Federal judge strikes down part of Trump Medicaid rule

A multistate coalition co-led by New Jersey’s attorney general successfully argued that federal officials exceeded their authority by narrowing Medicaid exemptions.

People with serious illnesses, disabilities, and other medical conditions will not have to meet an additional federal test to qualify for exemptions from new Medicaid work requirements following a court ruling Thursday that struck down part of the Trump administration’s regulations.

The Oct. 29 decision was issued in response to a multistate lawsuit co-led by New Jersey Attorney General Jennifer Davenport, California Attorney General Rob Bonta and Massachusetts Attorney General Andrea Joy Campbell.

U.S. District Judge Richard G. Stearns, sitting in Massachusetts, ruled that the Centers for Medicare & Medicaid Services (CMS) exceeded its authority by requiring people with certain medical conditions to demonstrate that their illness or disability significantly interferes with their ability to work, attend school, or perform community service.

Congress had already established categories of people who qualify for exemptions from the work requirements, the judge found, and the administration could not impose an additional restriction that would exclude some of them.

“This win will help people with complex or serious medical conditions stay on Medicaid and keep their healthcare,” Davenport said in a statement. “I will keep fighting to make sure red tape does not hurt those who are already struggling to stay well and maintain their dignity.”

The ruling stems from a lawsuit filed in June challenging regulations issued under the One Big Beautiful Bill Act, the sweeping federal law signed by President Donald Trump in July 2025.

Under that law, certain Medicaid recipients must complete 80 hours of work or community service each month or enroll at least half-time in an educational program to maintain coverage.

But Congress also exempted certain groups from those requirements, including people who are blind or disabled, have substance use disorders or disabling mental disorders, have qualifying physical or developmental disabilities, or live with serious or complex medical conditions.

The Trump administration’s regulations went further, requiring people in those categories to show that their conditions significantly impaired their ability to meet the work or other activity requirements.

Stearns found that the additional requirement conflicted with the law passed by Congress.

In his 16-page ruling, the judge concluded that the federal agency lacked the authority to exclude people from the categories Congress had identified as medically frail.

The requirement was therefore “contrary to law,” he wrote.

The court struck down the disputed language and issued a permanent injunction preventing federal officials from enforcing it. The judge also gave the states a six-month reprieve from enforcement involving determinations of whether individuals qualify for the medical frailty exemption, allowing time to adjust their eligibility systems.

The ruling does not delay the Jan. 1, 2027, implementation date for the broader Medicaid work requirements.

The decision was not a complete victory for New Jersey and the other states. The lawsuit also challenged two additional federal restrictions governing how states determine whether Medicaid recipients qualify for medical exemptions.

One rule prevents states from using medical billing records more than a year old to determine whether someone qualifies for an exemption from Medicaid work requirements.

The other limits people to one written statement per continuous period of Medicaid enrollment saying they have a medical condition that qualifies them for an exemption. After that, they would need other evidence to verify their condition.

The states argued that both provisions were unreasonable and could cause eligible residents to lose coverage.

But Stearns rejected those arguments, finding that federal officials had provided reasonable explanations for the restrictions.

The judge noted that older medical records might not accurately reflect a person’s current condition and that the administration had explained its approach to verifying claims of medical frailty. The court’s role, he wrote, was not to decide whether the administration had chosen the best policy but whether it had acted within the law.

In announcing the decision, Davenport’s office warned that the administration’s narrower definition of medical frailty could have caused thousands of medically vulnerable New Jersey residents to lose Medicaid coverage despite qualifying for exemptions under federal law. The state also argued that additional paperwork and verification requirements could create barriers for people with serious medical conditions, including those who already work or otherwise qualify for exemptions.

Medicaid is jointly funded by federal and state governments and provides health coverage to eligible low-income residents and people with disabilities. The work requirements apply to certain adults covered through Medicaid expansion, rather than every person enrolled in the program.

In his ruling, Stearns acknowledged that enforcing the administration’s unlawful definition could result in otherwise eligible people losing coverage. He also noted that states faced significant costs and administrative burdens because of having to modify their eligibility systems to comply with the disputed regulation.