Medicaid Program; Community Engagement Requirement for Certain Individuals

In this section, we discuss requirements and State options we are implementing at new Sec. 435.557 for States to verify: (1) that an applicable individual is compliant with the community engagement requirement in section 1902(xx)(2) of the Act; (2) that an applicable individual is deemed compliant for a month in which the individual was, for part or all of the month, in a mandatory or optional excepted status described in section 1902(xx)(3) of the Act, and (3) that an individual is a “specified excluded individual” defined in section 1902(xx)(9)(A)(ii) of the Act to whom the community engagement requirement does not apply. We also discuss the requirement in section 1902(xx)(5) of the Act that States conduct ex parte verifications by maximizing reliance on electronic data sources when verifying compliance with the community engagement requirement, including deemed compliance, or when determining that an individual is a specified excluded individual. Additionally, we address the circumstances under which States may require individuals to provide documentation or other additional information. In this section, we discuss the data sources that States will be required to use and considerations regarding use of other data sources. We also discuss verification options when there is no data source available to verify an individual's compliance, deemed compliance, or status as a specified excluded individual, or when the data available are not reasonably compatible with information provided by, or on behalf of, an individual. 1. Requirement To Conduct Ex Parte Verification

Section 1902(xx)(5) of the Act, implemented at Sec. 435.557(b), requires States to conduct ex parte verification of compliance and deemed compliance with the community engagement requirement, and qualification as a specified excluded individual. In the context of community engagement, ex parte verification is not specific to the renewal process but instead refers to the requirement that States first attempt to verify compliance with, or exception or exclusion from, the community engagement requirement using reliable information available to the State, without requiring additional information from an applicant or beneficiary. Specifically, the statute requires that “[f]or purposes of verifying that an applicable individual has met the requirement to demonstrate community engagement under [section 1902(xx)(1)], or determining such individual to be deemed to have demonstrated community engagement under [section 1902(xx)(3)], or that an individual is a specified excluded individual under [section

1902(xx)(9)(A)(ii)], the State shall . . . establish processes and use reliable information available to the State . . . without requiring, where possible, the applicable individual to submit additional information.” The language in the statute neither limits the information the State must attempt to obtain (beyond that it be reliable and available to the State) nor the points in the process when the State must seek these data (for example, the ex parte verification requirements are not limited to renewals). Thus, we interpret section 1902(xx)(5) to require that States attempt to verify on an ex parte basis that an individual is a specified excluded individual or meets the community engagement requirement (either via compliance or deemed compliance via an exception) every time the State verifies compliance.

We also remind States that, as further discussed in section II.H.1. of this IFC, before assessing compliance, the State must first attempt to confirm that the individual is an applicable individual as defined at Sec. 435.551. This means that the State must first attempt, where possible, to determine whether the applicant or beneficiary is a specified excluded individual defined at Sec. 435.554, because specified excluded individuals are not applicable individuals and are therefore not subject to the community engagement requirement. As such, to the extent possible, the State must first attempt to verify an individual's specified excluded individual status based on reliable information available to the State and, if the State cannot verify that the individual is a specified excluded individual, proceed to check reliable information available to the State to verify the individual has demonstrated community engagement or was deemed to have demonstrated community engagement based on a mandatory or optional exception (if applicable). However, we recognize that, depending on the State's procedures for checking reliable information available to the State, the State may practically collect all reliable information available to the State at once. In addition, the State may be able to more quickly obtain reliable information about certain criteria (such as income) than other criteria (for example, regarding an individual's specified excluded individual status based on medical frailty). In general, we are not requiring States to change their existing procedures for verifying other factors of eligibility not related to community engagement in order to implement the community engagement verification requirements or to implement a specific hierarchy when checking reliable information available to the State to verify an individual's specified excluded individual status or compliance or deemed compliance with the community engagement requirement. However, we note that States must make every effort to ensure they do not seek information to verify compliance or deemed compliance with community engagement for a specified excluded individual.

We remind States that in implementing ex parte processes for obtaining and using reliable information available to the State for the purposes of verifying community engagement, States must comply with all applicable data sharing and privacy laws. States must also ensure they do not violate the civil rights protections under the ADA, section 504 of the Rehabilitation Act (section 504), section 1557 of the Affordable Care Act (section 1557), or any other applicable Federal or State civil rights laws. 2. Requirement To Use Reliable Information Available to the State

At Sec. 435.557(a), we define reliable information available to the State for the purpose of verifying an individual's status as a specified excluded individual or an individual's compliance or deemed compliance with the community engagement requirement. We explain that reliable information available to the State means information necessary for determining eligibility to which the State has access or should have access. This includes information from electronic data sources that the agency has determined effective consistent with Sec. 435.557(b)(1)(ii), and as documented in the agency's verification plan in accordance with Sec. 435.557(b)(1)(iii); information from other State or local agencies; information related to community engagement from Federal agencies or other data sources provided through the electronic service established by the Secretary (The Federal Data Services Hub, “the Hub”); information in the State's eligibility system; information in the individual's case record; payroll data; claims(s) relevant to the individual that have been adjudicated in the preceding 12 months, including those that have been paid, pended or denied (hereinafter referred to as “adjudicated claims”); and encounter data, as relevant to the individual, from the preceding 12 months. States must have a process to obtain the information defined as reliable information available to the State without seeking information from the individual. The process may be automated, such as through an Application Programming Interface (API) or other electronic interface or could require a worker to manually obtain the information from its source.

We further specify that reliable information available to the State includes information from electronic data sources that States have determined to be effective, consistent with Sec. 435.557(b)(1)(ii), as documented in the State's verification plan in accordance with Sec. 435.557(b)(1)(iii). Accordingly, wherever possible, States must use existing data sources the State relies upon to verify other eligibility criteria (for example, income data sources) to verify compliance with the community engagement requirement and connect to other data sources (in addition to those specifically enumerated) when doing so is effective, as described in further detail later in this section. We also consider data from other State and local agencies that is needed to determine eligibility to be reliable information available to the State for the purpose of verifying compliance or deemed compliance with the community engagement requirement or that an individual is a specified excluded individual, and, as such, are requiring States to obtain and use information from other State agencies. For example, States must require information from SNAP and TANF agencies and incarceration data from State, county or other local correctional facilities to verify if an individual meets certain specified excluded individual criteria or the mandatory exception for individuals who were inmates of a public institution. To the extent allowable under applicable data sharing and privacy laws, States must also use education information from State colleges or other educational institutions such as community colleges, high school equivalency programs, and high schools, among others, to verify if an individual is meeting the community engagement requirement based on at least half- time enrollment status in an educational program. States must use all available information from other State and local agencies to the extent such information is relevant to verifying compliance or deemed compliance with the community engagement requirement or an individual's specified excluded individual status and may need to establish connections to these sources or implement manual procedures to access and use the reliable information contained in other State and local agencies' systems.

We additionally specify that reliable information available to the State includes information from Federal

agencies and other data sources related to community engagement provided through the Federal Data Services Hub (the Hub). As discussed in detail later in this section, we expect to provide States information related to community engagement through the Hub and/or another Federally operated electronic service. Once those data sources are established, States will be required to access that information through the Hub or another Federal service, unless the State has approval to use an alternative mechanism.

In addition, we specify that information in the State's eligibility system and an individual's case record is reliable information available to the State. As described throughout this section, States are required to obtain information that may be relevant to verifying compliance or deemed compliance with the community engagement requirement or status as a specified excluded individual for other purposes, such as verifying other factors of eligibility. For example, States collect information pertaining to pregnancy to determine whether continuous eligibility applies and collect an individual's American Indian status to determine exemptions from cost sharing requirements. When possible, States must use this information collected and stored in an individual's record or other information available in the State's eligibility system to verify an individual demonstrated or was deemed to demonstrate community engagement, or their status a specified excluded individual.

States are also required to use payroll data available to the State, such as payments for caregiver services or other State employee payroll information. Additionally, States must use adjudicated claims data relevant to an individual's medical condition from the last 12 months. Because reimbursement is not provided for all claims submitted for payment, we have included a broader category of adjudicated claims data as reliable information available to the State to also account for pended or denied claims data, in addition to paid claims, from within the last 12 months, so long as the underlying claims data are useful in verifying an exclusion or exception to the community engagement requirement. Additionally, States must use encounter data from the last 12 months as relevant to the individual as a source of reliable information available to the State. Adjudicated claims and encounter data are State Medicaid agency records and are useful verification sources in establishing qualification for certain exceptions to the community engagement requirement and certain specified exclusions, including medical frailty or otherwise having special medical needs, participation in a drug addiction or alcoholic treatment and rehabilitation program, or other criteria such as hospitalization. Because such adjudicated claims and encounter data are records contained in State Medicaid agency systems, we have determined these data are available to the State, and States are required to access this information, even if this requires system builds or other process enhancements to obtain or translate the data for verifying compliance with or exception or exclusion from the community engagement requirement.

States must also request and use data from other sources that provide reliable information that is relevant to determining eligibility, to the extent that establishing a connection or process to obtain information from the source would be effective. Section 1902(xx)(5) of the Act requires States to use reliable information available to the State without requiring information from an individual, where possible, to verify compliance or deemed compliance with the community engagement requirement or an individual's specified excluded status. As such, to comply with the statutory requirement, States must identify data sources (in addition to those specifically enumerated at Sec. 435.557(a)) that provide reliable information and request and use information from such data sources to the extent that establishing a connection or process to obtain the information would be effective. The regulation at Sec. 435.557(b)(1)(ii) provides that in determining whether connecting to and obtaining and using information from a data source would be effective, the State must consider such factors as the administrative costs associated with establishing and using the data match compared with the administrative costs associated with relying on documentation, and on program integrity in terms of the potential for ineligible individuals to be enrolled and for eligible individuals to be denied coverage. States should exercise reasonable judgment in determining that establishing a data match with a data source would not be effective, considering such factors as the accuracy of the information, the timeliness of the information returned, the complexity of accessing the data or data source, the age of the records, the comprehensiveness of the data, any limitations imposed by the owner of the data on its use, as well as other relevant factors, including the impact on program integrity.

The regulation at Sec. 435.945(j) requires States to “develop, and update as modified, and submit to the Secretary, upon request, a verification plan describing the verification policies and procedures adopted by the State agency to implement the provisions set forth in Sec. Sec. 435.940 through 435.956,” which relate to the verification of income, assets and citizenship status, amongst other eligibility criteria. At Sec. 435.557(b)(1)(iii), we incorporate this requirement for the purpose of verifying that an individual has met, is deemed to have met, or is excluded from the community engagement requirement. As such, we have updated the MAGI verification plan to include a supplement specific to community engagement. Each State must document in its verification plan supplement the policies and procedures the State will implement to verify compliance or deemed compliance with the community engagement requirement or an individual's specified excluded status. In addition to data sources included in the definition of “reliable information available to the State,” States must also document any other data sources the State has determined to be effective (in accordance with factors described at Sec. 435.557(b)(1)(ii)) and will use for community engagement verification as well as when the identified data sources will be used (for example, at application, renewal or both). To effectuate this requirement, we are also making a technical amendment to Sec. 435.945(j) to cross- reference the community engagement verification requirements set forth in Sec. 435.557.

We recognize that State systems evolve over time, and as new data sources become available to verify compliance with the community engagement requirement, or exception or exclusion from it, we may require States to use additional data sources in the future. While this IFC includes the requirement that States obtain and use reliable information available to the State and connect to new data sources that may become available through the Hub within 12 months of the new data source's first availability through that service, subject to the waiver process under Sec. 435.945(k), any other new requirement to connect to additional electronic data sources would be proposed through notice and comment rulemaking.

3. Requesting Additional Information From Applicants and Beneficiaries To Verify Compliance With, and Exceptions and Exclusions From, the Community Engagement Requirement

At Sec. 435.557(b)(2) and (3), we describe the State's obligations when the State is unable to verify an applicant's or beneficiary's compliance or deemed compliance with the community engagement requirement or status as a specified excluded individual using reliable information available to the State. In general, when there is no reliable information available to the State, or the reliable information available to the State is not reasonably compatible with the information provided by or on behalf the individual, the State must seek additional information from the individual to verify compliance or deemed compliance with the community engagement requirement or the individual's status as a specified excluded individual. In this section, we describe the requirements States must implement by January 1, 2028, and the options for States leading up to that date.

Community engagement is an entirely new factor of eligibility, and as such, States must consider criteria that were not previously applicable to Medicaid eligibility and establish new policies and procedures for verifying whether an individual meets those criteria. In addition, there are myriad ways in which an applicant or beneficiary may be excluded from or meet or be deemed to meet the community engagement requirement. Thus, States do not need to establish policies and procedures for verifying one piece of information as is the case for some other factors of eligibility (for example, income), but rather for all the ways in which an individual may qualify as a specified excluded individual, demonstrate community engagement, or be deemed to demonstrate community engagement, most of which do not currently exist in the context of Medicaid eligibility. As such, we have detailed sources of reliable information available to the State that States must use in verifying compliance or deemed compliance with the community engagement requirement or an individual's specified excluded individual status. However, we recognize there will be instances in which there is no reliable information available to the State. We anticipate that, for the new community engagement criteria, there will generally be documentation reasonably available for individuals to verify their compliance or deemed compliance or status as a specified excluded individual. Examples of reasonably available documentation include paystubs to verify work hours or income, a document from a community service organization that demonstrates the number of hours an individual volunteered, transcripts or class schedules as proof of half-time enrollment in an educational program, a document from VA showing disability status and approval notices from SNAP or TANF, to name a few. Accordingly, we expect that seeking documentation to verify eligibility generally should impose minimal burden while also furthering our goal of ensuring only eligible individuals are determined eligible and/or remain enrolled.

Thus, beginning on January 1, 2028, when there is no reliable information available to the State, or the reliable information available to the State is not reasonably compatible with the information provided by or on behalf of the individual, the State must generally require documentation to verify that an individual demonstrated community engagement, is deemed to have demonstrated community engagement, or is a specified excluded individual, if such documentation is reasonably available. We implement this requirement at Sec. 435.557(b)(2)(ii). However, there will be circumstances in which no documentation exists, or documentation is not reasonably available. For example, an individual who lives with and provides regular assistance to their disabled parents may qualify for an exclusion on the basis of being a family caregiver. Because of the personal nature of this type of assistance, it often occurs outside of an employer/ employee or other contractual relationship. As such, an individual is unlikely to have documentation to provide that demonstrates qualification for the exclusion. Individuals may also experience exceptional circumstances that prevent them from accessing or result in the loss of documentation, such as a housefire or flood.

States may not deny or terminate eligibility based on reliable information available to the State without first providing the individual with the opportunity to dispute the information available to the State and furnish information to verify their eligibility. Thus, as implemented at Sec. 435.557(b)(2)(iii), States must accept other information when no documentation is reasonably available to verify that an individual demonstrated community engagement, is deemed to have demonstrated community engagement or is a specified excluded individual. States must determine what information is considered sufficient to verify a given activity or other basis for demonstrating community engagement or exception or exclusion when such cannot be verified using reliable information available to the State and documentation is not reasonably available. States should document their policies regarding what documentation is required and what information is sufficient in the absence of reasonably available documentation in policy manuals, standard operating procedures, or other relevant documents internal to the State for training and audit purposes.

While most States require documentation for other factors of eligibility when there is no reliable information available to the State or the information is not reasonably compatible with the information provided by or on behalf of the individual, we recognize that some States may need to make system and process changes to implement these documentation requirements for community engagement. Accordingly, as provided in Sec. 435.557(b)(2)(i), States may require documentation or accept other information (even if documentation is reasonably available) to verify an individual's compliance or deemed compliance with the community engagement requirement or status as a specified excluded individual through December 31, 2027.

Finally, there are two exceptions to the policies described in this section. The first exception applies to verifying an individual's specified excluded individual status on the basis of being medically frail or otherwise having special medical needs and the second exception applies to mandatory exceptions. Refer to section II.I.7.e. of this IFC for further information about verifying medical frailty and section II.I.8. of this IFC for further information about verifying mandatory exceptions. a. Requirement To Accept Information From Applicants and Beneficiaries

The regulation at Sec. 435.557(b)(3) specifies that the State must comply with the requirements at Sec. Sec. 435.558 and 435.952(d) and provide individuals the opportunity to furnish information and documentation required to verify that the individual has demonstrated community engagement or is deemed to have demonstrated community engagement for a required month, or is a specified excluded individual, before terminating or denying eligibility based on reliable information available to the State. We also provide at Sec. 435.557(b)(4) that the State must allow the individual, an adult who is in the individual's

household, as defined in Sec. 435.603(f), or family, as defined in section 36B(d)(1) of the Code, an authorized representative, or, if the individual is incapacitated, someone acting responsibly for the individual to submit any required information using any of the modalities through which States are required to accept applications, including online, by phone, by mail, in person, or via other commonly available electronic means, in accordance with Sec. 435.907(a). 4. Verifying Community Engagement at Application, Renewal and More Frequent Verifications

At Sec. 435.557(c), we implement the requirement that the State verify an applicable individual has demonstrated or is to deemed to have demonstrated community engagement for the period specified at Sec. 435.556(a) and described in section II.H. of this IFC. The State must first attempt to complete the verification on an ex parte basis and, as described at Sec. 435.557(c)(1), may not limit the reliable information available to the State that is checked to specific activities or other means of demonstrating community engagement or being deemed to have demonstrated community engagement, or to specific excluded statuses. As specified at Sec. 435.557(c)(1)(i), the State must attempt to verify an individual's specified excluded individual status or that the individual demonstrated or was deemed to have demonstrated community engagement using all reliable information available to the State for all relevant months and may only request additional information or initiate noncompliance procedures under Sec. 435.558 if, after reviewing the reliable information available to the State, the State lacks sufficient information to confirm that the individual is a specified excluded individual or that the applicable individual demonstrated or was deemed to have demonstrated community engagement based on a mandatory or optional exception (if applicable) for the required number of months during the review period.

As an example, consider an enrolled, applicable individual who demonstrated community engagement at application on the basis of working 80 hours per month. At renewal, after confirming the individual is not a specified excluded individual, the State checks the data sources relied upon to verify work hours but does not locate information in the data sources sufficient to verify continued compliance on this basis. Before requesting information from the individual, the State must also check available information to determine if the individual meets an exception under Sec. Sec. 435.553 or 435.555, if applicable, and to verify whether the individual met the community engagement requirement in another way provided at Sec. 435.552 (for example, participation in an educational program, participation in a work program, community service, or income sufficient to meet the standard at Sec. 435.552(a)(6) or (7)). Only after completing these steps, if still unable to verify that the individual has demonstrated community engagement, is deemed to have demonstrated community engagement, or is a specified excluded individual, may the State send the renewal form to request information from the individual or initiate the noncompliance process concurrently with the renewal form, consistent with Sec. 435.558(b).

We note that, as provided at Sec. 435.557(c)(1)(ii), the State is not generally required to check additional sources of reliable information available to the State after the State verifies compliance, deemed compliance, or that the individual is a specified excluded individual. For example, if the State confirms an applicable individual has a monthly income equal to the Federal minimum wage multiplied by 80 hours for the required number of months in the review period, the State does not need to check any additional reliable information available to the State to verify other qualifying activities or exceptions, because the State has already confirmed the individual demonstrated community engagement. The only exception is when the State has information (for example, information provided on the application) indicating the individual may also qualify for an exclusion. As implemented at Sec. 435.557(c)(2), the State must always determine an individual to be a specified excluded individual when the State has sufficient information to make such determination. This requirement stems from the fact that specified excluded individuals are not applicable individuals and therefore not required to demonstrate community engagement as a condition of eligibility. Thus, as described throughout this IFC, States must confirm an individual is subject to the community engagement requirement prior to assessing their compliance. As a result, the exclusion takes precedence even if the State has also verified an individual demonstrates community engagement or meets the criteria for an exception.

However, we recognize that in some cases, it may appear that an individual could qualify for an exclusion, but the State may need more information to verify the individual's specified excluded individual status. If the State has enough information to determine that the individual demonstrates compliance or meets the criteria for an exception without requesting additional information, the State may not delay the individual's enrollment solely to complete the verification of the individual's qualification for the exclusion. As implemented at Sec. 435.557(c)(3), the State must enroll the individual promptly based on the information available (for example, income verifying compliance), provided all other eligibility criteria are satisfied, and then proceed to verify post-enrollment whether the individual meets the criteria for the exclusion (for example, an exclusion based on the individual's status as a veteran with a total disability rating) consistent with the requirements at Sec. 435.557(b)(2).

We also encourage States to design their process in such a manner to reduce administrative burden. States should consider prioritizing categories under which an individual may be excluded or, in the case of applicable individuals, excepted for a longer period of time over those that require more frequent verification based on the State's verification policies. For example, if an individual qualifies for an exclusion on the basis of being an American Indian as well as being a parent to a dependent child 13 years of age or under, we encourage the State to apply the exclusion based on their American Indian status because American Indian status is not subject to change and therefore does not need to be reverified. In developing their process, States may also wish to consider factors such as the availability of reliable information and reasonably available documentation in the absence of reliable information available to the State, as well as how the number of months for which an individual must demonstrate or be deemed to demonstrate community engagement and the State's election with respect to conducting more frequent verifications may impact the level of administrative burden. a. Verifying Community Engagement Information Provided on an Application, Renewal Form, or Reported Between Regular Renewals

States must include questions on their applications and renewal and other supplemental forms allowing applicants and beneficiaries an opportunity to provide information demonstrating compliance with the community engagement requirement, deemed compliance, and status as a specified

excluded individual. When States receive this information at application, renewal, or based on a reported change between regular renewals, States must begin the verification process by checking the reliable information available to the State, including information obtained electronically, to verify the information. If there is no reliable information available to the State, or the information provided by or on behalf of the individual is not reasonably compatible with reliable information available to the State, the State must seek additional information from the individual, in accordance with Sec. 435.557(b)(2), or other additional information relevant to verifying compliance or deemed compliance with the community engagement requirement or an individual's specified excluded status that cannot be verified using reliable information available to the State. As specified at Sec. 435.557(c)(1)(i)(B), an individual must not be required to provide documentation or other additional information unless information needed by the agency could not be verified using reliable information available to the State, including when there is no reliable information available to the State or the reliable information is not reasonably compatible with the information provided by or on behalf of the individual. b. Verifying Community Engagement When Conducting More Frequent Verifications Between Regularly Scheduled Redeterminations

Importantly, States that elect to verify compliance between regular renewals as provided at Sec. 435.557(d) must comply with all ex parte verification requirements under section 1902(xx)(5) of the Act, as implemented in this IFC. As specified at Sec. 435.557(d)(1), States that elect this option may not conduct a more limited verification between renewals but must instead comply with all the requirements described in this section. In accordance with Sec. 435.557(d)(2), the State must first check all reliable information available to the State to confirm the individual is not a specified excluded individual. After verifying the individual is not excluded, Sec. 435.557(d)(3) requires that the State must attempt to verify that the individual demonstrated community engagement or was deemed to have demonstrated community engagement using all reliable information available to the State for all relevant months before requesting initiating noncompliance procedures. In other words, the agency must attempt to verify compliance or deemed compliance in the same manner that it would when verifying eligibility at application or renewal, regardless of the basis on which the individual was determined to be in compliance with the community engagement requirement at enrollment or the last verification, before requesting information from the individual or initiating noncompliance procedures in accordance with Sec. 435.558. We also stress that, while the State must confirm whether an individual is a specified excluded individual as part of the more frequent verification process, more frequent verifications are specific to applicable individuals. Thus, consistent with Sec. 435.557(d)(4), individuals identified as specified excluded individuals during their most recent verification are not subject to more frequent verifications, unless the State has information indicating the individual is no longer a specified excluded individual, or that the individual may be losing their status as a specified excluded individual due to an anticipated change, such as turning age 19, as further discussed in section II.H.d.2. of this IFC.

When a State cannot verify that an applicable individual has demonstrated or is deemed to have demonstrated community engagement for a required month using reliable information available to the State, the State must comply with the requirements at Sec. 435.557(b)(2) and seek additional information from the individual to verify their continued eligibility. 5. The Federal Data Services Hub or Other Electronic Service

The Federal Data Services Hub, operated by CMS, is an electronic service through which States can access a number of data sources for use in verifying Medicaid eligibility. Existing regulations in Sec. 435.949 require that to the extent that information related to eligibility for Medicaid is available through the Hub, States must access the information through that service to obtain information from Federal agencies and other data sources, including the SSA, the Department of the Treasury, and the Department of Homeland Security, except as provided in Sec. 435.945(k). We expect to establish connections to additional data sources and provide States information through the Hub and/or another Federally operated electronic service to verify certain factors that could impact whether someone is subject to the community engagement requirement, and if so, whether they demonstrate or are deemed to have demonstrated community engagement, including additional sources related to qualifying activities under Sec. 435.552, mandatory exceptions under Sec. 435.553, optional short-term hardship exceptions under Sec. 435.555, and specified excluded individual criteria under Sec. 435.554. Examples of these additional data sources include the National Student Clearinghouse and the VA. We are also establishing other Federal services, such as the Eligibility Made Easy (Emmy) tool, through which States can access information specific to community engagement. Once those data sources are established and reliable information relevant to verifying compliance with the community engagement requirement becomes available through the Hub, Sec. 435.557(e) requires States to access the data available via connection to the Hub as soon as practicable, but no later than 12 months after their initial availability through the Hub. We are also establishing other Federal services, such as the Eligibility Made Easy (Emmy) tool, through which States can access information specific to community engagement.

A State may obtain approval under Sec. 435.945(k) to establish a direct connection to access information available through the Hub through an alternative source or mechanism as soon as practicable, but no later than 12 months after the information relevant to verifying compliance with the community engagement requirement becomes available through the Hub. The 12-month period allows States time for planning and implementation, including the system development and changes States will need to make for their eligibility systems to ingest and use information from newly available electronic data sources. Section 435.557(e)(1) provides that we may determine a Hub waiver as described at Sec. 435.945(k) is not required if the State establishes a connection to access information available through the Hub from certain alternative Federal electronic services, such as the Emmy API, should such services become available, that provide reliable and relevant information. We would make such a determination that a waiver is not required in circumstances where it is likely that a direct connection to or alternative mechanism for accessing information from the new data source would be likely to satisfy the criteria in Sec. 435.945(k). 6. Verifying Compliance With Community Engagement Activities

As implemented at Sec. 435.552 and discussed in detail in section II.C. of this IFC, applicable individuals subject to the community engagement requirement can meet the requirement

through engaging in a minimum of 80 hours per month of work, community service, or participation in a work program; being enrolled in an educational program at least half-time; or a combination thereof. Individuals also can demonstrate community engagement by having a monthly income that is not less than the applicable Federal minimum wage multiplied by 80 hours. Seasonal workers may demonstrate community engagement by having an average monthly income over the preceding 6 months that is not less than the applicable Federal minimum wage multiplied by 80 hours.

Section 1902(xx)(1)(A) of the Act and implementing regulations at Sec. 435.556 provide that States must require applicable individuals who are applying for Medicaid to demonstrate that they meet the community engagement requirement for the 1 month (or, at State option, the 2 or 3 consecutive months) preceding the month of application. Section 1902(xx)(1)(B)(i) of the Act provides that States must require applicable individuals who are enrolled beneficiaries to demonstrate that they meet the community engagement requirement for 1 or, at State option, more months between the individual's most recent eligibility determination and their next renewal. Where demonstrating community engagement for more than 1 month is required, the State may not require that the months be consecutive under section 1902(xx)(1)(B) of the Act (for example, a State that requires 2 months may not require that those 2 months be consecutive). See section II.H. of this IFC for more information about assessing compliance.

Section 1902(xx)(4) of the Act provides States with the option to verify compliance with the community engagement requirement between an applicable individual's regular renewals. States that elect this option have the option to determine the frequency with which to verify compliance. In States that elect to conduct more frequent verification of compliance with the community engagement requirement, under section 1902(xx)(1)(B)(ii) of the Act, the State must verify that applicable individuals met the community engagement requirement for 1 or more months (at State option), whether or not consecutive, between the most recent verification of compliance and the current verification. As described in section II.H.1. of this IFC, prior to verifying compliance with the community engagement requirement, the State must first confirm the individual is an applicable individual subject to the community engagement requirement and not a specified excluded individual.

We remind States that effective January 1, 2027, most of the population required to demonstrate community engagement is also subject to a new 6-month renewal requirement for the adult group under section 1902(e)(14)(L) of the Act. The 6-month renewal requirement does not apply to American Indians or to individuals enrolled in section 1115 demonstrations (except for those that cover certain adults eligible under a section 1115 demonstration that provides MEC to all individuals who would be eligible if the State provided coverage to the adult group under the State plan); for these individuals, eligibility must be renewed every 12 months. States are advised to consider the more frequent renewal requirement when determining whether to verify community engagement compliance between renewals (in general, that is, more frequently than every 6 months) and when determining the number of months for which an applicable individual must demonstrate compliance between verifications. Specifically, if electing more frequent verification, States may wish to consider the timing of the renewal process, particularly how far in advance the State initiates the renewals in relation to the end of the eligibility period, and the State's ability to access timely data to verify compliance and otherwise renew eligibility when determining the verification frequency and number of months.

Later in this section, we discuss verification requirements and options for verifying that an individual has demonstrated or is deemed as having demonstrated community engagement for the required month(s) at application, renewal, or between renewals (if applicable). As noted in section II.I.1. of this IFC, under section 1902(xx)(5) of the Act and Sec. 435.557(b), States must first attempt to verify that applicable individuals who are applicants or beneficiaries have met the community engagement requirement using reliable information available to the State before requesting additional information from the individual, in accordance with requirements at Sec. 435.557(b)(2), or initiating noncompliance procedures as discussed in section II.J.2. of this IFC and implemented at Sec. 435.558. States may request documentation or additional information only if there is no reliable information available to the State to verify compliance or the reliable information is not reasonably compatible with information provided by or on behalf of the individual. a. Verifying Hours of Work

As further discussed in section II.C. of this IFC, and specified in section 1902(xx)(2)(A) of the Act and Sec. 435.552(a)(1), an applicable individual demonstrates community engagement for a month if the individual works for not less than 80 hours in that month, which includes work in exchange for money, work in exchange for goods or services (“in-kind” work), unpaid work other than community service, and any combination of the three. Under the requirement in section 1902(xx)(5) of the Act, States must attempt to verify community engagement compliance on an ex parte basis. To comply with this requirement, States must, at a minimum, attempt to verify compliance using the reliable information available to the State that the State relies upon to verify income to the extent these data sources provide information about hours worked. However, not all types of work can be verified using currently available financial data sources and, in some instances, the data returned may not include information regarding the number of hours worked. As such, States should also consider whether there are other available data sources that provide information pertaining to hours worked, including paid, unpaid, or in-kind hours and, if so, establish a connection with said data source(s) (unless doing so is not effective) in accordance with Sec. 435.557(b)(1).

As explained in section II.C.8. of this IFC, if the monthly income is less than the applicable Federal minimum wage multiplied by 80 hours and the State does not have information regarding the number of hours worked, States have the option to apply an equivalency standard that allows the State to calculate the number of work hours for a month by dividing the individual's monthly income by the Federal minimum wage. For example, where the State is not able to verify that the applicable individual worked for at least 80 hours during the relevant month or had monthly income equivalent to working at least that number of hours for the month, the State may derive the number of hours worked from the monthly income and use the calculated estimate to combine with other qualifying hours to demonstrate community engagement under section 1902(xx)(2)(E) of the Act and Sec. 435.552(e). We recognize that States will be using the individual's MAGI-based income for their MAGI- based household when converting monthly income to hours worked. In these

circumstances, the State must use a reasonable method to allocate hours between members of the household. In addition, this option must only be used when the monthly income is less than the applicable Federal minimum wage multiplied by 80 hours and the State does not have information regarding the number of hours worked by an applicable individual.

If the State cannot verify work hours using reliable information available to the State (including, at State option, using the equivalency standard described in the preceding paragraph) or the reliable information available to the State is not reasonably compatible with the information provided by an applicable individual, the State must seek information from the individual to verify work hours. Beginning on January 1, 2028, when States are unable to verify work hours using reliable information available to the State, States must require documentation when such documentation is reasonably available, and must establish a process to accept other information when there is no reasonably available documentation, as described in section II.I.3. of this IFC. (1) Verifying Hours for Certain Caregivers

States will also need to consider how to verify hours for certain caregivers who provide assistance to a dependent child or disabled individual. (Please refer to Sec. 435.554(a) and sections II.E.3.e. and f. of this IFC for the definitions of dependent child and disabled individual for the purpose of community engagement.) Consistent with section 1902(xx)(9)(A)(ii)(III) of the Act, as implemented at Sec. 435.554(c)(3), a family caregiver as defined at Sec. 435.554(a) is a specified excluded individual if he or she meets one of the following implementing criteria established at Sec. 435.554(c)(3)(i)(A) through (C): (1) the individual primarily resides with a dependent child or disabled individual 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 or to assume primary responsibility) of a dependent child or disabled individual for whom he or she provides assistance that occurs on a regular basis and is not solely incidental in nature, 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 for whom he or she provides not less than 80 hours of assistance that is not solely incidental in nature per month. This means that States must verify the number of hours of care provided if the family caregiver does not reside with and is not related to the dependent child or disabled individual for whom he or she provides assistance to determine whether that individual is a specified excluded individual under the family caregiver component of section 1902(xx)(9)(A)(ii)(III) of the Act.

If the family caregiver does not live with and is not related to the dependent child or the disabled individual for whom he or she provides assistance, and provides less than 80 hours of care per month, the family caregiver does not meet the criteria for the exclusion and must demonstrate or be deemed to demonstrate community engagement (provided they are not a specified excluded individual on another basis). However, the hours of assistance 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 demonstrate community engagement, as permitted under Sec. 435.552(a)(5). For example, if the family caregiver provides 55 hours per month of assistance to a non-relative whom he or she does not live with, those 55 hours would count towards compliance with the community engagement requirement, and the caregiver would need 25 additional hours of engagement in the activities listed at Sec. 435.552(a)(1) through (4), including but not limited to other paid, unpaid, or in-kind work, to demonstrate community engagement. The applicable individual could also demonstrate community engagement on the basis of income, as specified at Sec. 435.552(a)(6) and (7). See section II.I.6.e. of this IFC and Sec. 435.552(e) for further details about the requirement to aggregate hours of engagement in different qualifying activities.

Where possible, States must use reliable information available to the State to verify hours of assistance provided by a family caregiver. (See section II.I.7.c. of this IFC for more discussion about using reliable information available to the State to verify an individual's status as a specified excluded individual under the family caregiver component of the exclusion at section 1902(xx)(9)(A)(ii)(III) of the Act.) However, we recognize that caregiving of this nature is unique and unlikely to be reflected in reliable information available to the State. In the absence of reliable information available to the State, the State must seek information from the individual to verify caregiving hours, including the number of hours of assistance provided by a family caregiver and any other information needed to substantiate the State's determination regarding the individual's status as a family caregiver, status as a specified excluded individual under the family caregiver exclusion, or number of caregiving hours counted as work. Beginning on January 1, 2028, when States are unable to verify family caregiver status or hours using reliable information available to the State, or the reliable information is not reasonably compatible with the information provided by or on behalf of the individual, States must require documentation if documentation is reasonably available. In the absence of reasonably available documentation, the State must accept other information that is sufficient to verify eligibility, as described in section II.I.3. of this IFC. b. Verifying Community Service

An applicable individual may also demonstrate community engagement by completing not less than 80 hours of community service through a structured program that is completed for the direct benefit of the community under the auspices of a public or nonprofit organization in a month, consistent with section 1902(xx)(2)(B) of the Act and Sec. 435.552(a)(2) and (b). In addition, section II.C.2. of this IFC explains that, because community service needs vary by State and locality, the types of activities considered qualifying community service may also differ between States. As such, we believe States are in the best position to identify sources of reliable information available to the State that will be effective in verifying community service hours. Where possible, we recommend that States work with organizations through which an individual may participate in qualifying community service to establish data exchanges that will assist with this verification.

We also understand that there will be many instances in which there is no reliable information available to the State, and developing a process to exchange or obtain information electronically from potential data sources would be ineffective or infeasible. In the absence of reliable information available to the State, or when the reliable information available to the State is not reasonably compatible with the information provided by or on behalf of an applicable individual, the State must have procedures in place to verify hours of community service in an

auditable manner (that is, a manner that yields records that can be produced for audit or other review purposes). States must ensure the individual's case record contains sufficient information (including documentation when applicable) to support the State's determination of eligibility, including with respect to community engagement. For the purpose of verifying community service hours, examples of the information that would support a determination may include documentation containing details about the general nature of the program; the dates and hours of community service completed; a description of the community service activity; the organization's name and address; and the name and contact information (such as phone number and/or email address) of a point of contact at the organization who can confirm the hours completed. As described in section II.I.3. of this IFC, beginning on January 1, 2028, the State must require documentation if documentation is reasonably available when there is no reliable information available to the State or the reliable information is not reasonably compatible with the information provided by or on behalf of the individual. If documentation demonstrating participation in community service is not reasonably available, the State must have a process to accept other information sufficient (as determined by the State) to verify community service participation. c. Verifying Participation in a Work Program

In addition, as specified in section 1902(xx)(2)(C) of the Act, an applicable individual may demonstrate community engagement for a month by participating in a work program for at least 80 hours in such month, which we implement at Sec. 435.552(a)(3). The definition of work program as defined at Sec. 435.552(b) includes different types of work programs, as discussed in section II.C.3. of this IFC; thus, the specific qualifying work programs available to applicable individuals will vary by State. Because of this variance, we believe States are best positioned to identify available sources of reliable information about work program participation. However, we note that section 1902(xx)(9)(D) specifies that “work program” has the same meaning given to such term in section 6(o)(1) of the Food and Nutrition Act of 2008 and therefore aligns with SNAP work program requirements. We encourage State Medicaid agencies to consult the SNAP program in their State to identify any data sources SNAP relies on to verify participation in a work program and leverage those data sources where possible. For instances in which the State is unable to verify 80 hours of participation in a work program using reliable information available to the State, the State must seek information from the individual to verify hours that the individual participated in a work program. Beginning on January 1, 2028, if States are unable to verify 80 hours of participation in a work program using reliable information available to the State, States must require documentation when such documentation is reasonably available and must establish a process to accept other information when documentation is not reasonably available, as described in section II.I.3. of this IFC. States must also ensure the procedures implemented to verify work program participation hours produce an auditable record supporting the State's eligibility determination. d. Verifying Enrollment in an Educational Program

As detailed in sections II.C.4. and II.C.5. of this IFC and specified in section 1902(xx)(2)(D) of the Act and Sec. 435.552(a)(4), (b), and (c), an applicable individual demonstrates community engagement if the individual is enrolled in an educational program at least half-time, as determined by the school or institution. States may consider establishing data exchanges with their State university system and/or other educational settings, and/or they may purchase data from a third-party entity such as the National Student Clearinghouse, provided the State complies with all applicable privacy and data sharing laws. We are exploring options to make educational data available through the Hub. When such data become available through the Hub, States will need to access that information through the relevant service in accordance with Sec. Sec. 435.949 and 435.557(e),except as provided at Sec. Sec. 435.945(k) and 435.557(e)(1) and (2) (for example, if the State wishes to establish a direct connection with the National Student Clearinghouse or other data source provided through the Hub, or use an alternate data source or mechanism to obtain educational program participation information). As with the other activities discussed in this section, States must also identify and establish connections to other sources of reliable information to verify educational status and request and use information from those sources, unless doing so would not be effective, as provided at Sec. 435.557(b)(1)(ii). The identification of additional sources of reliable information is particularly important for educational programs that might not be reflected in the National Student Clearinghouse data, such as community colleges, high school equivalency programs, high schools, and technical or vocational schools.

Additionally, as further discussed in section II.C.7. of this IFC, an applicable individual may satisfy the community engagement requirement using hours from a combination of activities. Accordingly, States must have procedures to calculate the number of hours an applicable individual who is enrolled for less than half-time participates in an educational program, as specified at Sec. 435.552(d). If the State does not have a data source that provides credit hours or participation hours for students enrolled for less than half-time, the State must seek information from the individual to determine the number of hours the individual participated in the educational program based on the number of credit or instruction hours. As discussed in section II.C.6. of this IFC, we are using the Carnegie Unit standard to calculate the time spent in an educational program for a 1-month period. This means that 1 credit hour equals 1 hour of instruction plus 2 hours of out-of-class work per week. Thus, using this methodology, 1 credit hour equates to 3 hours of student work for the week. The total number of hours for a given month is calculated by multiplying the number of credit hours by 3 to provide the weekly hours spent in the educational activity and then multiplying this number by 4.33 to determine the monthly hours (see section II.C.6. of this IFC for an example of this calculation). For educational programs that do not use credit hours, if an individual is enrolled less than half-time as defined by the school or institution, then the hours spent attending class and participating in educational activities will count towards meeting the requirement. See section II.C.6. of this IFC for further information about calculating hours of participation in an educational program for individuals enrolled less than half-time.

States must attempt to verify an applicable individual's half-time enrollment status or, if the individual is enrolled less than half- time, the number of hours or participation in an education program, using reliable information available to the State. If there is no reliable information available to the State, or the reliable information is not reasonably compatible with the information provided by or on behalf of the individual, the State must seek

information from the individual to verify compliance. Beginning on January 1, 2028, when there is no reliable information available to the State or the reliable information is not reasonably compatible with the information provided by or on behalf of the individual, the State must require documentation to verify half-time enrollment status or educational hours if documentation is reasonably available. In the absence of reasonably available documentation, the State must comply with the requirement at Sec. 435.557(b)(2)(iii) to accept information other than documentation. e. Verifying Compliance Using a Combination of Activities

In accordance with section 1902(xx)(2)(E) of the Act, implemented at Sec. 435.552(a)(5), an applicable individual may demonstrate compliance by completing a combination of work, community service, participation in a work program, or participation in an educational program. To verify compliance using a combination of activities, States must verify hours for each activity separately, as described in sections II.C.1. through II.C.3. and II.C.6. of this IFC, and then add the number of hours for each of the four activities to calculate the total number of qualifying community engagement hours for the month.

As noted in section II.C.6. of this IFC, States may have to calculate the number of hours an applicable individual who is enrolled less than half-time participated in an educational program by multiplying each credit hour by three to get the weekly total and then multiplying the weekly total by 4.33 for the monthly total. In addition, as discussed in section II.C.8. and II.I.6.a. of this IFC, when the monthly income is less than the applicable Federal minimum wage multiplied by 80 hours and the State does not have information regarding the number of hours worked. States may divide the verified monthly income by the Federal minimum wage to determine the number of work hours. For example, if the State verifies an individual has $380 in monthly income, the State may divide the monthly income by the current Federal minimum wage of $7.25 and credit the individual with having worked 52 hours for the month ($380 divided by $7.25). We also remind States that some individuals who meet the definition of a family caregiver will not qualify as a specified excluded individual under the family caregiver component of section 1902(xx)(9)(A)(ii)(III) of the Act, because they are not related to and do not live with the individual for whom they provide assistance, and they provide such assistance for fewer than 80 hours per month. States must ensure any hours of assistance provided by these applicable individuals are accounted for in the individual's monthly work hour total prior to combining those hours with all hours of other qualifying activities. See section II.I.6.a. of this IFC for more information about calculating work hours for family caregivers who do not qualify as specified excluded individuals.

After determining the number of hours an individual spent engaging in work, community service, a work program, and/or an educational program in a given month, the State must have procedures in place to aggregate those hours and must not request that the applicable individual provide documentation or other information when the sum of the hours of qualifying activities as reflected in reliable information available to the State is sufficient to verify the individual demonstrated community engagement for the relevant month. The State must also make sure that, when additional information is required for one or more categories of qualifying activity hours, the State considers the total number of hours across these activities, as reflected in the reliable information available to the State combined with the hours verified by documentation or other information provided by the applicable individual.

For example, an individual reports on their application that they worked and volunteered for 40 hours each in the prior month, for a total of 80 qualifying hours. The State verifies the individual worked for 40 hours in prior month using reliable information available to the State but needs more information to verify the community service hours. The State sends a request for information seeking documentation regarding the individual's participation in community service. In response, the individual submits documents that demonstrate the individual completed 42 hours of community service in the prior month. The State must combine the 40 hours of work that was verified using the reliable information available to the State with the 42 hours of community service reflected in the documentation for a total of 82 qualifying hours and determine the individual demonstrated community engagement in that month. f. Verifying Compliance Based on Monthly Income

The statute provides two additional pathways for an individual to demonstrate community engagement: (1) Section 1902(xx)(2)(F) of the Act specifies that an applicable individual demonstrates community engagement if they have a monthly income that is not less than the applicable Federal minimum wage requirement under section 6 of the FLSA multiplied by 80 hours, and (2) Section 1902(xx)(2)(G) of the Act specifies that a seasonal worker described in section 45R(d)(5)(B) of the Code demonstrates community engagement if they have an average monthly income over the preceding 6 months that is not less than the applicable Federal minimum wage requirement multiplied by 80 hours. See section II.C.8. of this IFC for further details about who qualifies as a seasonal worker.

As described in section II.C.8. of this IFC and implemented at Sec. 435.552(f), the determination of “monthly income” for the purpose of demonstrating community engagement refers to the same MAGI- based methodologies used for financial eligibility under Sec. 435.603. States generally do not need to establish separate data sources to verify that an applicable individual demonstrated community engagement based on their monthly income or average monthly income. Rather, to verify community engagement on this basis, States should use the same data sources they use to verify financial eligibility. We note that, for seasonal workers, an average income for the preceding 6 months must be calculated for each month in which an applicable individual is required to demonstrate community engagement, if the State does not elect to use a reasonable predictable changes methodology. Please see section II.C.8. of this IFC for more information about averaging income for seasonal workers, including an example of how the 6-month average is constructed for a given month of the review period.

For a State that has elected a reasonably predictable changes methodology as part of its MAGI-based methodologies (as discussed earlier in section II.C.8. of this IFC), we expect the monthly income in each of the preceding 6 months to be relatively stable because the income determination will have considered a prorated portion of the household's fluctuating income. 7. Verifying Status as a Specified Excluded Individual

Specified excluded individuals, defined in Section 1902(xx)(9)(A)(ii) of the Act and implemented at Sec. 435.554, are carved out from the definition of an applicable individual, as defined in section 1902(xx)(9)(A)(i) of the Act and implemented at Sec. 435.551. As such, specified excluded individuals are not

subject to the requirement to demonstrate community engagement. Consistent with section 1902(xx)(5) of the Act, States must establish processes and use reliable information available to the State without requiring, where possible, additional information to verify that an individual meets the definition of a specified excluded individual at application and renewal. We note that, because specified excluded individuals are not applicable individuals, the requirement in section 1902(xx)(1) of the Act to verify an applicable individual met the requirement in the 1 or more months prior to the month of application, or 1 or more months during the review period assessed at the regular renewal or when redetermining eligibility based on a change in circumstances, does not apply to specified excluded individuals. In other words, there is no requirement that an individual who is a specified excluded individual meet that definition for the required number of months during the review period (as defined in section II.H. of this IFC). Rather, as is discussed in greater detail in this section, States will verify if an individual meets the definition of a specified excluded individual at the time of application or renewal or if the State receives information indicating a change in circumstances for the individual that may affect eligibility, similar to when States verify other factors of eligibility (for example, income).

In addition, the option in section 1902(xx)(4) of the Act to verify applicable individuals' compliance with the community engagement requirement more frequently than at each regular renewal does not apply to specified excluded individuals. Thus, States may not reverify a specified excluded individual's status as such between regular scheduled renewals as part of the more frequent verification process (if elected by the State), unless the State has information indicating the individual's status has changed. However, we remind States that when assessing compliance, including when conducting a more frequent verification, the State must first confirm the individual is an applicable individual and is not a specified excluded individual using reliable information available to the State. In other words, when conducting more frequent verifications, the State must not conduct a more frequent verification for a specified excluded individual but must begin the verification process by confirming that beneficiaries who have been applicable individuals have not become specified excluded individuals.

Section 1902(xx)(9)(A)(ii) of the Act identifies nine categories of specified excluded individuals: individuals who are described in section 1902(a)(10)(A)(i)(IX) of the Act (the FFCC group); certain American Indians; parents, guardians, caretaker relatives, or family caregivers of a dependent child or a disabled individual; veterans with a permanent or temporary total disability; individuals who are medically frail or otherwise have special medical needs (as defined by the Secretary); individuals who are compliant with TANF work requirements and individuals who are members of a household that receives SNAP benefits and must comply with SNAP work requirements; individuals who are participating in a drug addiction or alcoholic treatment and rehabilitation program; inmates of a public institution; and individuals who are pregnant or entitled to postpartum medical assistance under section 1902(e)(5) or (16) of the Act. See section II.E. of this IFC and the implementing regulations at Sec. 435.554 for additional discussion of the definition of specified excluded individuals. The verification process a State implements when verifying if an individual is a specified excluded individual will depend on the reliable information available to the State. We note that in some instances, the process will differ at application and renewal based on available data and that there will likely be some categories of specified excluded individuals for which there is no reliable information available to the State for verification.

For many of the categories of specified excluded individuals, States may have information available to verify the status; for example, from the State's own records, claims, payment, and encounter data to verify medical frailty or participation in a drug addiction or alcoholic treatment and rehabilitation program. States may also have information from the records of another Federal, State, or local agency, that can be used, for example, to verify veteran disability status, that an individual is meeting TANF work requirements, or that an individual is or recently was in a county carceral facility. Additionally, for certain categories of specified excluded individuals, information needed to verify the individual's status may already have been verified as part of determining other factors of eligibility in Medicaid; therefore, no additional verification would be needed, such as for pregnancy or American Indian status. There are certain categories of specified excluded individuals for which no reliable information may be available to the State. Beginning on January 1, 2028, when there is no reliable information available to the State or the reliable information is not reasonably compatible with the information provided by or on behalf of the individual, States must generally require that the individual provide documentation when such documentation is reasonably available to verify that the individual meets the definition of a specified excluded individual under the relevant category. We discuss the requirements for States in verifying the different specified excluded individual statuses based on reliable information available to the State; the available reliable information; and the requirements when no reliable information is available to the State to verify an individual's qualification as a specified excluded individual. a. Former Foster Care Children

As further described in section II.E.1. of this IFC, 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 the FFCC group, is a specified excluded individual. Collecting information to determine if an individual is excluded based on eligibility for the FFCC group described at Sec. 435.150 is part of a State's eligibility screening and determination process. This means that State Medicaid applications include questions to determine if an individual (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. State Medicaid applications contain questions related to FFCC status to determine eligibility for this group and States should use these existing data in the State's eligibility system to verify an individual's status as a specified excluded individual under this category. Because States screen for eligibility in the FFCC group as a part of eligibility and enrollment processes, we expect States to find only a small number of FFCC in the adult group, and it is possible that some individuals described in the FFCC group will be enrolled in a section 1115 demonstration that provides MEC. States should identify if individuals in the adult group or in a section 1115 demonstration that provides MEC meet

the criteria for eligibility in the FFCC group, and if so, move them to the FFCC group, if eligible, or determine that they are specified excluded individuals under this category. Consistent with existing verification policy with respect to information not subject to change, States do not have to reverify someone's status as an FFCC for exclusion from the community engagement requirement until the individual turns age 26, which is an anticipated change in circumstances known to the State. b. American Indians

Section 1902(xx)(9)(A)(ii)(II) of the Act establishes a broad exclusion for American Indians. For purposes of this exclusion, we are adopting the existing definition of “Indian” at Sec. 447.51 for the specified excluded individual category at Sec. 435.554(c)(2). Under existing eligibility rules, certain American Indians are exempt from cost sharing in Medicaid and CHIP and may receive special types of income that are not included in the MAGI calculation. They may also be eligible for special enrollment periods and cost sharing reductions for qualified health plans purchased on the Health Insurance Exchange. State Medicaid applications ask questions to identify who might be eligible for these protections (that is, cost sharing exemptions and deductions from income for Medicaid and CHIP and special enrollment periods and cost sharing reductions on the Health Insurance Exchange). The application also requests information about American Indian status as part of the race question, which is optional.

States should use these existing data collected on the application and follow their existing verification policies to verify that an individual qualifies as a specified excluded individual in this category. Notably, unlike some other exclusions which may be time limited or based on conditions that are subject to change, once verified, States do not need to reverify someone's status as an American Indian or qualification as a specified excluded individual on this basis, consistent with existing verification policy related to information not subject to change. c. Parent, Guardian, Caretaker Relative, or Family Caregiver of a Dependent Child or a Disabled Individual

Section 1902(xx)(9)(A)(ii)(III) of the Act (implemented at Sec. 435.554(c)(3)) establishes a category of specified excluded individuals for “parents, guardians, caretaker relatives, and family caregivers (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.” Because each of these subcategories of individuals has different definitions and requirements, the information needed to verify an individual's status as a parent, a guardian, a caretaker relative, or a family caregiver for the purpose of this exclusion, and the reliable information available to the State to do so, varies. For all subcategories, States must design reasonable procedures and use reliable information available to the State to ensure qualifying parents, guardians, caretaker relatives, and family caregivers are identified promptly and determined to be specified excluded individuals excluded from the community engagement requirement. If there is no reliable information available to the State, or the reliable information is not reasonably compatible with the information provided by or on behalf of the individual, the State must seek information from the individual to verify their specified excluded status. Beginning on January 1, 2028, when the State is unable to verify the specified excluded status using reliable information available to the State, or the reliable information is not reasonably compatible with the information provided by or on behalf of the individual, the State must require documentation if documentation is reasonably available. If there is no reasonably available documentation, the State must accept other information sufficient (as determined by the State) to verify eligibility, consistent with Sec. 435.557(b)(2)(iii).

In all instances, the State must verify that the individual receiving care is either a dependent child or a disabled individual, as both of these terms are defined at Sec. 435.554(a) (Please refer to sections II.E.3.e. and f. of this IFC for further information regarding the who is considered a dependent child or disabled individual for the purpose of community engagement and Sec. 435.554(a) for the definition of those terms as they apply to community engagement.) To verify the child's age, States should rely to the greatest extent possible on the household composition data available in their eligibility system. If the age of the individual receiving care is not available in the case record or eligibility system, the State must obtain that information from the applicant or beneficiary.

To verify the disability status of the individual receiving assistance as further discussed in section II.E.3.f. of this IFC, States must attempt to use reliable information available to the State, to the extent the State has consent to access the information of the individual receiving care. Where there is no reliable information available to the State, including if the State does not have consent to access the information of the individual receiving care and the information is therefore unavailable, the State must seek information from the applicant or beneficiary to verify the disability status of the individual receiving care. The State must collect sufficient information to substantiate that the individual receiving care meets the definition of a disabled individual at Sec. 435.554(a). We note that while the State may require that the applicant or beneficiary provide a minimum amount of information necessary to determine that the individual to whom the applicant or beneficiary provides assistance meets the definition of a disabled individual, the State may not require the name of the individual receiving care or other identifying information, and may not determine that an individual does not qualify for the exclusion only because the applicant or beneficiary declines to identify the disabled individual to whom the applicant or beneficiary is providing assistance. If the applicant or beneficiary does not have the disabled individual's consent to release their identifying information to the State, the State must require information from the applicant or beneficiary in the form of a statement or screening tool sufficient to verify the person receiving care meets the definition of a disabled individual.

As described in further detail in this section, States may also need to obtain other information to verify an applicant's or beneficiary's specified excluded individual status, such as the number of hours of care provided. States may use screening questions to identify individuals who may qualify as a specified excluded individual based on their caregiver status and follow up with those who are identified through the screening process to obtain additional information, including documentation (if applicable). However, whenever States have information indicating the individual may qualify for this exclusion, States should attempt to obtain all additional information needed to sufficiently verify an individual's caregiver status in a single request, rather than requiring the individual to fill out numerous forms or respond to multiple requests for additional information. For example, if the State needs information to verify the number of hours of assistance the family caregiver provided in a given month and that the individual to whom the family caregiver provided assistance is disabled, the State should send one request for information seeking

documentation (or other needed information in the absence of reasonably available documentation) to verify both criteria whenever possible.

The State must also verify the individual's relationship to the dependent child or disabled individual to confirm the individual is the dependent child's or disabled individual's parent, guardian, caretaker relative, or family caregiver (as defined at Sec. 435.554(a) and implemented at Sec. 435.554(c)(3)). We define guardian 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, as further detailed in II.E.3.c. of this IFC. Because the definition is dependent on the legal status as determined by a court, the State must require a court order or other legal instrument in accordance with applicable State law to verify an individual's status as a guardian. States should rely on household composition information collected at application and available in their eligibility system to verify an individual is a parent or a caretaker relative whenever possible. However, States should be mindful that the terms “parent” and “caretaker relative” assume a slightly different meaning (defined at Sec. 435.554(a)) for purposes of community engagement than they do for general Medicaid eligibility purposes.

Family caregiver as defined at Sec. 435.554(a) means 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. 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 implementing criteria established at Sec. 435.554(c)(3)(i)(A) through (C): (1) the individual primarily resides with a dependent child or disabled individual, as these terms are defined in section II.E.3. of this IFC, 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 requirement) of a dependent child or disabled individual as 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 or to assume primary responsibility requirement) of the dependent child or the disabled individual, as 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 explain in section II.E.3. of this IFC that we view shared residence with or 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. Thus, individuals meeting either of those criteria are not required to demonstrate provision of a minimum number of caregiving hours but are required to demonstrate that they provide assistance that occurs on a regular basis that is not solely incidental in nature (as described in section II.E.3.h. of this IFC). As such, verifying whether an individual resides with or is related to the dependent child or disabled individual for whom he or she provides assistance is critical to determining if an individual meets the definition of a family caregiver at Sec. 435.554(a) and qualifies as a specified excluded individual under the family caregiver component of section 1902(xx)(9)(A)(ii)(III) of the Act as implemented at Sec. 435.554(c)(3)(i). States should rely on household composition and relationship data collected during the application process and stored in the eligibility system to verify the shared residence or familial relationship when possible. States should only seek additional information from the applicant or beneficiary to verify relationship to or co-residence with the dependent child or disabled individual if the information is not available in the State's system. If the applicant or beneficiary meets the definition of a family caregiver at Sec. 435.554(a) and resides with or is related to the dependent child or disabled individual to whom he or she provides assistance, the State must collect information necessary to verify that the assistance provided by the applicant or beneficiary is provided on a regular basis and is not solely incidental in nature. If the State determines an individual meets the definition of a family caregiver at Sec. 435.554(a) and does not live with and is not related to a dependent child or disabled individual for whom they are providing assistance that is not solely incidental in nature, the State is required also to verify the number of hours of assistance provided and may only determine the individual is a specified excluded individual under the family caregiver component of the exclusion at section 1902(xx)(9)(A)(ii)(III) of the Act if the individual provides no less than 80 hours of assistance in a month. For individuals whose family caregiver status and specified excluded individual status cannot be automatically established through reliable information available to the State, States must obtain sufficient information from the applicant or beneficiary to verify their status as a specified excluded individual under the family caregiver component of the exclusion at section 1902(xx)(9)(A)(ii)(III) of the Act. States must determine what information is sufficient to verify an individual is a family caregiver, but the information must substantiate the State's determination that an individual does or does not satisfy the criteria to be a specified excluded individual on this basis. We also note that, if the individual is ineligible for the exclusion because they provided care for less than the required number of hours, the hours spent providing care are considered unpaid work and must count as such toward the 80 hours required to demonstrate community engagement on the basis of work or a combination of qualifying hour types. See section II.I.6.a. of this IFC for more information about verifying work hours.

In addition to using reliable information available to the State to identify family caregivers who could be specified excluded individuals, screening questions and tools can reduce administrative barriers and speed identification and processing for applicants and beneficiaries who may be specified excluded individuals. States should consider incorporating plain language screening questions in Medicaid applications and other program applications and forms to help identify family caregivers and to help family caregivers identify themselves as being a family caregiver. Many family caregivers do not automatically identify themselves as caregivers or recognize themselves in the role of a family caregiver for a variety of reasons. As such, States will need to craft plain language questions that are understandable and help individuals see themselves in that role, as appropriate. The questions must be sufficiently detailed for the State to determine eligibility based on an individual's responses. The report “Caregiving in the US” (2025) \101\

includes examples of screening questions used to identify those caring for a child with disabilities or a serious medical condition, and unpaid caregivers of adults. Additional examples are included in a free Caregiver Communications and Marketing Toolkit created by the National Academy of State Health Policy (NASHP) \102\ and the Centers for Disease Control and Prevention's Behavioral Risk Factor Surveillance System (BRFSS) Caregiver Module \103\ used by several States to gather information about family caregivers.

\101\ 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.

\102\ “Caregivers Communications and Marketing Toolkit,” Support Caregiving, https://supportcaregiving.org/caregivers-communications-and-marketing-toolkit/.

\103\ “2019 Caregiving Module,” Centers for Disease Control and Prevention. https://www.cdc.gov/healthy-aging-data/media/pdfs/2024/07/2019-caregiver-module-5081.pdf.

Section 1902(xx)(9)(A)(ii)(IV) of the Act and implementing regulations at Sec. 435.554(c)(4) create a specified excluded individual status for veterans with a total disability rating. VA assigns disability ratings, which can be permanent or temporary, 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--either temporary or permanent--from VA is necessary to qualify for the exclusion. An exception to this exists for veterans with a total disability based on individual unemployability (TDIU) which allows veterans with service-connected disabilities to receive 100 percent disability compensation if they cannot secure or maintain “substantial gainful employment,” even if their combined disability rating is below 100 percent. We believe it is reasonable to regard these veterans, who receive 100 percent disability compensation, as having a total disability, in the same manner as all other veterans who have a combined disability rating of 100 percent and also receive 100 percent disability compensation.

Accordingly, to verify that an individual qualifies as a specified excluded individual as a veteran with a total disability rating, if the State does not have an established data connection to VA to verify an individual's status, the State must request documentation from the individual demonstrating the veteran's permanent or temporary disability rating of 100 percent (or the veteran's status as TDIU even if their combined disability rating is below 100 percent). We understand that documentation of a disabled veteran's disability rating is readily available through the VA and that veterans may access information related to their disability designation through the VA website at https://www.va.gov/. States must reverify a veteran's temporary total disability status at least once every 12 months because the VA's determination of temporary conditions indicates they are subject to change and likely to improve. States may reverify temporary total disability status as determined by the VA at each renewal, but they may not verify more frequently than each renewal. For permanent disability status determinations, States must rely on the VA's determination that the condition is not likely to improve and, once such status has been verified, States must not reverify an individual's permanent disability status.

We are assessing the availability of data from VA and whether we can make it available through the Hub to verify a veteran's total disability rating (100 percent and/or TDIU). If this data source becomes available to States, we will require States to establish a connection to the Hub to verify this information or request a waiver requesting authority to establish connections to data sources or mechanisms as provided at Sec. Sec. 435.945(k) and 435.557(e) within 12 months of their first availability through the Hub to verify veteran disability status. e. Individuals Who Are Medically Frail or Otherwise Have Special Medical Needs

The statute establishes a specified excluded individual status for individuals who are medically frail or otherwise have special medical needs in section 1902(xx)(9)(A)(ii)(V) of the Act. Section 435.554(c)(5)(i) defines medical frailty to include an individual: who is blind or disabled (as defined in 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 ADL; or with a serious or complex medical condition (which is defined at Sec. 435.554(c)(5)(i)(E)). We are further defining a medically frail individual at Sec. 435.554(c)(5)(i) 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. Accordingly, when determining whether an individual qualifies as a specified excluded individual on the basis of being medically frail or having other special medical needs, the State must verify both the presence of a condition or diagnosis that meets the criteria described at Sec. 435.554(c)(5)(i)(A) through (E) and that the condition or diagnosis significantly impairs the individual's ability to comply with the community engagement requirement.

In accordance with requirements in section 1902(xx)(5) of the Act, States must, where possible, verify medical frailty or other special medical needs on an ex parte basis using reliable information available to the State without requiring the individual to submit additional information. To comply with this requirement, at Sec. 435.557(f)(1), we provide that the State must attempt to verify that an individual is a specified excluded individual on the basis that the individual is medically frail or has other special medical needs as defined at Sec. 435.554(c)(5) using reliable information available to the State, including adjudicated claims or encounter data, as relevant to the individual, from the preceding 12 months. States may not consider information older than 12 months when verifying medical frailty or other special medical needs, because older information may not reflect the individual's current condition.

States must identify individuals who are medically frail or who otherwise have special medical needs and exclude them from the community engagement requirement. States should consider incorporating plain language screening questions in Medicaid applications and other program applications and forms for use at application and renewal to identify individuals who may be medically frail or otherwise have special medical needs, including to identify beneficiaries who were previously applicable individuals and who may newly qualify for an exclusion on the basis of medical frailty or otherwise having other special medical needs. The questions should be as concise as reasonably possible and presented in plain language. If an individual is identified as potentially medically frail or otherwise having other special medical needs based on the initial screening questions, the State must attempt to verify medical frailty using reliable information available to the State prior to seeking documentation or other information from the individual to determine whether the individual is a specified excluded individual on this basis, as specified in Sec. 435.557(f).

Information gathered by States to verify medical frailty or otherwise

having special medical needs should include multiple domains to be effective in identifying individuals who meet this exclusion, including their condition(s), utilization of services (for example, inpatient hospital services, intensive outpatient services, SUD services, etc.), and their level of impairment (for example, need for assistance with one or more ADLs, etc.). We have also reviewed examples of State processes for identifying individuals who are medically frail or otherwise have special medical needs through algorithms using administrative claims data that assign acuity scores to individuals, which potentially could be used to make a determination of medical frailty or otherwise having special medical needs (for example, a score over a specified threshold could be used to determine an individual is medically frail). States may use an approach that relies on lists of qualifying diagnosis codes combined with utilization data and other factors, such as severity of conditions, to determine medical frailty or otherwise having other special medical needs. However, in some cases, reliable claims information may not be available to the State for individuals who are medically frail or otherwise have other special medical needs, particularly in cases where an individual recently obtained a diagnosis and medical services, but the claims data are lagging. For this reason, the absence of adjudicated claims or encounter data altogether, as well as the absence of particular claims or types of claims in available adjudicated claims data, may not be used to determine ineligibility for the exclusion based on medical frailty or other special medical needs. For example, an individual may not be determined not to be medically frail only because their condition or utilization relates to one or more non-listed diagnosis codes. States must provide an individual with the opportunity to provide documentation or other information demonstrating medical frailty or otherwise having other special medical needs status when the State is unable to verify the excluded status using information available to the State, as provided in Sec. 435.557(f).

Some individuals may not identify themselves as having a condition that could qualify them as a specified excluded individual on this basis for several reasons, even upon completing a screener, but their status as medically frail or otherwise having special medical needs may be apparent based on other documentation or information provided by the individual. States may accept provider documentation from many types of practitioners, including physicians, nurse practitioners, physician assistants, psychologists, counselors and therapists, clinical social workers, and other practitioners credentialed by the State, that are qualified to determine that an individual's condition qualifies them as medically frail or having other special medical needs under State scope of practice laws. We note that States' lists of practitioners qualified to determine that an individual's condition qualifies them as medically frail or having other special medical needs must be shared with us upon request as part of our oversight and data monitoring activities.

We recognize that for individuals who are newly applying for Medicaid, and for enrolled beneficiaries who are newly attesting to specified excluded individual status based on medical frailty or otherwise having special medical needs, there may not be reliable information available to the State. This may be especially true if the individual has not received medical services due to prior lack of health coverage, or for enrolled beneficiaries, because the condition is new and the individual has not yet received medical care for the new condition. For beneficiaries who have received medical care, the services received may not yet be reflected in reliable information available to the State due to claims lag. For such individuals, the State would not have reliable information, such as adjudicated claims or encounter data from the last 12 months, to verify that an individual qualifies as a specified excluded individual on this basis.

At Sec. 435.557(f)(1)(ii), we explain the verification requirements when no reliable information is available to the State to verify medical frailty, or when the reliable information available is not reasonably compatible with the information provided by or on behalf of the individual. Beginning on January 1, 2028, States may only use a statement or other information provided under penalty of perjury one time during an individual's period of enrollment,) to verify eligibility as a specified excluded individual on the basis of medical frailty or having other special medical needs. We define an individual's period of enrollment defined at Sec. 435.557(a) as a continuous period of enrollment in coverage under the State plan or waiver without the individual being disenrolled, regardless of the number of consecutive eligibility periods, of redeterminations or renewals, or of transitions between eligibility groups). Once a statement or other information provided under penalty of perjury has been used on or after January 1, 2028, to verify eligibility for an exclusion based on being medically frail or having other special medical needs, at the next regularly scheduled renewal, in the absence of available information, the State must require the individual provide documentation demonstrating the individual's current medical frailty status.

For example, if the State accepts a statement provided under penalty of perjury to verify a new applicant is medically frail because there is no reliable information available to the State in February 2028, the State must verify that person's medical frailty status using reliable information available to the State or documentation submitted by or on behalf of the individual when renewing their eligibility in August. If the individual remains continuously enrolled and later declares medical frailty status on another basis, the State may not accept the individual's statement or other information of provided under penalty of perjury as verification that the individual is medically frail since the individual's prior status was verified using a statement provided under penalty of perjury. To verify the individual's medical frailty status on this new basis, the State must use reliable information available to the State or documentation submitted by or on behalf of the individual.

We believe that requiring verification of medical frailty to confirm an individual's specified excluded status using data or other documentation after the State has verified that exclusion using a statement or other information provided under penalty of perjury (such as a screening tool) will motivate individuals to access care. Requiring States to verify an individual's medically frail status using reliable information available to the State or, beginning on January 1, 2028, documentation after the State has verified that exclusion using a statement or other information provided under penalty of perjury (such as using a screening tool) is reasonable, because once an individual is enrolled in coverage or once an enrolled beneficiary experiences a new or worsening condition that could result in qualifying for the medical frailty exclusion, the beneficiary is able to receive covered services to address their health condition. We encourage beneficiaries in this situation to access appropriate services for which they are entitled to coverage, which is in beneficiaries' best interest and may lower future, downstream costs to Medicaid that could result from delaying receipt of necessary care. When beneficiaries

access covered services, their receipt of services will appear (with some degree of lag) in adjudicated claims or encounter data (as applicable), which constitutes reliable information available to the State. Thus, once a beneficiary has enrolled in coverage and started receiving covered services to address their health condition, we expect States will be able to reverify their continued qualification for the medical frailty exclusion (as applicable) on an ex parte basis using information contained in State systems.

While we believe requiring documentation when there is no reliable information available after previously verifying an individual's medical frailty status using a statement or other information provided under penalty is reasonable, we recognize that some States may need to make system and process changes to implement these documentation requirements. As such, as provided in Sec. 435.557(f)(1)(i), States may require documentation or accept other information (even if documentation is reasonably available) to verify an individual's medical frailty status through December 31, 2027.

States must reverify that an individual is medically frail or otherwise has other special medical needs at least every 12 months, although States may reverify more frequently, such as at each renewal.. For individuals who were enrolled or last verified based on information provided under penalty of perjury, such as responses to questions in a screening tool, without additional verification (such as reliable information available to the State or documentation provided by the individual), Sec. 435.557(f)(1)(ii)(A) requires, beginning January 1, 2028, that the individual's medical frailty status must be reverified at the next regular renewal, which could be 6 months from the individual's last verification even in a State that otherwise elects to reverify medical frailty status every 12 months. States must attempt this verification and each verification thereafter using adjudicated claims or encounter data as relevant to the individual for the preceding 12 months, before requesting documentation from the individual. We expect that after individuals are enrolled and gain access to coverage, States generally will be able to reverify on an ex parte basis using reliable information available to the State. We therefore believe requiring reverification at least once every 12 months balances the goal of promoting continued coverage for vulnerable populations with the importance of community engagement in achieving the program's goals, as well as the need to maintain program integrity. Moreover, standardizing the timeframe simplifies the administration of the requirement.

Finally, CMS recognizes that processes for the identification and verification of individuals who may be medically frail or otherwise have special medical needs intersect with Federal privacy requirements; in particular, we recognize the intersection of 42 CFR part 2 and the medically frail exclusion for individuals with SUDs. It is critical that Federal civil rights requirements for individuals with disabilities, as well as Federal privacy protections, be observed in this and all contexts related to the implementation of the community engagement requirement. States must ensure that they take appropriate steps to safeguard Medicaid beneficiary and applicant information used in the specified excluded individual identification and verification processes discussed in this section of the rule, and that the information is accessed, stored, and handled consistent with all applicable Federal requirements, including section 1902(a)(7) of the Act; 42 CFR 431, subpart F; the Health Insurance Portability and Accountability Act of 1996 (HIPAA); 42 CFR part 2; \104\ and any other applicable Federal privacy laws, as well as applicable State laws. The Department of Health and Human Services Office for Civil Rights (OCR) enforces the requirements of 42 CFR part 2. We will work with OCR to provide States with technical assistance on the intersection of 42 CFR part 2 and the community engagement requirement. Further, applicable individuals who meet the definition of a person with a disability under section 504, section 1557, or the ADA but do not qualify for an exclusion or exception may require reasonable modifications to comply with the community engagement requirement. We remind States that they are required to provide such reasonable modifications in implementing the community engagement requirement where necessary to avoid discrimination on the basis of disability under section 504, section 1557, and the ADA. In addition, States must comply with notice requirements at Sec. 435.917(a) and must provide assistance to individuals seeking help with the application or renewal process in accordance with Sec. 435.908(a).

\104\ For more information about the 42 CFR part 2 requirements regarding confidentiality of SUD patient records, see: “Understanding Confidentiality of Substance Use Disorder (SUD) Patient Records or “Part 2”,” OCR, last updated February 13, 2026, https://www.hhs.gov/hipaa/part-2/index.html.

Section 1902(xx)(9)(A)(ii)(VI) of the Act and implementing regulations at Sec. 435.554(c)(6) and (7) describe categories of specified excluded individuals that reference existing work requirements in other jointly administered Federal-State programs. Specifically, clause (ii)(VI)(aa) references TANF and clause (ii)(VI)(bb) references SNAP. Section 1902(xx)(9)(A)(ii)(VI)(aa) of the Act and implementing regulations at Sec. 435.554(c)(6) create an exclusion from the community engagement requirement for individuals who comply with the work requirements imposed by the State under section 407 of the Act as a condition of eligibility for TANF. Section 1902(xx)(9)(A)(ii)(VI)(bb) of the Act and the implementing regulations in Sec. 435.554(c)(7) create 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.

As such, States must have a process to obtain information from the TANF agency and from the SNAP agency to determine whether an individual meets either of these criteria. If so, then the individual meets the definition of a specified excluded individual and therefore is not an applicable individual subject to the Medicaid community engagement requirement.

Our understanding is that many States already use TANF or SNAP (or both) agency systems as reliable sources of information available to the State for purposes of verifying other factors of eligibility or maintain shared eligibility systems with those programs. These States already have access to information to verify that an individual is a specified excluded individual under these categories based on the individual's most recent TANF work requirement compliance status or SNAP household eligibility and work requirement exemption and exception status. However, if the State does not yet have means to obtain these data from the TANF and the SNAP agency, the State must establish a process to obtain all the information needed from both programs to determine if an individual is a specified excluded individual under either of these categories to comply with the requirement at Sec. 435.557(b)(1).

If there is no reliable information available to the State (for example, no information about the individual is returned from SNAP or TANF), or the reliable information is not reasonably

compatible with the information provided by or on behalf of the individual, the State must seek information from the individual to verify their specified excluded status. Beginning on January 1, 2028, when there is no reliable information available to the State or the reliable information is not reasonably compatible with the information provided by or on behalf of the individual, the State must require documentation if documentation is reasonably available. If there is no reasonably available documentation, the State must have a process to accept other information to verify eligibility, consistent with Sec. 435.557(b)(2)(iii). g. Participants in Drug Addiction or Alcoholic Treatment and Rehabilitation Programs

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).” The statute establishes an exclusion for active participants in certain drug addiction or alcoholic treatment and rehabilitation programs, which we implement at Sec. 435.554(c)(8). In accordance with requirements under section 1902(xx)(5) of the Act to verify an individual is a specified excluded individual on an ex parte basis using reliable information available to the State without requiring the individual to submit additional information, States must attempt to verify participation in drug addiction or alcoholic treatment and rehabilitation programs using adjudicated claims, payment and encounter data, and other relevant information available to the State to attempt to verify an individual's qualification for the exclusion.

In the absence of reliable information available to the State or if the reliable information available to the State is not reasonably compatible with the information provided by or on behalf of the individual, States must obtain sufficient to verify the individual's current participation in a drug addiction or alcoholic treatment and rehabilitation program. Beginning on January 1, 2028, when there is no reliable information available to the State or the reliable information is not reasonably compatible with the information provided by or on behalf of the individual, the State must require documentation if documentation is reasonably available. If there is no reasonably available documentation, Sec. 435.557(b)(2)(iii) requires that the State accept other information sufficient (as determined by the State) to verify eligibility. h. 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. As implemented at Sec. 435.554(c)(9), “inmate of a public institution” has the meaning given the term at Sec. 435.1010 and includes individuals in correctional institutions such as State or Federal prisons, county or local jails, detention facilities, or other carceral settings. States must ensure they have procedures to obtain data showing whether an individual is an inmate of a public institution to determine if the individual is a specified excluded individual on this basis. States must use reliable information available to the State to the extent possible to determine whether an individual is (or was at any point in the prior 3 months for the purpose of verifying the exception at Sec. 435.553(b)) an inmate of a public institution. To access these data, including from jails and prisons, States should use existing connections with other State agencies and local governments that were established to implement requirements under division G, title I, section 205 of the Consolidated Appropriations Act, 2024 (CAA, 2024; Pub. L. 118-42) (concerning the prohibition on termination of enrollment due to incarceration). States may also wish to consider employing processes developed through section 1115 demonstrations serving incarcerated or formerly incarcerated populations reentering the community to support verification of qualification as a specified excluded individual on this basis. If the State does not have a process to obtain reliable information identifying an individual as a current or recent former inmate, the State must establish a process to obtain this information to comply with the requirement at Sec. 435.557(b)(1). When there is no reliable information available to the State, including prior to establishing a process to obtain data showing whether an individual is or recently was an inmate of a public institution, or the reliable information is not reasonably compatible with the information provided by or on behalf of the individual, the State must obtain sufficient documentation (if it is reasonably available) or other information from the individual to verify qualification as a specified excluded individual on this basis. As specified at Sec. 435.557(b)(2), beginning on January 1, 2028, when there is no reliable information available to the State or the reliable information is not reasonably compatible with the information provided by or on behalf of the individual, the State must require documentation if reasonably available and may accept other information only in the absence of reasonably available documentation (and must have a process to do so in cases where documentation does not exist or is not reasonably available). i. Pregnant or Eligible for Postpartum Coverage

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. Consistent with existing requirements under Sec. 435.956(e), the State must accept an attestation of pregnancy or entitlement to postpartum medical assistance unless the State has information that is not reasonably compatible with such attestation. Individuals may report pregnancy at application, post-enrollment as a change in circumstance (including in connection with a verification of compliance with the community engagement requirement more frequently than at renewal, if elected by the State), or at renewal. States should use this information from their eligibility system or the individual's case record, including their application forms, to verify qualification as a specified excluded individual on this basis. In addition, when checking data sources to determine whether a beneficiary who was previously identified as an applicable individual is now newly excluded during a more frequent verification or at renewal. States may identify pregnancy or postpartum status based on claims data, encounter data, health records, or other reliable information available to the State. Consistent with the requirement at section 1902(xx)(5) of the Act to use reliable information available to the State to verify an individual's specified excluded status, the State must use such information to determine whether an individual qualifies as a specified excluded individual on the basis of pregnancy or eligibility for postpartum coverage without requiring information from the individual. 8. Mandatory Exceptions

States must deem applicable individuals as having demonstrated community engagement for a month if, for all or part of a month, they fall into a mandatory exception specified in

section 1902(xx)(3)(A) of the Act and implemented at Sec. 435.553.

Mandatorily excepted individuals are: specified excluded individuals as defined at Sec. 435.554 and discussed in section II.E. of this IFC, individuals under age 19, individuals entitled to or enrolled in Medicare part A or enrolled in Medicare part B, individuals described in a mandatory eligibility group under section 1902(a)(10)(A)(i)(I) through (VII) of the Act, and individuals who were an inmate of a public institution at any point during the prior 3 months ending on the first day of a month in which the individual is otherwise subject to the requirement to demonstrate community engagement.

Many of the mandatory exceptions include individuals for whom the State's eligibility system is likely to have existing information on which the State must rely to verify that an applicable individual qualifies for a mandatory exception. For example, as part of the eligibility determination, a State would generally screen for and have information on individuals who were under the age of 19, entitled to or enrolled for Medicare benefits under part A or B, or described in any mandatory eligibility group in section 1902(a)(10)(A)(i)(I) through (VII) of the Act. Because States are already required to obtain this information as a part of the eligibility determination, we believe the verification of these elements should be straightforward based on information already contained and readily available in the State's enrollment and eligibility system. In addition, States must establish connections with other State or local agencies that provide reliable information relevant to an individual's status as an inmate of a public institution at any point during the 3-month period before any month for which the applicable individual otherwise would be required to demonstrate community engagement, as discussed in preamble section II.I.7.h. of this IFC.

When verifying an applicable individual qualifies for a mandatory exception, the requirement to use reliable information available to the State applies, as implemented at Sec. 435.557(g)(1). Section 1902(xx)(3)(A) of the Act permits the State to deem an individual to have demonstrated community engagement for a month without further verification “of the information resulting in such deeming” if the individual meets the criteria for a mandatory exception for all or part of that month. We interpret this requirement to allow a State to deem an applicable individual to have demonstrated community engagement without requiring documentation or other information in the absence of reasonably available documentation only if the individual provided information on an application, renewal or other State form, or when reporting a change in circumstances in accordance with Sec. 435.557(b)(4) indicating they qualify for an exception and there is no reliable information available to the State to verify the information the individual provided. If reliable information available to the State is inconsistent with information provided by the applicable individual, beginning on January 1, 2028, the State must require documentation or other information if documentation is not reasonably available. This documentation or other information is not required for the purpose of verifying the underlying information resulting in the deeming of compliance but rather to resolve the inconsistency. We also stress that not requiring documentation or other information to verify an applicable individual meets the criteria for an exception is a State option under the statute but States may require documentation (if it is reasonably available) in the absence of reliable information available to the State and are encouraged to do so in the interest of program integrity. 9. Verifying Optional Short-Term Exceptions

Section 1902(xx)(3)(B) of the Act, implemented at Sec. 435.555 and discussed in section II.G. of this IFC, provides States with the option to implement exceptions from the community engagement requirement for specific short-term hardship events. States that elect to implement these optional exceptions must deem applicable individuals experiencing a short-term hardship event for a given month as having demonstrated community engagement for that month. a. Applicable Individuals in Certain Medical Institutions or Receiving Outpatient Services

As specified at Sec. 435.555(d)(1), in a State that elects to offer exceptions for short-term hardships, an applicable individual experiences a short-term hardship if they receive inpatient hospital services, nursing facility services, services in an ICF/IID, inpatient psychiatric hospital services, or such other services of similar acuity as discussed in section II.G.4. of this IFC. Consistent with existing verification policy and Sec. 435.557(g)(2)(i), the State must attempt to verify that an applicable individual has received these services using reliable information available to the State before requesting information from the individual. As defined at Sec. 435.557(a), reliable information available to the State includes, but is not limited to, adjudicated claims and encounter data as relevant to the individual for the preceding 12 months (as applicable). However, States may not have these data available, or there may be a lag in receipt of such data. In the absence of reliable information available to the State, States must seek additional information to verify qualification for the short-term hardship exception. Beginning on January 1, 2028, when there is no reliable information available to the State or the reliable information is not reasonably compatible with the information provided by or on behalf of the individual, the State must require documentation (for example, from a provider, a medical bill or admission or discharge paperwork) if documentation is reasonably available, or other information, as required at Sec. 435.557(b)(2) if no documentation exists or is reasonably available. The State must ensure that the eligibility record includes sufficient information to substantiate the State's eligibility determination for the short-term hardship exception. b. Applicable Individual or Dependent Must Travel Outside of Their Community for an Extended Period of Time To Receive Medical Services Necessary for a Serious or Complex Medical Condition

As specified at Sec. 435.555(d)(4), an applicable individual experiences a short-term hardship if the applicable individual or their dependent must travel outside of their community of residence for an extended period of time to receive medical services necessary to treat a serious or complex medical condition, as defined at Sec. 435.554(c)(5)(i)(E), that are not available within their community of residence. States must first attempt to verify the serious or complex condition and receipt of medical services, including the location where and the date(s) on which the services were received, using reliable information available to the State, including adjudicated claims or encounter data as relevant to the individual for the preceding 12 months and information from other electronic data sources (as applicable) However, we anticipate there will be instances in which no reliable information is available to the State, particularly when the applicable individual's dependent, and not the applicable individual, needed to travel outside of their community of residence

to receive care. Beginning on January 1, 2028, when no reliable information is available to the State, the State must require documentation if documentation is reasonably available, such as medical records providing the dates and location of services. The State must also establish procedures to accept other information in the absence or reasonably available documentation.

In addition, the State must verify the relationship to the individual who received care, if that individual was the applicable individual's dependent. To the extent possible, the State must use information available in the applicable individual's case record or the State's eligibility system, such as household composition data collected at application, to verify the relationship. If the information is not available in the case record or eligibility system or using other reliable information available to the State, the State must seek additional information to verify the relationship. Beginning January 1, 2028, the State must obtain documentation if such is reasonably available. If documentation is not reasonably available, the State must have procedures in place to accept other information sufficient to verify the individual's eligibility (as determined by the State). We note that the latitude described in section II.I.3. of this IFC allowing States to accept other information even if documentation is reasonably available through January 31, 2027, does not apply to verifying guardianship status. If the applicable individual is the dependent's legal guardian, a court order or other legal instrument is required to verify the relationship.

While an applicable individual is not required to travel with their dependent for necessary medical treatment, for such an applicable individual to receive this short-term hardship exception, the State must verify that the applicable individual had to take leave from employment or had to absent themselves from other community engagement activities for reasons related to the dependent's condition or travel. Section II.G.7. of this IFC provides examples of reasons related to the dependent's condition or travel. c. Emergency and Disaster Declarations and High Unemployment Rate

As specified at Sec. 435.555(d)(2) and further described in section II.G.5. of this IFC, an applicable individual residing in a county or equivalent unit of local government in which an emergency or disaster exists as declared by the President under the Stafford Act or the NEA, meets the short-term hardship exception, if their State elects to offer short-term hardship exceptions. Similarly, an applicable individual meets the criteria for a short-term hardship if they reside in a county or equivalent unit of local government in which the unemployment rate is at or above 8 percent or 1.5 times the national unemployment rate (whichever is less) provided the State demonstrates the unemployment rate meets the threshold in a request to CMS, consistent with requirements described in section II.G.6. of this IFC. At Sec. 435.557(g)(2)(ii), we implement the requirement that States electing to offer short-term hardship exceptions apply an automatic short-term hardship exception to applicable individuals residing in these affected locations without requesting any verification relating to these circumstances from such individuals. States must store and be able to produce records supporting verification of such emergency, disaster, or high unemployment rate upon request, for an audit or other review.