Medicaid Work Requirements: What People in Substance Use or Mental Health Treatment Should Know

Summary

New federal rules require states to apply Medicaid community engagement, often called “work,” requirements to certain adults. Nebraska began implementing these requirements on May 1, 2026, and other states must implement the federal requirements no later than January 1, 2027.

Some people will not have to meet the work requirement. A substance use disorder or disabling mental health condition may qualify someone for an exclusion when it significantly limits their ability to work, attend school, volunteer, or complete other qualifying activities. People participating in a qualifying drug or alcohol treatment program may also be excluded under a separate provision.

These are two different pathways. Federal law contains a narrow definition of a qualifying treatment program, while Nebraska says it will use criteria from its broader Medicaid SUD demonstration—which recognizes outpatient treatment, intensive outpatient treatment, medication-assisted treatment and residential care—to identify qualifying programs. Nebraska has not yet fully explained how it will reconcile those standards. As a result, receiving treatment from a licensed outpatient provider may support an exclusion, but patients should not assume that treatment participation alone guarantees one. The state makes the eligibility determination.

What is changing?

The federal community engagement requirement generally applies to certain adults covered through Medicaid expansion. Unless someone qualifies for an exception or exclusion, they may need to demonstrate at least 80 hours per month of one or more approved activities, such as:

• Working
• Volunteering
• Participating in an approved work or training program
• Attending school

People can also satisfy the requirement through certain income-based pathways.

Nebraska began applying its Medicaid work requirements on May 1, 2026. Nebraska Medicaid checks compliance at application or renewal, depending on whether someone is applying for coverage or is already enrolled.

How can a substance use or mental health condition affect the requirement?

There are two separate provisions that may be relevant.

1. The medically frail exclusion

A person may qualify as medically frail or as having special medical needs when a health condition significantly impairs their ability to complete the required activities. Conditions that may support this determination include:

• A substance use disorder
• A disabling mental health condition
• A serious or complex medical condition
• A serious physical, intellectual, or developmental disability

A diagnosis alone does not necessarily establish this exclusion. The relevant question is whether the condition significantly limits the person’s ability to work or complete other qualifying activities.

The medically frail pathway is not limited to patients receiving care from a particular type of facility. Information from appropriately credentialed healthcare practitioners—including physicians, nurse practitioners, physician assistants, psychologists, counselors, therapists, and clinical social workers—may be used to support the determination, subject to state requirements and scope-of-practice rules.

2. The qualified drug or alcohol treatment-program exclusion

Federal law separately excludes people participating in a qualifying drug addiction or alcohol treatment and rehabilitation program. The federal provision incorporates an older statutory definition that generally covers programs operated by private nonprofit organizations or publicly operated community mental health centers.

Nebraska’s published implementation materials appear to take a potentially broader approach. The state says it will identify qualified programs using the same criteria applied under its Medicaid §1115 SUD demonstration. That demonstration recognizes a continuum that includes:

• Outpatient individual, group and family treatment
• Intensive outpatient treatment
• Day treatment
• Medication-assisted treatment
• Residential and inpatient care
• Withdrawal-management services

The demonstration relies on medical necessity, evidence-based placement criteria such as ASAM, and service-specific provider licensure, credentialing and—in some cases—accreditation requirements. It does not generally limit recognized treatment to nonprofit organizations.

This suggests that Nebraska may recognize a wider range of licensed Medicaid SUD providers for work-requirement purposes than the older federal definition would appear to allow. However, Nebraska has not expressly stated that every provider authorized to furnish a service within the §1115 continuum is a qualifying program, nor has it explained how its approach fits with the narrower statutory definition.

For that reason, patients should not assume either that licensed outpatient treatment automatically qualifies or that it necessarily falls outside the treatment-program exclusion.

What does this mean for Affect patients?

Affect provides licensed outpatient treatment for substance use and mental health conditions, including services that fall within the modern continuum of Medicaid SUD care. Nebraska’s reference to its §1115 demonstration criteria suggests that participation in outpatient treatment like Affect’s may be relevant to the treatment-program exclusion.

Nebraska has not, however, expressly confirmed that Affect or every similarly licensed outpatient provider qualifies under that provision. Affect therefore cannot guarantee that participation in its program will automatically exclude a patient from the work requirement.

An Affect patient may also qualify through the separate medically frail pathway if their substance use disorder, mental health condition, or other medical needs significantly impair their ability to complete qualifying activities. When permitted, Affect can provide relevant clinical information about a patient’s diagnosis, treatment participation and functional limitations to support the state’s review.

The final decision belongs to the state Medicaid agency.

Does telehealth treatment count?

Receiving treatment through telehealth does not prevent someone from qualifying as medically frail. What matters under that pathway is the person’s condition and its effect on their ability to complete qualifying activities—not whether treatment is delivered in person or remotely.

For the separate treatment-program exclusion, telehealth is not necessarily the deciding factor. Nebraska’s Medicaid SUD framework recognizes community-based and outpatient care furnished in a range of appropriate settings, and Nebraska Medicaid covers many behavioral health services delivered through telehealth. But Nebraska has not stated that telehealth coverage, provider licensure or Medicaid enrollment alone establishes that a program qualifies for the exclusion.

Does mental health treatment qualify?

A disabling mental health condition may support a medically frail determination when it significantly impairs the person’s ability to work or complete other required activities.

Simply participating in outpatient mental health treatment does not automatically create an exclusion. Patients in intensive outpatient or partial hospitalization treatment may have strong evidence of functional impairment because of the severity of their condition and the time required for care, but the state must still evaluate whether the medically frail criteria are satisfied.

How Nebraska verifies an exclusion

Nebraska says it will first use information it already has, including Medicaid claims, to determine whether someone appears to qualify as medically frail or is participating in a qualifying SUD treatment program. Its process may therefore identify Affect patients through their diagnoses, services or treatment claims even when the state has not separately classified Affect as a qualifying program.

For existing members, Nebraska reviews available medical claims before the end of the person’s eligibility period. If qualifying information is identified, the person may be treated as excluded without having to take additional action.

If Nebraska cannot make the determination from existing information, it may ask the person to complete a declaration. Nebraska’s current process requests basic information about the medical condition or treatment provider and does not require additional supporting documentation with the declaration at this time.

Because procedures can change, members should follow the instructions in any notice they receive from Nebraska Medicaid.

What should Nebraska Medicaid members do?

1. Do not assume that you must complete work hours

You may qualify for an exception or exclusion because of a medical condition, caregiving responsibilities, pregnancy, participation in another public-benefit work program, a temporary hardship, or another circumstance.

2. Do not assume that a diagnosis or treatment enrollment automatically qualifies

Substance use and mental health conditions can be relevant. Nebraska’s published methodology may recognize treatment across a broad SUD continuum, but eligibility still depends on the pathway Nebraska applies and your individual circumstances.

3. Watch for notices from Nebraska Medicaid

Check your mail, email, text messages, and Nebraska’s iServe portal. If Nebraska requests more information, respond by the deadline in the notice. Failure to respond can result in denial or loss of coverage even when someone may otherwise qualify.

4. Ask your provider for help when necessary

If Nebraska requests medical information, ask your provider whether they can document your condition, treatment, and any limitations affecting your ability to work or participate in other qualifying activities.

5. Use official sources

Current Nebraska instructions, forms, and contact information are available on the Nebraska Department of Health and Human Services work-requirements page.

Frequently Asked Questions

Do I have to work to keep Medicaid in Nebraska?

Not necessarily. The requirement applies to certain adults covered through Medicaid expansion, but numerous exceptions and exclusions apply. You may also satisfy the requirement through school, volunteering, approved work programs, a combination of activities, or certain income-based pathways.

Does having a substance use disorder automatically exclude me?

No. A substance use disorder may support a medically frail determination when it significantly impairs your ability to complete qualifying activities. Participation in certain statutorily defined drug or alcohol treatment programs is a separate basis for exclusion.

Does a mental health condition count?

It can. A disabling mental health condition may qualify under the medically frail pathway when it significantly limits your ability to meet the requirement. A diagnosis or treatment participation alone does not guarantee exclusion.

Is Affect a “qualified treatment program” for purposes of the automatic treatment-program exclusion?

Nebraska has not given Affect a definitive answer. Nebraska says it will use criteria from its §1115 SUD demonstration, which recognizes licensed outpatient, intensive outpatient and medication-assisted treatment in addition to residential care. That suggests Affect’s services may be considered, but Nebraska has not expressly confirmed that Affect qualifies under the treatment-program exclusion or explained how its approach relates to the narrower federal definition.

Patients should therefore not assume that Affect treatment automatically establishes an exclusion. Affect patients may also qualify through the separate medically frail pathway based on their condition and functional limitations.

Can Affect help?

Affect can provide treatment and, when appropriate and permitted, relevant clinical information about a patient’s condition and functional limitations. Affect cannot determine Medicaid eligibility or guarantee that a state will approve an exception or exclusion.

What happens if I do not meet the requirement?

If the requirement applies to you and the state cannot verify that you completed qualifying activities or met an exception or exclusion, you may be denied Medicaid coverage or lose your existing coverage. Respond promptly to any request for information and seek assistance if you do not understand a notice.

Official information

• Nebraska Medicaid Work Requirements
• Nebraska’s Medically Frail and SUD Treatment Program Exemption Process
• CMS Interim Final Rule on Medicaid Community Engagement Requirements

Final note

Medicaid eligibility rules are complicated, and the relationship between Nebraska’s published §1115-based methodology and the federal treatment-program definition remains unclear. Guidance may change as implementation continues. This article provides general educational information based on publicly available guidance as of July 2026. It is not legal advice and does not replace an eligibility determination or instructions from a state Medicaid agency.