Montana's Early Medicaid Work Rules Leave Enrollees Confused and Scared of Losing Coverage

Bethany Zulick went back to school in January to become a high school English teacher. She'd taught English overseas years earlier and missed it.

"It's so exciting to me to watch someone learn a new word or have that spark of understanding," she said.

Substitute teaching would pay enough to make the return to school work financially. Health insurance was the problem. The plan offered through Montana State University cost almost as much as her tuition. Medicaid solved that, with no monthly premiums to worry about.

For a few months, the arrangement worked fine. Zulick taught during the day and took online classes at night. Then in June, the state sent a letter that she said left her "completely confused."

She knew Montana was rolling out new work requirements over the summer. She assumed she wouldn't need to prove compliance until her Medicaid renewal came up next spring. The letter from the Montana Department of Public Health and Human Services said otherwise, and it contradicted itself while doing so. One section said she'd need to verify compliance at her next renewal. Another, further down, said she had 30 days from the letter's June 26 date to submit paperwork. Was this routine mail she could set aside, or was her coverage actually at stake? She had no way to know.

That kind of ambiguity is becoming a familiar story in the handful of states moving early on Medicaid work requirements. All states must have the new rules in place by Jan. 1, but Montana, Nebraska and Arkansas got a head start. Advocates worry the rushed timelines in those three states will cause thousands of eligible people to lose coverage simply because they didn't understand what was being asked of them, and that Montana's experience may be a preview of the chaos to come nationally.

Under the new rules, enrollees must document 80 hours a month of work, volunteering or study, or prove they qualify for an exemption such as being "medically frail" or serving as a primary caregiver for a family member. Nearly 71,000 Montanans are subject to the requirements. Medicaid itself is a joint federal-state program, funded through a cost-sharing arrangement but administered day to day by the states, covering people with low incomes or disabilities.

State health officials insist they're ready. They've told lawmakers they plan to process roughly 5,000 enrollees a month. But the letters going out to real people, like the one Zulick received, tell a messier story.

A System Still Under Construction

Rep. SJ Howell, a Democrat in the Montana House, has fielded dozens of calls from bewildered constituents about letters just like Zulick's.

"The notices coming from the department are very, very confusing, and it's very hard to find help figuring out what's going on," Howell said. She raised the issue with health department leaders at a legislative hearing in early September. Officials responded that the letters have since been revised to be clearer.

Clearer letters won't fix everything, though. Montana rolled out a soft launch of the work requirements in July, giving enrollees until Oct. 1 to comply. Critics say that's not enough runway, because the state hasn't finished building the computer systems it needs or hiring the staff to run them. Of 59 planned positions, only about 20 were filled as of the September hearing, according to state health department officials, who noted the numbers had shifted due to staff turnover.

Eventually, the state says, it will be able to automatically verify university enrollment for students claiming a school exemption. That system isn't expected to be running until next year. For now, students like Zulick have to track down and submit their own paperwork.

Fewer outside resources exist to help people navigate that process than in years past. Cover Montana, a nonprofit that has long helped residents fill out this kind of paperwork, lost its federal funding last year. Its staff shrank from 18 employees to two part-timers answering a phone line. The state runs its own helpline, but federal data shows Montanans wait on hold far longer than the national average, and many give up before reaching a state employee.

"We were worried about chaos that could be generated by the state rushing," said Aaron Wernham, CEO of the Montana Healthcare Foundation, a nonprofit focused on improving health outcomes statewide. "Given how little information the state has provided about what they are doing, I'm much more worried about chaos."

Wernham points to a recent, painful precedent. In 2023, states undertook a massive review of Medicaid eligibility after pandemic-era protections lapsed. In Montana alone, roughly 87,000 people who were still financially eligible lost coverage anyway, tripped up by paperwork errors rather than actual ineligibility. Some of the people dropped from the rolls shouldn't have had to file anything at all, including homeless residents whose coverage was supposed to renew automatically.

The push for work requirements in Montana isn't new. The state legislature passed a measure in 2019 expressing its intent to add them to Medicaid, but had to wait for federal approval before moving forward.

Montana Senate President Matt Regier, a Republican, sees the requirements as a matter of fairness. "In an economy like this, if you're an able-bodied adult that's able to work, you really do need to step up," he said. Asked about enrollee confusion, Regier said the Oct. 1 deadline gives the system plenty of time to work out its problems.

Zulick, as it turned out, didn't need to worry about that deadline. She got married in July, which changed her eligibility for Medicaid entirely, something she didn't know when the June letter arrived.

The Human Cost

Not everyone gets an easy exit. Heather Reel, who attended a rally at the state capitol in July to protest Montana's early rollout, relies on Medicaid for mental health coverage. Without it, she said, she'd struggle to care for her teenage son, who has autism and is nonverbal. Between shifts at a fast food restaurant and caring for him, she worries she simply won't have time to figure out how to report her work hours before the deadline hits.

Akeiisa Coleman, who analyzes Medicaid policy for the Commonwealth Fund, a nonprofit focused on healthcare equity, describes the early-adopting states as building the plane while it's already in the air. "Montana is going to be an example for what we might see nationally as things roll out," she said.

Most states are holding to the Jan. 1 deadline rather than rushing ahead, giving them more time to build and test their systems. But Coleman cautions they may still fall short of having every piece in place. If a state can't automatically approve or deny coverage under the new rules, workers have to process cases by hand, one at a time. That kind of manual review invites backlogs, and backlogs mean more people losing coverage they're actually entitled to keep.

Jon Ebelt, a spokesperson for Montana's health department, said in a statement that the state's Medicaid office is ready for the Oct. 1 change. "We are committed to ensuring eligible Montanans maintain coverage while meeting requirements, and we will continue to monitor implementation closely," he said.

Democratic lawmakers have repeatedly pressed state health officials to push back the Oct. 1 deadline. So far, officials have said they have no intention of doing so.