individual “who is described in” section 1902(a)(10)(A)(i)(IX) of the Act, which refers to the eligibility group serving former foster care children (FFCC group), is a specified excluded individual. The FFCC group generally serves individuals who were enrolled in Medicaid while in foster care, then exited foster care (or “aged out”) without an adoption or other permanency, and are under age 26. The FFCC group was originally limited to individuals who had been in foster care in the State in which they subsequently sought Medicaid coverage and were not described in any other mandatory eligibility groups under section 1902(a)(10)(A)(i)(I) through (VII) of the Act. Section 1002(a) of the Substance Use Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act (SUPPORT Act; Pub. L. 115- 271) modified the original eligibility criteria for the FFCC group in section 1902(a)(10)(A)(i)(IX) of the Act to expand eligibility in the group to individuals who had been in foster care in other States and who may be otherwise described in a separate mandatory eligibility group under section 1902(a)(10)(A)(i)(I) through (VII) of the Act (so long as they are not enrolled in such other group). However, the amendment was effective exclusively for those individuals who turn age 18 on or after January 1, 2023. This means that, under the State plan requirements, slightly different eligibility criteria for the FFCC group apply to individuals under age 26 who turned age 18 on or before December 31, 2022, and those who turn age 18 on or after January 1, 2023.\45\

\45\ CMCS State Health Official (SHO) letter #22-003, “Coverage of Youth Formerly in Foster Care in Medicaid.” (December 16, 2022). Available at: https://www.medicaid.gov/federal-policy-guidance/downloads/sho22003.pdf.

We have considered whether the reference in section 1902(xx)(9)(A)(ii)(I) of the Act to the FFCC group encompasses both the original version and SUPPORT Act version of section 1902(a)(10)(A)(i)(IX) of the Act, or if it is specific only to the latter one. We are interpreting section 1902(xx)(9)(A)(ii)(I) of the Act to apply the exclusion to individuals who meet the eligibility criteria under the SUPPORT Act, regardless of when they turned age 18, for the following reasons.

The phrase “described in” could be read to exactly mirror the phased-in implementation of the eligibility criteria in section 1902(a)(10)(A)(i)(IX) of the Act and apply the relevant criteria to individuals based on when they turned age 18 for the purpose of the specified excluded individual category. That means, in reference to youth formerly in foster care, an individual under age 26 who turned age 18 before January 1, 2023, would only be a specified excluded individual if he or she meets the original criteria for the FFCC group (specifically: in the same State and not eligible for another group). Someone under age 26 who turned age 18 on or after January 1, 2023, would be a specified excluded individual if he or she meets the expanded criteria for the FFCC group under the SUPPORT Act.

However, we do not believe this is the best reading of section 1902(xx)(9)(A)(ii)(I) of the Act, because the Act directs an eligibility hierarchy for the FFCC group. That means that a strict reading of the exclusion is likely to create an empty exclusion category. Clause (XVII) in the language following section 1902(a)(10)(G) of the Act provides that, “. . . if an individual is described in subclause (IX) of subparagraph (A)(i) and is also described in subclause (VIII) of that subparagraph, the medical assistance shall be made available to the individual through subclause (IX) instead of through subclause (VIII).” This language means that individuals eligible for both the adult group and the FFCC group must be enrolled in the FFCC group. This eligibility hierarchy means that a strict reading of “described in” in section 1902(xx)(9)(A)(ii)(I) of the Act that is equivalent to “eligible for” the FFCC group per the SUPPORT Act phase-in of the eligibility criteria by age would render the exclusion meaningless as a null set of individuals. Under that reading, by operation of the language following section 1902(a)(10)(G) of the Act, all the individuals who are eligible for the FFCC group would by definition not be in the adult group and thus never would be applicable individuals to whom the exclusion category might apply.

Because a strict reading of the reference to section 1902(a)(10)(A)(i)(IX) of the Act in section 1902(xx)(9)(A)(ii)(I) would render that exclusion category a nullity, we interpret the exclusion to apply to persons meeting the current SUPPORT Act definition of the FFCC group, even in circumstances where they would not qualify for eligibility under section 1902(a)(10)(A)(i)(IX) of the Act due to when they turned 18.

This interpretation also furthers administrative simplicity. The population of individuals formerly in foster care is relatively small; and the population of individuals formerly in foster care who do not meet the State plan requirements is even smaller. For example, some States operating section 1115 demonstrations to apply the SUPPORT Act criteria to eligible individuals who turned 18 before January 1, 2023, report very low enrollment numbers (sometimes in the single digits). The administrative work for States to identify and apply the correct eligibility criteria to the population is high compared to the small size of the population. We implement this definition at new Sec. 435.554(c)(1).

This policy means that States must use a single set of eligibility criteria, under the SUPPORT Act changes to the FFCC group, for this category of specified excluded individual, regardless of whether the individual turned age 18 on or after January 1, 2023. Thus, an individual in the adult group or an applicable section 1115 demonstration may be a specified excluded individual as long as he or she meets the criteria for an individual

described in the FFCC group: (1) is under age 26; (2) is not enrolled in an eligibility group described in section 1902(a)(10)(A)(i)(I) through (VII) of the Act, even if they meet the eligibility requirements for such group; (3) was in foster care under the responsibility of any State upon attaining age 18 (or such higher age as the State has elected in its title IV-E plan); and (4) was enrolled in Medicaid in any State while in such foster care. For example, suppose an individual ages out of foster care (while enrolled in Medicaid) at age 21 in State A in 2024 and subsequently moves to State B. Because this individual turned age 18 in 2021, the SUPPORT Act rules for the FFCC group do not apply to the individual. State B covers the adult group but does not have a section 1115 demonstration to cover former foster care youth from other States. When the individual applies for Medicaid in State B, he meets the eligibility requirements for the adult group, and the State enrolls him in that group. In 2027, the individual is in the adult group and still under age 26. Because the individual meets the current description of the FFCC group, despite not being enrolled in the group, the individual is a specified excluded individual and not subject to the community engagement requirement. 2. American Indians

Section 1902(xx)(9)(A)(ii)(II) of the Act defines as specified excluded individuals an individual “who: (aa) is an Indian or Urban Indian (as such terms are defined in paragraphs (13) and (28) of section 4 of the Indian Health Care Improvement Act; (bb) is a California Indian described in section 809(a) of such Act; or (cc) has otherwise been determined eligible as an Indian for the Indian Health Service under regulations issued by the Secretary.” CMS has previously issued regulations that define “Indian” to implement various protections for individual Indians, Indian tribes, and tribal organizations as it relates to Medicaid premiums and cost sharing, as required by sections 1916(j), 1916A(b)(3)(A)(vii), and 1916A(b)(3)(B)(x) of the Act.\46\ The existing definition at Sec. 447.51 incorporates each of the specific groups listed in section 1902(xx)(9)(A)(ii)(II)(aa) through (cc) of the Act; therefore, we adopt the existing definition of “Indian” at Sec. 447.51 for the community engagement exclusion at the new Sec. 435.554(c)(2). In other places throughout this IFC, we refer to this population as American Indians. We believe adopting this definition will promote alignment with existing Medicaid protections for American Indians and will allow States to use existing data used for cost sharing to effectuate this community engagement exclusion. Notably, unlike other exclusions which may change from month to month or be time-limited, States will not be required to (and may not) reverify someone's status as an American Indian for exclusion from the community engagement requirement.

\46\ Medicaid Program; Premiums and Cost Sharing 75 FR 30243 (May 28, 2010). https://www.federalregister.gov/d/2010-12954.

3. Parent, Guardian, Caretaker Relative, or Family Caregiver of a Dependent Child 13 Years of Age and Under or a Disabled Individual

Section 1902(xx)(9)(A)(ii)(III) of the Act establishes an exclusion for parents, guardians, caretaker relatives, and family caregivers (as defined in section 2 of the Recognize, Assist, Include, Support, and Engage Family Caregivers Act of 2017 (RAISE Family Caregivers Act; Pub. L. 115-119), of a dependent child 13 years of age and under or a disabled individual. The terms “caretaker relative” and “dependent child” are existing Medicaid terms defined in regulation that we are building upon for purposes of this exclusion. The terms parent, guardian, family caregiver, and disabled individual are either new to Medicaid, or are not defined in regulation to determine Medicaid eligibility. Each category of excluded individuals established by section 1902(xx)(9)(A)(ii)(III) of the Act is defined in relation to a dependent child aged 13 and under or a disabled individual. We define the terms caretaker relative, dependent child, disabled individual, family caregiver, guardian and parent at Sec. 435.554(a). For example, as we describe in more detail below, for purposes of the exclusion at 1902(xx)(9)(A)(ii)(III) of the Act, we are defining dependent child at Sec. 435.554(a) to mean “a child 13 years of age or under who relies on another individual for care” and all specified excluded individual- related references to dependent child throughout the remainder of this preamble reflect this regulatory definition. Additionally, to qualify as a specified excluded individual, those meeting the definition of family caregiver at Sec. 435.554(a) must also meet certain criteria specified at new Sec. 435.554(c)(3)(i). a. Definition of Caretaker Relative

Current CMS regulations define a caretaker relative at Sec. 435.4. The “caretaker relative” definition generally implements section 1905(a)(ii) of the Act (“relatives specified in section 406(b)(1) with whom a child is living if such child is (or would, if needy, be) a dependent child under part A of title IV.”). Such references to title IV-A of the Act are to the former Aid to Families with Dependent Children (AFDC) program, as it existed on July 16, 1996. AFDC was replaced with the TANF block grant by PRWORA. In de-linking receipt of cash assistance from Medicaid, PRWORA also established categorical eligibility for low-income families under section 1931 of the Act. The definition of caretaker relative is used for the population of categorically needy parents and other caretaker relatives that is now implemented in regulations at Sec. 435.110. Section 435.4 defines a caretaker relative as a parent or other relative (related by blood, adoption, or marriage) living with a dependent child, who assumes primary responsibility for the dependent child's care. Section 435.4 specifies who qualifies as a relative for such purposes, and includes a child's father, mother, grandfather, grandmother, brother, sister, stepfather, stepmother, stepbrother, stepsister, aunt, uncle, first cousin, nephew, niece, or the spouse of such parent or relative, even after the marriage is terminated by death or divorce. The definition also provides States the option to include other adults: additional relatives of the child by blood (including those of half-blood), adoption, or marriage; a domestic partner of the parent or other caretaker relative; or any adult with whom the child is living and who assumes primary responsibility for the child's care.

Use of the term “caretaker relative” in our regulations describes a specific relationship with a child that defines the categorical Medicaid eligibility group at Sec. 435.110.\47\ Because States have experience implementing the Sec. 435.110 eligibility group and associated policies based on the existing definition in Sec. 435.4, we believe it is appropriate to align the definition of “caretaker relative” in section 1902(xx)(9)(A)(ii)(II) of the Act with that definition. However, we acknowledge that, in addition to a dependent child age 13 or under, the exclusion also applies to caretaker relatives of a “disabled individual” (defined later in this section). Therefore, if we were to use the existing definition at Sec. 435.4 without any changes, the definition would not align with the exclusion in

the statute. As such, for purposes of this exclusion from the community engagement requirement, at a new Sec. 435.554(a) we establish a definition of caretaker relative, based on the relationships listed in the existing definition at Sec. 435.4, to apply the definition to caretaker relatives of both dependent children and disabled individuals, as established in section 1902(xx)(9)(A)(ii)(III) of the Act. We also specify additional relationships (husband, wife, son, daughter, stepson, stepdaughter, grandson, granddaughter) under which individuals could qualify as a caretaker relative of a disabled individual (these additional relationships are not relevant for dependent children age 13 and under because of their age). Like the definition in Sec. 435.4, the new definition requires that the caretaker relative assume primary responsibility for the dependent child's or disabled individual's care and live with the dependent child or disabled individual who is receiving the care.

\47\ Medicaid Program; Eligibility Changes Under the Affordable Care Act of 2010 77 FR 17144 (March 23, 2012). https://www.federalregister.gov/d/2012-6560.

If a State has elected to expand the definition of “caretaker relative” to additional relatives under paragraph (3) of the caretaker relative definition at Sec. 435.4, the State must apply the same elections when determining whether an individual is a “caretaker relative” of a dependent child or a disabled individual for purposes of the exclusion described at section 1902(xx)(9)(A)(ii)(III) of the Act. We believe that aligning the elections of additional relatives across the eligibility group for parents and other caretaker relatives at Sec. 435.110 and this community engagement exclusion would prevent beneficiary confusion and potential disruption of coverage for certain caretakers who transition between the parent and caretaker relative group and a group consisting of applicable individuals. We also believe alignment will create administrative simplicity for States and better understanding of the policy for beneficiaries.

For example, suppose a beneficiary is the second cousin of, and lives with, a 10-year-old child who is dependent on the beneficiary for care. Because their State elected the option under paragraph (3) of the caretaker relative definition at Sec. 435.4, the beneficiary is eligible for the “parents and other caretaker relatives” eligibility group. The beneficiary subsequently experiences an increase in unearned income and is determined ineligible for the “parents and other caretaker relatives” group and is then determined eligible for the adult group. If the State uses a consistent definition of relationships for caretaker relative, the State would determine the individual to be a specified excluded individual under the exclusion described at section 1902(xx)(9)(A)(ii)(III) of the Act. The beneficiary would not be subject to the community engagement requirement, and the State would not need to determine whether the individual demonstrated compliance, which is consistent with the beneficiary's previous status as a caretaker relative. However, if the State used a different relationship election for the exclusion, the State would need to conduct a separate analysis of the relationship between the adult and the dependent child, adding to the complexity of the redetermination process for the State and potentially resulting in confusion or a disruption of coverage for the caretaker relative. b. Definition of Parent

Because the statute separately lists “parent” in addition to “caretaker relative” in section 1902(xx)(9)(A)(ii)(III) of the Act, we interpret “parent” to mean something different from a “caretaker relative.” Section 1902(xx)(9)(A)(ii)(III) of the Act does not define “parent,” and parenthood is generally governed by State law. Therefore, at new Sec. 435.554(a), we define for purposes of section 1902(xx)(9)(A)(ii)(III) of the Act to mean an individual with the legal status of a mother or father, including by adoption, in accordance with applicable State law, to another individual, which is consistent with common definitions of the term.\48\ Consistent with other groups listed in the exclusion established at section 1902(xx)(9)(A)(ii)(III) of the Act, the parent must provide some level of care to the dependent child or disabled individual for whom they are a parent. For example, an estranged parent without a relationship with their child would not be considered a specified excluded individual under the category of parent. We recognize that many parents who live with and are primarily responsible for their dependent child or adult disabled child will also meet the definition in this regulation of “caretaker relative.” This definition of parent provides for parents who do not meet the definition of “caretaker relative” but who meet this definition of “parent” to be considered a specified excluded individual.

\48\ Black's Law Dictionary (12th ed. 2024) s.v. “Parent,” accessed May 1, 2026.

Section 1902(xx)(9)(A)(ii)(III) of the Act also separately lists a “guardian,” which is not defined under section 1902(xx) of the Act or defined elsewhere in the Act or CMS regulations. At Sec. 435.554(a), we define “guardian” for purposes of section 1902(xx)(9)(A)(ii)(III) of the Act to mean an adult appointed by a court to care for and make personal decisions on behalf of an individual who cannot care for themselves, which is consistent with the common meaning of the term.\49\

\49\ Merriam-Webster Dictionary Online, s.v. “Guardian,” accessed March 21, 2026, https://www.merriam-webster.com/dictionary/guardian.

Because guardianship is governed by State law, we considered how other Federal agencies refer to or define guardianship when developing our definition. The Department of Justice (DOJ) describes guardianship as the appointment by a court of a person or entity to make personal, property decisions, or both for an individual whom the court finds cannot make decisions for themselves.\50\ DOJ also explains that each State has its own set of guardianship laws, and terminology may vary.\51\

\50\ “Guardianship” U.S. Department of Justice, accessed on March 3, 2026. https://www.justice.gov/elderjustice/guardianship.

\51\ “Guardianship: Key Concepts and Resources.” U.S. Department of Justice, last modified on February 18, 2026. https://www.justice.gov/elderjustice/guardianship-key-concepts-and- resources.

In the definition of “guardian” we establish in Sec. 435.554(a), an individual has the legal status of a “guardian” when the individual is appointed by a court. DOJ's description also refers to personal and/or financial responsibilities. For the definition established at Sec. 435.554(a), we specify that a guardian has been appointed by a court to care for and make personal decisions for an individual who cannot care for themselves. We believe that guardianship as it relates to the responsibility for another person's care, rather than financial responsibilities, is more aligned with the purposes of the exclusion. d. Definition of Family Caregiver

Section 1902(xx)(9)(A)(ii)(III) of the Act includes a “family caregiver (as defined in section 2 of the RAISE Family Caregivers Act) of a dependent child 13 years of age and under or a disabled individual” as a specified excluded individual.

The RAISE Family Caregivers Act directed the Secretary of the U.S. Department of Health and Human Services (HHS) to develop and make

publicly available a family caregiving strategy that identified recommended actions for recognizing and supporting family caregivers. To guide the development of this strategy, Section 2 of the RAISE Family Caregivers Act defined “family caregiver” as an adult family member or other individual who has a significant relationship with, and who provides a broad range of assistance to, an individual with a chronic or other health condition, disability, or functional limitation. This definition encompasses a broad range of caregiver relationships and assistance provided to capture the full landscape of caregiving in the U.S. to inform the national caregiving strategy.

Section 1902(xx)(9)(A)(ii)(III) of the Act requires CMS to use the RAISE Family Caregivers Act definition of family caregiver when determining whether an individual qualifies as a specified excluded individual, but it also limits care recipients to “a dependent child 13 years of age and under or a disabled individual” (both of which are defined later in this section). Because the care recipients specified in section 1902(xx)(9)(A)(ii)(III) of the Act differ from those referenced in the RAISE Family Caregivers Act definition, it is necessary to establish a definition of “family caregiver” for purposes of identifying specified excluded individuals that incorporates applicable components of the RAISE Family Caregivers Act definition while aligning with the care recipients specified in 1902(xx)(9)(A)(ii)(III) of the Act. As such, at new Sec. 435.554(a), we define family caregiver as an adult family member or other individual who has a significant relationship with, and who provides care within a broad range of assistance to, a dependent child or a disabled individual. This definition of family caregiver largely aligns with the RAISE Family Caregivers Act definition but includes modifications to support implementation of section 1902(xx)(9)(A)(ii)(III) of the Act, as further discussed below.

We are generally incorporating the significant relationship and activity-based components of the RAISE Family Caregivers Act definition into the definition of family caregiver at Sec. 435.554(a), recognizing that a family caregiver is not limited to legally recognized relatives or members of the same household and that providing a “broad range of assistance” (as specified in the RAISE Family Caregivers Act definition) to an individual may consist of any number of activities necessitated by individual health status. However, the RAISE Family Caregivers Act definition encompasses caregiving for a broad range of individuals including those with a chronic health condition, disability, or functional limitation while section 1902(xx)(9)(A)(ii)(III) of the Act expressly limits the exclusion to family caregivers “of a dependent child age 13 years and under or a disabled individual.” We do not interpret the statutory cross- reference to the RAISE Family Caregivers Act definition of family caregiver in section 1902(xx)(9)(A)(ii)(III) of the Act as authorizing expansion of the community engagement exclusion beyond the care recipient populations expressly specified in that section of the Act. In addition, because “a dependent child 13 years of age and under” is specified in section 1902(xx)(9)(A)(ii)(III) but is not referenced in the RAISE Family Caregivers Act definition, we are adding this cohort of individual to the set of care recipients included in our definition of family caregiver at Sec. 435.554(a).

Together, these modifications appropriately harmonize the RAISE Family Caregivers Act definition of family caregiver with the scope of care recipients specified at section 1902(xx)(9)(A)(ii)(III) of the Act and ensure that the exclusion is applied only to family caregivers who provide assistance to a dependent child or a disabled individual. (Notably, as outlined further in this section, there is no upper age limit for the “disabled individual” referenced in section 1902(xx)(9)(A)(ii)(III) of the Act, meaning that individuals of any age with a disability would qualify under that term.)

Additionally, to reflect the varied and individualized nature of caregiving arrangements, we opted to modify the RAISE Family Caregivers Act definition slightly in Sec. 435.554(a) to refer to “care within a broad range of assistance” to ensure that States do not require that a family caregiver provide multiple forms of assistance to a dependent child or a disabled individual to qualify as a specified excluded individual. For additional details about the criteria a family caregiver must meet to qualify as a specific excluded individual, see section II.E.3.h. of this IFC. e. Definition of Dependent Child

Section 1902(xx)(9)(A)(ii)(III) of the Act provides an exclusion from the community engagement requirement for an individual who is a parent, guardian, caretaker relative, or family caregiver of a “dependent child 13 years of age and under.” In Sec. 435.554(a), we define dependent child to mean a child 13 years of age or under who relies on another individual for care.

“Dependent child” already has a specific Medicaid definition; in developing definitions for this community engagement exclusion, we considered whether it is appropriate to apply the existing definition of dependent child, and decided it is not, for the reasons discussed below.

In 2012, we established a definition of a “dependent child” in Sec. 435.4,\52\ noting that our definition was grounded in section 1931 of the Act. (“Consistent with section 1931 of the Act, we propose Medicaid definitions of `caretaker relative' and `dependent child' at Sec. 435.4”).\53\ In implementing the mandate under subsections (a) and (b) of section 1931 of the Act to apply the eligibility requirements of the former AFDC program (as it existed on July 16, 1996) to low-income families, the definition of “dependent child” in Sec. 435.4 incorporates each State's choice with regard to the AFDC “deprivation” requirement. A dependent child under Sec. 435.4 must be “deprived of parental support by reason of the death, absence from the home, physical or mental incapacity, or unemployment of at least one parent, unless the State has elected in its State plan to eliminate such deprivation requirement.” When we implemented the final rule defining “caretaker relative” in 2012, we noted that many States had elected to eliminate the deprivation requirement from their definition of “dependent child,” applying only an age standard to the term. In addition, section 1902(xx)(9)(A)(ii)(III) of the Act provides an exclusion from the community engagement requirement for an individual who is a parent of a dependent child 13 years of age and under, which is in conflict with the deprivation requirement. Because section 1902(xx)(9)(A)(ii)(III) of the Act does not refer to section 1931 of the Act and is in conflict with the deprivation requirement in Sec. 435.4, and because most States have eliminated the deprivation requirement, we decided against adopting the existing definition of dependent child at Sec. 435.4 for purposes of section 1902(xx)(9)(A)(ii)(III) of the Act.

\52\ Medicaid Program; Eligibility Changes Under the Affordable Care Act of 2010. 77 FR 17144 (March 23, 2012). https://www.federalregister.gov/d/2012-6560.

\53\ Medicaid Program; Eligibility Changes Under the Affordable Care Act of 2010. 76 FR 51148 (August 17, 2011). https://www.federalregister.gov/d/2011-20756.

In establishing a definition of dependent child for purposes of exclusion from the community

engagement requirement, we also considered how “dependent” is defined as it relates to the work requirements in the SNAP program. Notably, the WFTC legislation made changes to the exemptions for the SNAP time limit work requirement that align with the exclusion established at section 1902(xx)(9)(A)(ii)(III) of the Act. Section 10102 of the WFTC legislation amended section 6(o) of the Food and Nutrition Act of 2008 to apply an exemption from the time limit work requirement to “a parent or other member of a household with responsibility for a dependent child under 14 years of age” (the exemption previously applied to those responsible for a dependent under 18 years of age). Unlike the existing definition in Medicaid, SNAP does not apply a deprivation requirement for a child 13 years of age and under to be considered a dependent.

While we determined it was not appropriate to apply the deprivation requirement to the new definition of “dependent child” at Sec. 435.554(a) for the reasons we discuss in the preceding paragraphs, we recognize that dependent children still rely on adults for care (for example, housing, food, medical care, education, etc.). Therefore, we include a child's reliance on another individual for care in the new definition. Because most States have removed their deprivation requirement for dependent children under Medicaid and to align policy with SNAP (as was done in the WFTC legislation that aligned the age limits for dependent children for community engagement exclusions in Medicaid and time-limit work requirement exemptions in SNAP), we establish a new definition of “dependent child” at Sec. 435.554(a) to mean a child 13 years of age or under who relies on another individual for care, and only for the purpose of determining if a person is a specified excluded individual under section 1902(xx)(9)(A)(ii)(III) of the Act. f. Definition of Disabled Individual

Section 1902(xx)(9)(A)(ii)(III) of the Act provides an exclusion from the community engagement requirement for an individual who is a parent, guardian, caretaker relative, or family caregiver of a disabled individual. The statute does not define the term “disabled” or “disabled individual,” nor does it include a cross-reference to an existing statutory or regulatory definition of disability. Instead, Section 1902(xx)(9)(A)(ii)(III) of the Act focuses on the caregiver and that person's relationship to the care recipient, not on whether the care recipient has previously been determined disabled by the Social Security Administration (SSA) or been identified as disabled within the Medicaid program or by other eligibility criteria established by Federal law.

In developing a regulatory definition, we considered several possible approaches. First, we considered adopting the SSA definition of disability used for purposes of Supplemental Security Income (SSI) and Social Security Disability Insurance (SSDI). That definition generally requires that a person be unable to engage in substantial gainful activity due to a medically determinable impairment expected to last at least 12 months or result in death. We determined that this standard is closely tied to cash assistance eligibility and work incapacity determinations and may not be well aligned with the structure or purpose of this caregiver exclusion. Section 1902(xx)(9)(A)(ii)(III) of the Act does not require that the disabled individual be unable to work, nor does it condition the exclusion on the disabled individual's receipt of SSI or SSDI. Limiting the exclusion to disabled individuals with a formal SSA disability determination could exclude individuals who provide assistance to disabled individuals with a broad range of functional limitations whom the statute appears to encompass.

Second, we considered other disability definitions used in Federal statutes and programs, including the definition of “individual with a disability” under the Rehabilitation Act of 1973 and the Americans with Disabilities Act (ADA). These statutes are generally aligned in that an individual has a disability if the individual has a physical or mental impairment that substantially limits one or more major life activities, has a record of such an impairment, or is regarded as having such an impairment. These definitions are not tied to work incapacity or eligibility for cash assistance and instead focus on functional limitation. The ADA definition is also a well-established Federal standard that applies across a wide range of programs and contexts and is familiar to States and interested parties.

Finally, we considered permitting States to define “disabled individual” for purposes of the exclusion. However, the absence of a Federal standard could lead to inconsistent application across States and uncertainty for beneficiaries.

After considering these options, we are adopting a definition of disabled individual at new Sec. 435.554(a) that aligns with the ADA definition of “disability” at 28 CFR 35.108. Under this definition, disabled individual means an individual who meets the ADA definition of disability at 28 CFR 35.108. An individual need not be eligible for Medicaid or other Federal programs on the basis of a disability to be a disabled individual under this definition.

As previously stated, section 1902(xx)(9)(A)(ii)(III) of the Act does not specify an upper age limit when referencing a “disabled individual.” This term could, therefore, include an older adult who requires assistance of varying scope in performing activities of daily living (ADLs) (bathing, dressing, toileting, eating, etc.) or other activities that keep older adults living at home and participating in community life. We encourage States to ensure that educational materials on this community engagement exclusion are sufficiently clear so that individuals providing supports to older adults understand that they could qualify as a specified excluded individual through the family caregiver component at section 1902(xx)(9)(A)(ii)(III) of the Act. We also acknowledge that there is no lower age limit to “disabled individual,” meaning that the term could apply to individuals from birth, although we note that there is overlap through the age of 13 with references in this same exclusion category to “dependent child 13 years of age and under.” g. Applicability of Parent, Caretaker Relative, Guardian, or Family Caregiver Exclusion to Multiple Individuals in a Residence

Interested parties requested that we explain how the exclusion under section 1902(xx)(9)(A)(ii)(III) of the Act will apply in homes with multiple individuals who may be a parent, caretaker relative, guardian, or family caregiver. We considered limiting the exclusion to one person per residence or allowing multiple individuals who reside together to qualify for the exclusion. In Medicaid, there is no precedent for limiting the number of individuals who reside together and are eligible for an exclusion to the application of a policy (for example, cost sharing exemptions, outlined at Sec. 447.56), as most existing exclusions/exceptions in Medicaid are established based on an individual's eligibility factors, not (like this exclusion) their relation to another individual. Further, the statutory language at section 1902(xx)(9)(A)(ii)(III) does not specify that to qualify as a specified excluded individual there must be a one-to-one ratio of the individual to the person receiving care.

We also considered how FNS within USDA implements similar exemptions for SNAP work requirements. The time limit work requirement under SNAP exempts individuals who have someone under age 14 in their SNAP household.\54\ In SNAP, a household is defined as everyone who lives together and purchases and prepares meals together.\55\ Although the SNAP terminology for a household is slightly different from the Medicaid terminology we describe in this section, FNS does not limit these exemptions from SNAP work requirements to a single person in a household. Instead, the time limit exemption applies to everyone living in the SNAP household with someone 13 years of age and under. This approach does not require SNAP programs to determine if there are other caregivers caring for the same dependent child when determining exemptions from the time limit work requirement.

\54\ SNAP Work Requirements. U.S. Department of Agriculture Food and Nutrition Services, last updated August 29, 2025, https://www.fns.usda.gov/snap/work-requirements.

\55\ 7 CFR 273.1.

We acknowledge that multiple individuals who could qualify for this exclusion may reside together. Consistent with our interpretation of the statute and existing SNAP policy, we are promulgating at new Sec. 435.554(c)(3)(ii) a policy that allows multiple parents, caretaker relatives, guardians, and/or family caregivers in a single residence to qualify for the exclusion, provided that they meet the definitions and criteria discussed in this section. CMS believes that this policy closely aligns with what is allowed under SNAP and is consistent with section 1902(xx) of the Act, while minimizing administrative burden for States and beneficiaries. h. Criteria for the Family Caregiver Exclusion

We interpret the inclusion of family caregivers as a component of the exclusions at section 1902(xx)(9)(A)(ii)(III) of the Act as recognizing not only the critical role family caregivers play, but also that these caregiving responsibilities, when regularly occurring and not solely incidental in nature, meaningfully limit a family caregiver's ability to participate in work or other community engagement activities. This interpretation is supported by the cross- reference to the RAISE Family Caregivers Act's definition of family caregiver, which emphasizes the significant relationship between the caregiver and the care recipient and recognizes that caregiving involves the provision of a broad range of assistance.

In implementing this provision, we considered whether to adopt a specific, uniform definition of “significant relationship” but opted not to do so as we recognize that caregiving relationships and the assistance provided varies widely. However, to give practical effect to the significant relationship element of the RAISE Family Caregivers Act definition of family caregiver while avoiding an overbroad application of the exclusion, we are establishing criteria to ensure the caregiving relationship is significant enough to justify exclusion from the community engagement requirement. States must apply these criteria to identify caregiving relationships that are sufficiently significant to qualify the family caregiver as a specified excluded individual through section 1902(xx)(9)(A)(ii)(III) of the Act. These criteria do not redefine who a family caregiver is but instead should be applied when States determine if an individual who meets the family caregiver definition at Sec. 435.554(a) qualifies as a specified excluded individual. These criteria apply to all family caregivers regardless of whether the individual is a paid or an unpaid family caregiver, as the purpose of the exclusion is to recognize the time and responsibility associated with being a family caregiver, regardless of compensation.

To simplify State administration and reduce beneficiary confusion, the criteria that pertain to a “relative,” as described below, are structured to align with the relationships recognized under the caretaker relative definition as discussed earlier in this section and defined at Sec. 435.554(a). Given that section 1902(xx)(9)(A)(ii)(III) of the Act lists family caregivers and caretaker relatives as separate and distinct groups subject to the exclusion, we are not requiring that a family caregiver reside with or assume primary responsibility for the care of the dependent child or disabled individual. This reflects the varied and individualized nature of family caregiving arrangements and ensures the family caregiver exclusion operates separately and apart from the caretaker relative exclusion while allowing States to build on existing administrative infrastructure and relationship determinations.

As implemented at a new Sec. 435.554(c)(3)(i), an individual who is a family caregiver as defined at Sec. 435.554(a) is a specified excluded individual if he or she meets one of the following criteria:

1. The individual primarily resides with a dependent child or disabled individual, as these terms are defined earlier, for whom he or she provides assistance that occurs on a regular basis and is not solely incidental in nature;

2. The individual is a relative (as specified in the “caretaker relative” definition at Sec. 435.554(a) without regard to the requirements to live with and to assume primary responsibility) of a dependent child or disabled individual, as these terms are defined earlier, for whom he or she provides assistance that occurs on a regular basis and is not solely incidental in nature, and with whom he or she does not reside; or

3. The individual does not reside with and is not a relative (as specified in the “caretaker relative” definition at Sec. 435.554(a) without regard to the requirements to live with and to assume primary responsibility) of a dependent child or disabled individual, as these terms are defined earlier, for whom he or she provides not less than 80 hours of assistance that is not solely incidental in nature per month.

We view shared residence with the care recipient and familial relationship to the care recipient as consistent with ongoing caregiving responsibility and as strong evidence of the “significant relationship” specified in the RAISE Family Caregivers Act definition of family caregiver. According to Pew Research Center, 10 percent of all U.S. adults say they are a caregiver for a parent age 65 or older.\56\ The full extent of the care provided by family caregivers to individuals with whom they live or to whom they are related is difficult to fully quantify, as often this care and support is unrecognized and unpaid. Family caregivers who live with the recipient of that care are more likely to be involved in daily, more intensive, round-the-clock care, assistance, or supervision. Relatives of care recipients are also often called upon to provide extensive support at all hours, particularly if they live close to the care recipient. Caring for relatives occurs both within and across households, and with more older adults choosing to remain in their own homes and communities, the prevalence of long-distance caregivers has increased to approximately 15 percent (5 to 7 million) of all family caregivers.\57\

\56\ Parker, K. “Family Caregiving in an Aging America.” Pew Research Center, February 2026. https://www.pewresearch.org/wp-content/uploads/sites/20/2026/02/ST_2026.2.26_family-caregivers_report.pdf.

\57\ Sadick, B. “How to Provide Long-Distance Caregiving.” U.S. News, June 3, 2025. https://health.usnews.com/senior-care/articles/how-to-provide-long-distance-caregiving.

For these reasons, we believe that co-residence and familial relationship are sufficient indicators to establish an ongoing significant caregiving relationship, particularly given the often personal and intense nature of the care provided by family caregivers who live with or are related to the care recipient, the regularly occurring provision of that care, and the impact of that care to the care recipient. As such, family caregivers who live with or are related to a dependent child or a disabled individual for whom they provide assistance that occurs on a regular basis and is not solely incidental in nature are not required to demonstrate provision of a minimum number of caregiving hours under this regulation. As described in section II.I.7.c. of this IFC, States are required to obtain sufficient information, including documentation when applicable, to verify an individual's status as a specified excluded individual through the family caregiver component of section 1902(xx)(9)(A)(ii)(III) of the Act.

We also recognize that some individuals provide caregiving supports to non-relatives with whom they do not reside. While the majority of family caregivers provide care for a relative, 11 percent care for a friend, neighbor, or other nonrelative.\58\ The intensity of care provided in these situations varies widely from limited, episodic, or incidental assistance to substantial, ongoing hands-on support. While we recognize that even limited assistance may help an individual with a disability remain in their own home, as noted at the beginning of this section, we interpret the inclusion of family caregivers as a component of the exclusions at section 1902(xx)(9)(A)(ii)(III) of the Act as recognizing individuals whose caregiving responsibilities meaningfully limit their ability to participate in work or other community engagement activities. As such, we believe it is necessary to establish a clear and practical standard for family caregivers who do not live with, and are not related to, the recipient of the care he or she provides.

\58\ AARP and National Alliance for Caregiving. (2025). “Caregiving in the U.S.” https://www.aarp.org/content/dam/aarp/ppi/topics/ltss/family-caregiving/caregiving-in-us-2025.doi.10.26419-2fppi.00373.001.pdf.

The 80-hour per month threshold reflects a sustained and regular commitment of time providing care, roughly equivalent to an average of 20 hours per week. This level of caregiving demonstrates a significant relationship with the care recipient and indicates an active caregiving role comparable to part-time employment, job training, or other community activities that would otherwise satisfy the community engagement requirement. The threshold also serves a program integrity function by reducing the likelihood that an individual will qualify as a specified excluded individual under the family caregiver component at section 1902(xx)(9)(A)(ii)(III) of the Act based on informal or sporadic assistance, helping ensure the exclusion is reserved for individuals with caregiving responsibilities that are significant enough to justify exclusion from the community engagement requirement.

We also considered State administration of these requirements, and the 80-hour threshold also provides a clear, objective benchmark that States can administer consistently. Without a defined minimum threshold of caregiving, States would be required to make subjective judgements about the sufficiency of caregiving activities, increasing the risk of inconsistent decisions and uneven application across States. This standard reduces subjectivity, supports more uniform implementation across States, and promotes more predictable outcomes for States and beneficiaries.

We recognize that a person who meets the family caregiver definition in Sec. 435.554(a) might provide significant and meaningful caregiving to a dependent child or a disabled individual to whom he or she is neither related nor resides with, but that he or she might not qualify as a specified excluded individual because the hours of assistance provided do not reach the 80-hour per month threshold. Such a person would be an applicable individual unless eligible for other exclusions. However, as noted earlier in section II.C.1. of this IFC, the hours of assistance provided by such an individual would count as unpaid work under Sec. 435.552(b) and the individual would only need to engage in additional activities sufficient to reach the 80-hour threshold to comply with the community engagement requirement. For example, if an individual provides 55 hours per month of assistance to a non-relative who he or she does not live with, those 55 hours would count towards compliance with the community engagement requirement, and the family caregiver would need 25 additional hours a month of the activities listed in section 1902(xx)(2) of the Act, such as community service or participation in an educational program, to demonstrate compliance.

To summarize, we are implementing at new Sec. 435.554(c)(3)(i) the family caregiver component of the exclusion at section 1902(xx)(9)(A)(ii)(III) of the Act by considering the following to be specified excluded individuals: individuals who meet the definition of a family caregiver at Sec. 435.554(a) who reside with or are a relative (as specified in the caretaker relative definition at Sec. 435.554(a) without regard to the requirements to live with or to assume primary responsibility) of a dependent child or a disabled individual for whom he or she provides assistance that occurs on a regular basis and is not solely incidental in nature, or who provide not less than 80 hours of assistance that is not solely incidental in nature per month to a dependent child or a disabled individual to whom they are not related and with whom they do not reside. We believe this approach allows us to give practical effect to the “significant relationship” element of the RAISE Family Caregivers Act without constraining States to a single definition and that the criteria are reliable indicators that a caregiving relationship is ongoing, meaningful, and not merely incidental or episodic. Co-residency and familial relationship generally reflect an inherent level of connection and responsibility, while the minimum hours threshold for family caregivers who do not live with and are not related to a dependent child or disabled individual ensures that the family caregiver exclusion applies where there is a demonstrable and sustained caregiving role. The criteria also provide clear standards while recognizing and preserving the varied and individualized nature of caregiving arrangements.

Finally, as States implement the family caregiver component of the exclusion at section 1902(xx)(9)(A)(ii)(III) of the Act, they must ensure that they are conducting outreach consistent with the Medicaid outreach requirements at Sec. 435.561. We also encourage States to consider general public outreach efforts to complement the required outreach so the public can clearly understand which individuals may qualify as a specified excluded individual under the family caregiver component. Individuals who are family caregivers may not realize that they qualify for an exclusion to the community engagement requirement and will need clear, consumer friendly information to help them understand whether they are excluded. For more information on Medicaid outreach requirements, see Sec. 435.561 and the related discussion in section II.L. of this IFC.

Section 1902(xx)(9)(A)(ii)(IV) of the Act creates an exclusion for veterans with a total disability rating. The statute references 38 U.S.C. 1155, which provides VA the authority to create a schedule for rating disabilities. VA assigns disability ratings based on the severity of a veteran's service-connected condition(s), which is stated as a percentage. For purposes of community engagement, a total, or 100 percent, disability rating from VA is necessary to qualify for the exclusion. VA may assign total disability ratings that are permanent or temporary; either would qualify an individual for the exclusion, if rated at 100 percent. New Sec. 435.554(c)(4) adopts this “veteran with a disability rated as total” definition for purposes of the community engagement exclusion at section 1902(xx)(9)(A)(ii)(IV) of the Act.

Some veterans receive total disability based on individual unemployability (TDIU), which allows veterans with service-connected disabilities to receive 100 percent compensation if they cannot secure or maintain “substantial gainful employment,” even if their combined rating is below 100 percent. These veterans, due to receipt of 100 percent compensation, must be treated by States in the same manner as all other veterans who have a combined disability rating of 100 percent, thus meeting the exclusion.

Some veterans will receive a permanent and total (P&T) disability which means that a veteran has a 100 percent (total) disability rating, and their condition is considered static (permanent) with no expectation of improvement. While a veteran only needs a total (100 percent) VA disability rating to meet the exclusion, States are not permitted to reverify a permanent disability determination. Conversely, temporary disabilities assigned by the VA, which are sometimes time- limited or are expected to improve over time, will require reverification at least once every 12 months. For more information about verification requirements and recommended data sources for veterans with total disability ratings, see section II.I.7.d. of this IFC. 5. An Individual Who is Medically Frail or Otherwise has Special Medical Needs a. Background

The definition of a specified excluded individual at section 1902(xx)(9)(A)(ii)(V) of the Act includes an individual who is medically frail or otherwise has special medical needs (henceforth referred to as medically frail). Specifically, section 1902(xx)(9)(A)(ii)(V) of the Act provides that specified excluded individuals must include an individual, “(V) who is medically frail or otherwise has special medical needs (as defined by the Secretary), including an individual--(aa) who is blind or disabled (as defined in section 1614 of the Act); (bb) with a substance use disorder (SUD); (cc) with a disabling mental disorder; (dd) with a physical, intellectual or developmental disability that significantly impairs their ability to perform 1 or more ADLs; or (ee) with a serious or complex medical condition.” We are defining medically frail individuals as individuals who meet one or more of the five categories identified at section 1902(xx)(9)(A)(ii)(V) of the Act. As described in more detail in section II.E.5.b. of this IFC, at Sec. 435.554(c)(5) we define medically frail individuals for the purposes of the community engagement exclusion.

The community engagement requirement has the potential to empower Medicaid beneficiaries through employment, education, or volunteer service so they can escape isolation and dependency, build confidence, achieve self-sufficiency and prosperity, and improve health. However, this mandatory exclusion from the community engagement requirement protects access to necessary health care services for individuals who are medically frail and may have physical or behavioral health conditions that significantly impair their ability to consistently work or participate in other community engagement activities defined at Sec. 435.552.

Section 1937(a)(2)(B)(vi) of the Act exempts individuals who are medically frail, including individuals eligible under the State plan adult group, from mandatory enrollment in a benchmark or benchmark- equivalent benefit package (which we refer to as an alternative benefit plan (ABP)), that does not offer all services at the same or higher amount, duration, and scope covered under the State's traditional Medicaid State plan. We are not adopting the ABP medically frail definition for purposes of the community engagement medically frail exclusion for the reasons stated in this section of the preamble. While the medically frail exclusions for purposes of ABP and community engagement both apply to individuals eligible under the adult group, they are distinct from each other in that they are in two different sections of the statute that apply to different aspects of the Medicaid program. The medically frail exclusion for the ABP only impacts an individual's Medicaid benefit package selection, while the medically frail exclusion under the community engagement requirement determines if an individual needs to demonstrate community engagement to maintain Medicaid eligibility.

Section 1937(a)(2)(B)(vi) of the Act provides that individuals who are medically frail should be identified in accordance with regulations issued by the Secretary. That regulation, Sec. 440.315(f), provides that States must identify individuals who are medically frail for purposes of the ABP requirements, and that the State's definition for that purpose must at least include those individuals described in Sec. 438.50(d)(3), individuals with disabling mental disorders (including children with serious emotional disturbances and adults with serious mental illness), individuals with chronic SUDs, individuals with serious and complex medical conditions, individuals with a physical, intellectual or developmental disability that significantly impairs their ability to perform one or more ADLs, or individuals with a disability determination based on Social Security criteria or in States that apply more restrictive criteria than the SSI \59\ program, the State plan criteria.\60\

\60\ The community engagement requirement does not apply to children under the age of 19 and therefore is not applicable to the individuals described in Sec. 438.50(d)(3) or children with serious emotional disturbances. The regulation at Sec. 438.50(d)(3) includes children under the age of 19 eligible for SSI under Title XVI of the Act; eligible under section 1902(e)(3) of the Act; in foster care or other out-of-home placement; receiving foster care or adoption assistance; or receiving services through a family- centered, community-based, coordinated care system that receives grant funds under section 501(a)(1)(D) of Title V of the Act, and is defined by the State in terms of either program participation or special health care needs.

The ABP definition of medically frail at Sec. 440.315(f) is very similar to the community engagement medically frail definition at section 1902(xx)(9)(A)(ii)(V) of the Act. However, unlike the definition at Sec. 440.315(f), the community engagement medically frail definition specifically includes blind individuals; uses the term “or” instead of “and” for individuals with serious or complex medical conditions; does not include children under the age of 19 described at Sec. 438.50(d)(3); does not make reference to children with serious emotional disturbances and adults with serious mental illness to further describe individuals with disabling mental disorders; does not use the term “chronic” for individuals with SUDs; and does not include individuals with a disability determination based on

more restrictive criteria than the SSI program under a State plan.

We are not changing the ABP definition of medically frail and are specifying at Sec. 435.554(c)(5) a separate but similar definition of medically frail for community engagement purposes in this IFC. States continue to have the discretion to include categories of individuals who are not described at Sec. 440.315(f) in their definition of medically frail for purposes of benefit package selection.

Section 1902(xx)(9)(A)(ii)(V) of the Act provides the Secretary with the authority to define the term medically frail for community engagement purposes (as long as the definition includes the five categories specified at section 1902(xx)(9)(A)(ii)(V) of the Act). We are not using our authority at section 1902(xx)(9)(A)(ii)(V) of the Act to add additional categories to the definition of medically frail, as we have not identified any other populations that we believe could reasonably be considered medically frail outside of the five categories identified at section 1902(xx)(9)(A)(ii)(V) of the Act.

Further, unlike medical frailty implemented in ABPs, we are not providing States with the option to add additional categories of people to the definition of medical frailty for community engagement purposes. We considered doing so; however, as we state in the prior paragraph, we are not aware of a category of people that could not reasonably fall under one of the five categories identified at section 1902(xx)(9)(A)(ii)(V) of the Act. We are concerned that there may be more of an incentive for some States to include individuals who would not reasonably be considered medically frail, if we provided States with the option to add additional categories of people to the community engagement medically frail definition. For example, we do not believe it would be reasonable for States to consider an individual who is homeless as medically frail solely on the basis that the individual is homeless, as that circumstance is not a medical condition. However, individuals who are homeless may have a medical condition, such as an SUD or disabling mental disorder, that could qualify them for the medically frail exclusion. Furthermore, we believe that having a standard medically frail definition provides States with a more streamlined approach to medical frailty that will be easier to implement. If we permitted States to add additional categories to the definition of medically frail beyond those identified in the statute, then we would need to establish a process for review and approval of such categories, which would create burden for both CMS and States. We therefore do not believe limiting the definition of medically frail for community engagement purposes to the five categories identified in the statute will lead to a meaningful difference in the number of individuals who are subject to the community engagement requirement that cannot also meet such requirements. b. Medically Frail Definition

As noted in section II.E.5.a. of this IFC, consistent with our statutory authority at section 1902(xx)(9)(A)(ii)(V) of the Act, we are defining a medically frail individual at Sec. 435.554(c)(5) as an individual whose physical, mental, or other behavioral health condition significantly impairs the individual's ability to comply with the community engagement requirement in this subpart and who is blind or disabled (as defined at section 1614 of the Act); with an SUD; with a disabling mental disorder; with a physical, intellectual, or developmental disability that significantly impairs their ability to perform one or more ADLs; or with a serious or complex medical condition. Individuals only need to fit within one of these categories to qualify for the medically frail exclusion to the community engagement requirement.

The best reading of the statutory phrase “medically frail or otherwise has special medical needs” is one that considers not only the presence of a particular diagnosis or condition, but also the extent to which the condition impairs an individual's ability to engage in community engagement activities (including but not limited to work) or otherwise comply with the statutory requirements in section 1902(xx) of the Act. Reading the statute to require automatic classification as medically frail or otherwise having special medical needs based solely on diagnosis or condition would risk sweeping in individuals whose conditions do not significantly impair their functional capacity, meaning that they are able to perform 80 hours per month of qualifying activities, and thus would fail to give full meaning to the term “medically frail or who otherwise has special medical needs.” The phrase “medically frail or who otherwise has special medical needs” connotes diminished functional capacity that significantly impairs an individual's ability to meet ordinary demands. In this context, the relevant demand is meeting the community engagement requirement. Accordingly, we interpret the statute to require consideration of the severity of an individual's condition as relevant to whether that individual is capable of meeting the community engagement requirement. An individual who lacks the capacity to meet the community engagement requirement may properly be determined to be medically frail or otherwise to have special medical needs. But, if a person is able to demonstrate community engagement by performing 80 hours per month of qualifying community engagement activities, notwithstanding their physical, mental, or other behavioral health condition, they would not qualify as medically frail and would not be a specified excluded individual.

The statute also expressly delegates definitional authority to the Secretary by providing that individuals who are “medically frail” or “otherwise ha[ve] special medical needs” are those “as defined by the Secretary.” This language demonstrates Congress's intent to afford the Secretary discretion to establish standards governing the scope and application of this term in the context of administering the statute. Of note, section 1902(xx)(9)(A)(ii)(V), setting forth the exclusion for individuals who are medically frail or otherwise have special medical needs, is the only item in the statutory list of specified excluded individual categories that includes this express grant of definitional authority, which indicates that Congress specifically intended to authorize the Secretary to place parameters around which individuals will qualify for this exclusion.

Additionally, we are not aligning the definition of the medically frail categories for an individual who is disabled; with a disabling mental disorder; or with a physical, intellectual, or developmental disability that significantly impairs their ability to perform one or more ADL, with our definition of a disabled individual at Sec. 435.554(a) or the veteran disability standard we describe in section II.E.4. of this IFC. We do not believe it would be appropriate to apply these definitions to these medically frail exclusion categories as the exclusion at section 1902(xx)(9)(A)(ii)(V)(aa) of the Act is expressly tied to the definition of a disabled individual at section 1614 of the Act, and it would be difficult to set one standard that appropriately defines individuals with disabling mental disorders or with a physical, intellectual, or developmental disability that significantly impairs their ability to perform one or more ADLs.

For the first medically frail exclusion, we are specifying at Sec. 435.554(c)(5)(i)(A) that an individual who is blind or disabled (as defined in section 1614 of the Act) and who otherwise meets the

criteria at Sec. 435.554(c)(5)(i) is medically frail, consistent with section 1902(xx)(9)(A)(ii)(V)(aa) of the Act. Under section 1614 of the Act, a person is blind if they have central visual acuity of 20/200 or less in the better eye with use of a correcting lens. Under section 1614 of the Act, a person is disabled if they are unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than twelve months.

For the second medically frail exclusion, we are specifying at Sec. 435.554(c)(5)(i)(B) that an individual with an SUD and who otherwise meets the criteria at Sec. 435.554(c)(5)(i) is medically frail, consistent with section 1902(xx)(9)(A)(ii)(V)(bb) of the Act, excluding individuals who are in stable recovery (which means, in recovery for 5 or more years). As we describe in more detail in the paragraph after next, we are excluding individuals in stable recovery from this definition since their SUDs are unlikely to significantly impair their ability to comply with the community engagement requirement. We decline to further define the term SUD in regulation, with the exception of excluding individuals who are in stable recovery, as there are numerous definitions of an SUD. While we are not further defining the term SUD, except for excluding individuals who are in stable recovery, it is our understanding that the Diagnostic and Statistical Manual of Mental Disorders (DSM-5) \61\ and International Classification of Diseases and Related Health Problems, Tenth Revision (ICD-10) \62\ are most commonly used to define and classify SUDs, and States may find the DSM-5 and ICD-10 to be useful resources for setting criteria to identify individuals with SUDs. We also believe it would be reasonable for States to consider certain conditions as SUDs, including alcohol use disorder, opioid use disorder, and stimulant use disorder provided an individual's SUD significantly impairs their ability to comply with the community engagement requirement. We note that this is a list of examples, and not an exhaustive list.

\61\ “Diagnostic and Statistical Manual of Mental Disorders (DSM-5-TR),” American Psychiatric Association, accessed February 27, 2026, https://www.psychiatry.org/psychiatrists/practice/dsm.

\62\ “International Statistical Classification of Diseases and Related Health Problems 10th Revision,” World Health Organization, accessed February 27, 2026, https://icd.who.int/browse10/2019/en.

SUDs are characterized by cognitive, behavioral, and physiological symptoms indicating that an individual continues using a substance (for example, alcohol, opioids, hallucinogens, etc.) despite significant substance-related problems that impact the individual's life.\63\ In addition, SUDs have different clinical levels: mild, moderate, and severe. It is our understanding that under current clinical standards SUDs are chronic diseases and that individuals in recovery are considered to have an SUD.\64\ However, there are stages of recovery that are generally based on the length of recovery: early recovery, sustained recovery, and stable recovery. Generally, individuals in early recovery have been in recovery for less than 12 months, individuals in sustained recovery have been in recovery for 1 to less than 5 years, and individuals in stable recovery have been in recovery for 5 years or longer.\65\

\63\ “Treatment of Substance Use Disorders,” Centers for Disease Control and Prevention, last modified April 25, 2024, https://www.cdc.gov/overdose-prevention/treatment/.

\64\ “Treatment and Recovery,” National Institute on Drug Abuse, last modified July 2020, https://nida.nih.gov/publications/drugs-brains-behavior-science-addiction/treatment-recovery.

\65\ Frone MR, Chosewood LC, Osborne JC, and Howard JJ. (2022). “Workplace Supported Recovery from Substance Use Disorders: Defining the Construct, Developing a Model, and Proposing an Agenda for Future Research.” Occupational Health Science 6(4): 475-511. https://doi.org/10.1007/s41542-022-00123-x.

We interpret the statutory reference to this medically frail category to apply to individuals with an SUD regardless of whether they are in an active treatment program. We believe our interpretation is supported by the statute, which does not include language limiting this exclusion only to individuals in an active treatment program. We also interpret the statutory reference to individuals with an SUD to include individuals who are in recovery from an SUD, including individuals who are in early or sustained recovery. However, we believe that it is inappropriate to include individuals with an SUD who are in stable recovery (which means individuals who are in recovery for 5 or more years) in the medically frail exclusion. The risk of SUD recurrence for an individual in stable recovery is approximately the same as the general population.\66\ Therefore, we believe that such individuals are better able to participate in community engagement activities than an individual who is in active treatment or early or sustained recovery. In addition, we believe that participating in community engagement activities, such as employment, has the potential to help these individuals maintain their recovery by helping them escape isolation and dependency, build confidence, achieve self-sufficiency and prosperity, and improve health. As noted in section II.E.5.a. and preceding paragraphs in this section of this IFC, section 1902(xx)(9)(A)(ii)(V) of the Act provides the Secretary with the authority to define an individual who is medically frail, so we believe it is consistent with our statutory authority to exclude individuals who are in stable recovery from the definition of an individual with an SUD as we are defining the term. States must ensure that they have reasonable processes and criteria in place for individuals to identify themselves as meeting the SUD medically frail exclusion, including for individuals who have a relapse.

\66\ Ibid.

We note that for community engagement purposes the medically frail exclusion for individuals with an SUD is a distinct exclusion from the exclusion at section 1902(xx)(9)(A)(ii)(VII) of the Act for individuals participating in a drug addiction or alcoholic treatment and rehabilitation program (as defined in section 3(h) of the Food and Nutrition Act of 2008), described further in section II.E.7. of this IFC. While we acknowledge that individuals participating in a drug addiction or alcoholic treatment and rehabilitation program generally have SUDs, as we stated in the previous paragraph, we interpret the medically frail exclusion for individuals with SUDs at section 1902(xx)(9)(A)(ii)(V)(bb) of the Act as not limited to individuals in an active treatment program.

For the third medically frail exclusion, we are specifying in our regulation at Sec. 435.554(c)(5)(i)(C) that an individual with a disabling mental disorder and who otherwise meets the criteria at Sec. 435.554(c)(5)(i) is medically frail, consistent with section 1902(xx)(9)(A)(ii)(V)(cc) of the Act. There are numerous definitions of disabling mental disorders. The American Psychiatric Association defines mental disorders as conditions that impact an individual's thinking, emotion, or behavior and may impact an individual's functioning.\67\ Further, a disabling mental disorder may significantly impair an individual's ability to complete major life activities, such as their ability to work or

volunteer \68\ and can be either permanent or temporary.\69\

\67\ “What is Mental Illness?,” American Psychiatric Association, last modified July 2025, https://www.psychiatry.org/patients-families/what-is-mental-illness.

\68\ Ibid.

\69\ Ibid.

The statute specifically requires the mental disorder to be disabling, so an individual with a non-disabling mental disorder would not qualify for this exclusion. We decline to further define disabling mental disorder in our regulation, as it would be incredibly difficult to set one standard that appropriately defines individuals with disabling mental disorders, and we instead direct States to consider whether the disabling mental disorder significantly impairs an individual's ability to comply with the community engagement requirement. However, it is our understanding that the Interdepartmental Serious Mental Illness Coordinating Committee (ISMICC), DSM-5, and ICD-10 criteria for serious mental illness (SMIs) are commonly used to define and classify disabling mental disorders, and States may find the ISMICC, DSM-5, and ICD-10 to be useful resources for setting criteria to identify individuals with disabling mental disorders. We also believe it would be reasonable for States to consider certain conditions, when such conditions are disabling and significantly impair an individual's ability to comply with the community engagement requirement, as disabling mental disorders, including schizophrenia, schizotypal disorder, delusional disorder, other non-mood psychotic disorders, moderate or severe bipolar disorder, major depressive disorder, and panic disorder. We note that this is a list of examples, not an exhaustive list.

For the fourth medically frail exclusion, we are specifying in our regulation at Sec. 435.554(c)(5)(i)(D) that an individual with a physical, intellectual, or developmental disability that significantly impairs their ability to perform one or more ADLs and who otherwise meets the criteria at Sec. 435.554(c)(5)(i) is medically frail, consistent with section 1902(xx)(9)(A)(ii)(V)(dd) of the Act. There are numerous definitions of a physical, intellectual, or developmental disability. Processes used to determine that an individual has a physical, intellectual, or developmental disability are also generally dependent on an individual's functional status and the severity of their condition, which is consistent with our criteria at Sec. 435.554(c)(5)(i) that an individual's physical, mental, or behavioral health condition must significantly impair their ability to comply with the community engagement requirement. The Eunice Kennedy Shriver National Institute for Child Health and Human Development has indicated that physical disabilities either temporarily or permanently impact an individual's physical function, intellectual disabilities generally permanent and impact an individual's intellectual functioning and adaptive behavior, and developmental disabilities are generally permanent and can impair physical or intellectual functioning, or both.\70\ ADLs are activities related to personal care including bathing or showering, dressing, getting in and out of bed or a chair, walking, using the toilet, and eating. Instrumental activities of daily living (IADLs) are activities that allow an individual to live independently in the community (for example, shopping, meal preparation, etc.).\71\

\70\ “About Intellectual and Developmental Disabilities (IDDs),” Eunice Kennedy Shriver National Institute of Child Health and Human Development, last modified November 9, 2021, https://www.nichd.nih.gov/health/topics/idds/conditioninfo.

\71\ “CMS Waiver Applications,” Centers for Medicare & Medicaid Services, last accessed February 27, 2026, https://wms-mmdl.cms.gov/WMS/faces/portal.jsp.

The statute specifically requires that the individual's physical, intellectual, or developmental disability significantly impair their ability to perform one or more ADLs. An individual with such a disability that does not significantly impair their ability to perform one or more ADLs would not qualify for this exclusion. We interpret the statute as requiring an individual's physical, intellectual, or developmental disability to significantly impair their ability to perform one or more ADLs, but not IADLs, as IADLs are different from ADLs and the statute makes no reference to IADLs. We decline to further define a physical, intellectual, or developmental disability that significantly impairs an individual's ability to perform one or more ADLs in our regulation, as it would be incredibly difficult to set one standard that appropriately defines individuals who would qualify for such an exclusion, and instead direct States to consider the effect of the physical, intellectual, or developmental disability on an individual's ability to comply with the community engagement requirement. We believe it would be reasonable for States to consider certain conditions as physical, intellectual, or developmental disabilities for purposes of this exclusion, when such disabilities significantly impair an individual's ability to perform one or more ADLs and comply with the community engagement requirement, including muscular dystrophy, cerebral palsy, cystic fibrosis, spina bifida, impairments resulting from injuries (for example, spinal cord injury, brain injury, and amputation), Down syndrome, Fragile X syndrome, and Prader-Willi syndrome. We note that this is a list of examples, not an exhaustive list.

For the final medically frail exclusion, we are specifying at Sec. 435.554(c)(5)(i)(E) that an individual with a serious or complex medical condition who otherwise meets the criteria in Sec. 435.554(c)(5)(i) is medically frail, consistent with section 1902(xx)(9)(A)(ii)(V)(ee) of the Act. Since the statute uses the term “or,” we interpret this exclusion as applying to individuals with a serious medical condition, a complex medical condition, or a medical condition that is both serious and complex. We considered including specific conditions within our definition of a serious or complex medical condition, including human immunodeficiency virus and acquired immunodeficiency syndrome (HIV/AIDS), end stage renal disease (ESRD), cancer, and sickle cell disease (SCD) but, for reasons stated in a later paragraph, we do not believe it is reasonable to categorically consider conditions as serious or complex without factoring in criteria such as the severity of the condition.

In 1999, the Institute of Medicine,\72\ in response to a request from the Health Care Financing Administration (now CMS), authored the report “Definition of Serious and Complex Medical Conditions.” \73\ The report detailed difficulties with defining patient populations with “serious and complex” medical conditions but included the following criteria that could be used to describe medical conditions as serious and complex”: conditions that are life threatening, conditions that cause serious disability without necessarily being life threatening, conditions that cause significant pain or discomfort that can cause serious interruptions to life activities, conditions that require major commitments of time and effort from caregivers for a substantial period of time, conditions that may require frequent monitoring, conditions that predict or are associated with severe

consequences, conditions associated with negative consequences for someone else, conditions that affect multiple organ systems, conditions that require management to tight physiological parameters, conditions whose management requires coordination of multiple specialties, conditions whose treatment carries a risk of serious complications, and conditions requiring adjustment in a nonmedical environment.\74\

\72\ The Institute of Medicine is now known as the National Academy of Medicine.

\73\ CMS notes that the term used in this report is different from the “serious or complex” medical condition used in the community engagement statute but has determined the framework in the report to be sufficiently broad to implement this medical frailty exclusion.

\74\ Chrvala CA, Sharfstein SS, Institute of Medicine (U.S.). Committee On Serious and Complex Medical Conditions, and Inc Netlibrary. 1999. Definition of Serious and Complex Medical Conditions. Washington, DC: National Academy Press. https://www.ncbi.nlm.nih.gov/books/NBK224968/.

As the Institute of Medicine's report states: “It is important to recognize that these conditions may be serious and complex for some patients at some points during the course of their disease or disability. The conditions will not necessarily be serious and complex for all patients at all times.” This approach is relevant to our criteria at Sec. 435.554(c)(5)(i), as an individual with a serious or complex condition must have their ability to comply with the community engagement requirement significantly impaired by their condition to be determined medically frail. We understand that, as discussed in the Institute of Medicine's report, the acuity of patients with serious or complex medical conditions can, and does, improve. An individual with a well-managed serious or complex medical condition that does not significantly impair their ability to meet the community engagement requirement should not be determined medically frail. We therefore expect States to evaluate an individual's serious or complex medical condition according to the serious or complex medical condition's impact on the individual's ability to comply with the community engagement requirement.

Based on the Institute of Medicine's list of possible criteria that could be used to identify a “serious and complex medical condition,” we are specifying at Sec. 435.554(c)(5)(i)(E) that a serious or complex medical condition is a medical condition that is life threatening, seriously disabling without necessarily being life threatening, causing significant pain or discomfort that can cause serious interruptions to life activities, requiring a major time or effort commitment from caregivers for a substantial period of time, requiring frequent monitoring, associated with severe consequences or negative consequences for someone else, affecting multiple organ systems, requiring management to tight physiological parameters, requiring coordination of multiple specialties, requiring treatment that carries a risk of serious complications, or requiring adjustment in non-medical environments. States will need to ensure fidelity to the definition at Sec. 435.554(c)(5)(i)(E) and our criteria at Sec. 435.554(c)(5)(i) that an individual's physical, mental, or other behavioral health condition significantly impair their ability to comply with the community engagement requirement, when determining if an individual has a serious or complex medical condition for purposes of the community engagement exclusion.

We do not believe it would be appropriate to include an exhaustive list of conditions in regulation. However, we believe it would be reasonable for States to consider certain conditions as serious or complex, when such conditions significantly impair an individual's ability to comply with the community engagement requirement, including cancer, ESRD, viral hepatitis, SCD, chronic obstructive pulmonary disease, HIV/AIDS, sarcoidosis, cognitive impairment, heart disease, amyotrophic lateral sclerosis, Parkinson's disease, Huntington's disease, cystic fibrosis, multiple sclerosis, spinocerebellar ataxias, muscular dystrophy, hemophilia, trauma disorders, and Thalassemia major. Examples of conditions that we would not typically expect to significantly impair an individual's ability to meet the community engagement requirement include asthma, hypertension, anemia, generalized pain, pre-diabetes, Type I or II diabetes, obesity, psoriasis, headaches, and Attention-Deficit/Hyperactivity Disorder.

We note that these are not exhaustive lists. As previously stated, according to the Institute of Medicine's report, “It is important to recognize that these conditions may be serious and complex for some patients at some points during their disease or disability. The conditions will not necessarily be serious and complex for all patients at all times.” \75\ We further note that, in line with our approach to defining an individual who is medically frail at Sec. 435.554(c)(5)(i), as discussed in a preceding paragraph, we do not believe that it is reasonable for States to categorically exclude individuals with certain serious or complex medical conditions from the community engagement requirement without considering whether their condition significantly impairs their ability to comply with the community engagement requirement. Whether a person with a serious or complex medical condition qualifies as a specified excluded individual on the basis of medical frailty will depend on the condition significantly impairing their ability to comply with the community engagement requirement. For example, individuals with HIV/AIDS are medically frail if they are determined to have a serious or complex medical condition that significantly impairs the individual's ability to comply with the community engagement requirement, which is less likely to be the case if the acuity of their condition is not severe. We recognize that the acuity may change over time. For example, individuals with pressure ulcers, pneumonia, or fractures that heal would likely be able to comply with the community engagement requirement in relatively short order as their condition would likely no longer be determined as a serious or complex medical condition that significantly impairs their ability to do so. In addition, we believe that if individuals with a serious or complex medical condition do not have significantly impaired ability to comply with the community engagement requirement participating in community engagement activities, such as employment, could potentially help them escape isolation and dependency, build confidence, achieve self-sufficiency and prosperity, and improve health.

\75\ Ibid, pg. 19.

Except as discussed in the preceding paragraphs, we decline to further define in regulation an individual with an SUD; with a disabling mental disorder; with a physical, intellectual or developmental disability that significantly impairs their ability to perform one or more ADLs; or with a serious or complex medical condition. As we specify at Sec. 435.554(c)(5)(ii), States must use lists of diseases, diagnoses, disorders, or other health conditions to help define these categories and identify individuals who might potentially qualify as medically frail if they also meet the standard in Sec. 435.554(c)(5)(i). The lists must be auditable, justifiable, and consistent with the definitions established at Sec. 435.554(c)(5)(i)(A) through (E). We anticipate these lists will generally take the form of health care code sets (for example, ICD-10 codes, etc.). Further, such lists must be revised on a regular basis to add or remove diseases, diagnoses, disorders, or health conditions (as applicable) based on States' implementation experiences. For

example, States may determine that health conditions no longer need to be included on their lists because of advancements in treatment or that health conditions need to be added that are rare and were missed during their initial implementation of the community engagement requirement. In addition, if an individual does not have a disease, diagnosis, disorder, or health condition on the State's list, the State must have reasonable processes and criteria in place for such individuals to request consideration for the medically frail exclusion. We expect that individuals will request consideration on an infrequent basis as we believe such lists are likely to capture the breadth of diseases, diagnoses, disorders, or other health conditions that could be reasonably considered to meet the definitions at Sec. 435.554(c)(5)(i)(A) through (E).

We note that any lists of diseases, diagnoses, disorders, or health conditions or other processes that States use to identify medically frail individuals must be shared with us upon request as part of our oversight and data monitoring activities. If through Payment Error Rate Measurement Program (PERM) audits and reporting, or any other CMS audits, we determine that States determined that an individual is medically frail in a manner inconsistent with Sec. 435.554(c)(5)(i) (meaning there is frequent approval of individuals as medically frail with little to no support for the conclusion that their physical, mental, or other behavioral health condition significantly impairs their ability to comply with the community engagement requirement), States would not be in compliance with the regulation. Over time and with advances in treatment, we expect that the number of individuals who are determined to be medically frail by States will decline and then stabilize.

As States develop their lists and implement the medically frail exclusion, they must ensure that they are conducting outreach consistent with the Medicaid outreach requirements at Sec. 435.561. We also encourage States to consider general public outreach efforts to complement the outreach required at Sec. 435.561, so the public can clearly understand in which circumstances individuals might qualify as medically frail. In particular, individuals who are medically frail might not realize that they qualify for an exclusion from the community engagement requirement and will need clear, consumer-friendly information to help them understand if they are excluded. Additional information on Medicaid outreach requirements is found in section II.L. of this IFC. 6. Individuals Compliant With TANF Work Requirements and Individuals Not Exempt From SNAP Work Requirements

Section 1902(xx)(9)(A)(ii)(VI) of the Act creates an exclusion that references existing work requirements in other jointly administered Federal-State programs. Specifically, clause (ii)(VI)(aa) references the TANF block grants, and clause (ii)(VI)(bb) references SNAP. While the TANF \76\ and SNAP \77\ statutes both use the terminology “work requirements,” the term is inclusive of work and activities other than work, such as education, job training, community service, volunteering, etc.

\76\ Section 407 of the Social Security Act.

\77\ Sections 6(d)(1) and 6(o) of the Food and Nutrition Act of 2008.

Section 1902(xx)(9)(A)(ii)(VI)(aa) of the Act excludes individuals who are “in compliance with any requirements imposed by the State under section 407 of the Act” from having to meet the Medicaid community engagement requirement. Section 407 of the Act establishes mandatory work requirements and performance standards for the TANF program. Unlike other work requirements that apply to individuals, these Federal requirements establish performance standards that States must achieve; States have flexibility in how they implement work requirements placed on individuals to meet the performance standards outlined in section 407 of the Act.\78\ We adopt the language of section 1902(xx)(9)(A)(ii)(VI)(aa) of the Act in new regulation at Sec. 435.554(c)(6). Because States may define compliance with TANF work requirements differently, we are not prescribing a uniform definition of compliance with TANF work requirements for the purposes of this exclusion. Instead, when determining whether an individual is eligible for the TANF exclusion from the Medicaid community engagement requirement, the State Medicaid agency should assess whether the individual is compliant with the specific TANF work requirements established by the State. Consistent with section II.I.7.f. of this IFC, State Medicaid agencies should work closely with the State agency that administers TANF to determine which individuals are eligible for this TANF-based exclusion. To implement this exclusion, States should not rely on or require reporting from the individual. We also note that most potentially applicable individuals who receive TANF will fall under other exclusions, such as those for parent, guardian, or caretaker relative of a child age 13 or younger, described at 435.554(c)(3).

\78\ Falk G. (2026). “Temporary Assistance for Needy Families (TANF) Block Grant: A Primer.” U.S. Library of Congress. Congressional Research Service, R48413. https://www.congress.gov/crs-product/R48413.

Section 1902(xx)(9)(A)(ii)(VI)(bb) of the Act, implemented at new Sec. 435.554(c)(7), creates an exclusion for an individual who “is a member of a household that receives [SNAP] benefits . . . and is not exempt from a work requirement under the Food and Nutrition Act of 2008.” Based on the plain language of the statute, we interpret the use of “not exempt from” in this provision to mean “subject to” a work requirement under the Food and Nutrition Act of 2008. If an individual is in a household that receives SNAP benefits and is subject to a work requirement under the SNAP program, they meet the definition of a specified excluded individual and are therefore not an applicable individual subject to the Medicaid community engagement requirement.

Unlike the TANF exclusion from community engagement, which requires the State to ensure the individual is compliant with TANF work requirements to meet the definition for the exclusion, for the SNAP exclusion, States only need to determine that the individual is not exempt from SNAP work requirements and is in a household that receives SNAP benefits; the State does not need to confirm that the individual is in fact compliant with SNAP work requirements. CMS is aware that SNAP has two types of work requirements: general work requirements, defined in section (6)(d)(1) of the Food and Nutrition Act of 2008, and the time limit work requirement, defined in section (6)(o) of such Act. Because section 1902(xx) of the Act does not specify which SNAP work requirements apply to this exclusion, we interpret the statute to mean that both requirements apply. Therefore, an individual would be considered a specified excluded individual if they were a member of a household receiving SNAP benefits, and were not exempt from the general work requirement, time limit work requirement, or both--meaning they were subject to at least one of the SNAP work requirements. Consistent with section II.I.7.f. of this IFC, State Medicaid agencies should work closely with the State agency that administers SNAP to determine which individuals are eligible for this exclusion.

Both TANF and SNAP have long-standing work requirements for adults, with some exceptions, as a condition of

receiving benefits. Using national data from 2019, the Office of the Assistant Secretary for Planning and Evaluation in HHS, estimated that approximately 40 percent of Medicaid beneficiaries nationally were also enrolled in SNAP, and 4 percent were also enrolled in TANF.\79\ This exclusion ensures that Medicaid beneficiaries do not need to also meet the Medicaid community engagement requirement if they are already subject to SNAP and/or meeting TANF requirements. Because of the population overlap between these programs, this exclusion can reduce the burden on beneficiaries who may be eligible for and receiving benefits from multiple programs and allows States to use information regarding an individual from these programs to verify their exclusion or need to demonstrate Medicaid community engagement.

\79\ Macartney S and Ghertner R. (2023). “How Many People that Receive One Safety Net Benefit Also Receive Others?.” Office of Human Services Policy, Assistant Secretary for Planning and Evaluation. https://aspe.hhs.gov/sites/default/files/documents/340f9d2586febc3cdc1510f793403d0c/program-overlap-datapoint.pdf.

Section 1902(xx)(9)(A)(ii)(VII) of the Act establishes an exclusion for individuals “participating in a drug addiction or alcoholic treatment and rehabilitation program (as defined in section 3(h) of the Food and Nutrition Act of 2008).” Section 3(h) of such Act defines “drug addiction or alcoholic treatment and rehabilitation program” to mean any such program conducted by a private non-profit organization or institution, or a publicly operated community mental health center under part B of title XIX of the Public Health Service Act to provide treatment that can lead to the rehabilitation of drug addicts or alcoholics. States will need to determine which rehabilitation and treatment programs meet this definition for purposes of this exclusion. To qualify for this exclusion, the statute requires an individual to “participate” in a rehabilitation or treatment program. We are not establishing a minimum time commitment requirement, such as a minimum number of hours or days of services, that would qualify as participation for this exclusion; instead, States may establish a minimum standard for participation for such purposes, consistent with appropriate clinical guidelines. We implement this definition of “participating in a drug addiction or alcoholic treatment and rehabilitation program” for the community engagement exclusion at the new Sec. 435.554(c)(8).

We acknowledge that individuals participating in an addiction treatment or rehabilitation program will, by definition, have an SUD. The statutory definition of medical frailty at section 1902(xx)(9)(A)(ii)(V) of the Act (discussed in more detail in section II.E.5. of this IFC) includes individuals with an SUD. Additionally, States must ensure that any data sharing used to implement both SUD- related exclusions is aligned with 42 CFR part 2, the Federal regulation protecting the confidentiality of SUD treatment records. This is addressed in more detail in section II.I.7.e. of this IFC. 8. Inmate of a Public Institution

Section 1902(xx)(9)(A)(ii)(VIII) of the Act provides an exclusion from the community engagement requirement for individuals who are inmates of a public institution. Medicaid has a long-standing definition of “inmate of a public institution” and “public institution” at Sec. 435.1010, which we reference in new Sec. 435.554(c)(9). We consider an individual to be an inmate of a public institution if the individual is in custody and held involuntarily through operation of law enforcement.\80\ Public institutions do not include educational or vocational training institutions; child care institutions; or medical institutions, including institutions for mental diseases (IMDs). Inmates of public institutions include individuals in correctional institutions such as State or Federal prisons, local jails, detention facilities, or other penal settings. Recent legislative changes \81\ and CMS guidance have required or provided flexibility to States to provide certain Medicaid-covered services to eligible individuals during periods of incarceration. Because States are required to suspend rather than terminate eligibility during periods of incarceration,\82\ States should have systems and processes already in place to identify this population, including an individual's date of release. We believe that applying the existing Medicaid definitions to this exclusion ensures consistency and will promote administrative efficiency, as States will be able to use information from existing eligibility and data systems when effectuating this exclusion. We adopt the existing definition of “inmate of a public institution” at Sec. 435.1010 for the community engagement exclusion at the new Sec. 435.554(c)(9).

\80\ CMCS SHO letter #16-007, “To Facilitate Successful Re- entry for Individuals Transitioning from Incarceration to their Communities.” (April 28, 2016)., Available at: https://www.medicaid.gov/federal-policy-guidance/downloads/sho16007.pdf.

\81\ Including, but not limited to, section 1001 of the SUPPORT Act (Pub. L. 115-271), Section 5121 of the Consolidated Appropriations Act, 2023 (Pub. L. 117-328), and Section 205 of the Consolidated Appropriations Act, 2024 (Pub. L. 118-24). These legislative changes established, and then further amended section 1902(a)(84) of the Act.

\82\ CMCS Informational Bulletin, “Prohibition on Termination of Enrollment Due to Incarceration (Division G, Title I, Section 205, of the Consolidated Appropriations Act, 2024).” (December 23, 2025). Available at https://www.medicaid.gov/federal-policy-guidance/downloads/cib122325.pdf.

Section 1902(xx)(9)(A)(ii)(IX) of the Act establishes an exclusion for pregnant and postpartum women who are entitled to medical assistance under section 1902(e)(5) or (16) of the Act. While pregnant women are generally not eligible for the adult group under Sec. 435.119, and so most often would not be subject to community engagement, we also recognize that individuals enrolled in the adult group can become pregnant and remain in the adult group.\83\ Also, it is possible that a section 1115(a)(2) demonstration population determined to include applicable individuals may have pregnant women enrolled in it. Therefore, it is important to specify that a pregnant woman is a specified excluded individual.

\83\ The Office of the Assistant Secretary for Planning and Evaluation found that, in 2018, 8.2% of enrollees with Medicaid/CHIP financed births were enrolled in the adult group. Gordon SH, Whitman A, Buchmueller T, et al., “Medicaid Eligibility Category Among Enrollees with Medicaid-Paid Births in 2018,” Health Services Research 61(1) (2026): e70053, https://doi.org/10.1111/1475-6773.70053.

Section 1902(e)(5) of the Act, implemented at Sec. 435.170, establishes mandatory State plan continuous eligibility during pregnancy and through the end of the month in which the 60-day postpartum period following the end of pregnancy concludes, regardless of a change in income. Section 1902(e)(16) of the Act provides the State option, effective beginning April 1, 2022, for continuous and extended coverage for women during pregnancy and for 12 months after the end of the pregnancy.\84\ As of May 2026, 48 States, the District of Columbia, and U.S. Virgin Islands have elected the option to provide 12-month extended postpartum coverage in Medicaid (and CHIP). This State plan option means that a pregnant woman enrolled in Medicaid is continuously eligible for 12 months after the end of pregnancy,

regardless of the eligibility group in which she is enrolled. As a result, any woman who is receiving Medicaid under either the mandatory postpartum period (Sec. 435.170) or the 12-month postpartum extension while in the State plan adult group or a relevant section 1115(a)(2) demonstration population is a specified excluded individual during the relevant postpartum period. We implement this definition at the new Sec. 435.554(c)(10).

\84\ For more information, see CMCS SHO Letter #21-007, “Improving Maternal Health and Extending Postpartum Coverage in Medicaid and the Children's Health Insurance Program (CHIP).” (December 7, 2021). Available at https://www.medicaid.gov/federal-policy-guidance/downloads/sho21007.pdf.

F. Mandatory Exceptions vs. Specified Excluded Individuals

In describing individuals who are not required to meet the community engagement requirement at section 1902(xx)(2), section 1902(xx)(3)(A) of the Act establishes the term “mandatory exceptions for certain individuals” and section 1902(xx)(9)(A)(ii) of the Act establishes the term “specified excluded individual.” The difference between these terms stems from the definition of “applicable individual” at section 1902(xx)(9)(A)(i) of the Act, which defines applicable individual as individuals “other than specified excluded individuals (as defined in clause (ii)).” As discussed in section II.B. of this IFC, section 1902(xx)(1) of the Act establishes community engagement as a condition of eligibility for “applicable individuals,” and section 1902(xx)(9)(A)(i) of the Act expressly excludes “specified excluded individuals” from the definition of “applicable individuals.” Therefore, community engagement is not a condition of eligibility for specified excluded individuals. Conversely, the mandatory exceptions described at section 1902(xx)(3)(A) of the Act apply to “applicable individuals” who are otherwise subject to the community engagement requirement in a given month, but who meet criteria for a mandatory exception for part or all of that month, which results in the State deeming them compliant. Therefore, individuals who meet the criteria for a mandatory exception are still, by definition, considered applicable individuals, while specified excluded individuals are not.

This distinction becomes important when determining whether someone is subject to the community engagement requirement. The threshold question for States when they begin to process an application or a renewal is whether someone is an applicable individual or a specified excluded individual. If the State determines that the individual is a specified excluded individual in the month of application or when the State processes the renewal, it must not determine whether the individual met the community engagement requirement or met criteria for one of the mandatory exceptions in the prior month(s), as required at Sec. 435.556(c); accordingly, States are prohibited from requiring specified excluded individuals to demonstrate community engagement or be deemed to have demonstrated community engagement as a condition of eligibility. If the individual is an applicable individual in the month of application or when the State processes the renewal, the State would need to continue to analyze whether the individual meets criteria for any of the mandatory exceptions and deem compliance, or, if they are not excepted, determine whether the individual is compliant with the community engagement requirement during the appropriate timeframe. We further describe how States assess compliance, including when they determine if someone is a specified excluded individual or applicable individual, in section II.H. of this IFC.

We explain the distinction between mandatory exceptions and specified excluded individuals because of the reference to “specified excluded individuals” in the list of mandatory exceptions at section 1902(xx)(3)(A)(i)(I) of the Act. A State that is assessing compliance in a review period, as defined in section II.H.3. of this IFC, must have first determined that the individual is not a specified excluded individual. However, a State may find that this individual, although no longer a specified excluded individual, previously was a specified excluded individual in part or all of 1 or more months during the review period. If so, the individual would meet the criteria for the mandatory exception in those months.

For example, for a renewal that is due in September, a State that requires individuals to demonstrate community engagement in 2 months considers whether an individual met any of the mandatory exception criteria during the review period of April through September (the individual's 6-month eligibility period in this example). For part of this review period, the State's records show that the individual met the exclusion criteria as a parent of a dependent child 13 years of age or under. However, their child (who does not have a disability) turned 14 years old in June. Thus, at the time of the renewal due in September, the parent is no longer a specified excluded individual but is now an applicable individual subject to the community engagement requirement. In this scenario, the parent would be “deemed” to demonstrate community engagement in 3 of the 6 months in the review period (April, May, and June), because the individual met the exclusion criteria as a parent of a dependent child who was under age 14 for part or all of those months; this meets the State's requirement for the individual to be compliant for 2 months since their last renewal.

As previously discussed, community engagement is not a condition of eligibility for specified excluded individuals, so such individuals are not subject to the community engagement requirement. Conversely, compliance with the community engagement requirement is a condition of eligibility for applicable individuals. Applicable individuals who meet a mandatory exception are subject to the community engagement requirement, but they are deemed to demonstrate community engagement for any month the exception applies during the review period.