States preparing to implement new Medicaid work requirements are confronting a logistical hurdle before the first participants are required to meet the rules: updating aging eligibility technology and building new processes to document work, school, and other qualifying activities, according to an Associated Press analysis of budget projections in more than 25 states.
The work mandates, designed as part of broad Medicaid changes meant to cut government spending, take effect Jan. 1 for millions of lower-income adults. But the technology and staffing demands for state agencies come first, as states overhaul online portals for Medicaid participants, systems used by state workers, and the databases used to verify information.
The AP analysis found that a mixture of federal and state tax dollars is likely to fund implementation, even as the federal government has begun flowing money to states. The first half of a $200 million federal allotment for Medicaid work and eligibility changes has started to reach states, and the analysis projects that the overall tab for needed technology improvements and additional staff is likely to exceed $1 billion.
Missouri, which began preparing early, is one example of how implementation can strain state capacity. To receive Medicaid coverage under the new requirements, adults will have to show they are working, volunteering, or taking classes. Missouri’s chief information officer, Toi Wilde, said the state’s systems are hard to modify, adding: “Our current eligibility systems are pretty old, and the ability to change them is very, very difficult.”
The AP reported that most states do not currently collect employment or education information about Medicaid participants, which means they may need to rely on outside sources to verify job and school data. The lack of an organized database of community volunteer hours also complicates the task of proving that volunteer work counts toward the new monthly requirement.
The federal rules that states need to follow are also still being finalized. States are waiting on federal guidance, not due until June, to define some exceptions—such as how the federal government will determine whether a person qualifies as “medically frail.” States also face additional compliance pressure because the federal government will start penalizing states with too many Medicaid payment errors in October 2029.
The federal and state funding breakdown differs by state, but the reporting shows that funding does not eliminate the implementation workload. Congress guaranteed each state a share of the $200 million allotted for Medicaid work and eligibility changes, and the federal government covers up to 90% of states’ costs to develop eligibility systems, 75% of the costs to maintain them, and half of most other administrative costs.
Missouri received early approval for the 90% federal funding rate. State lawmakers are fast-tracking a $32 million appropriation to solicit bids for vendors to begin upgrading technology platforms and improving a chatbot used by Medicaid participants. The Missouri Department of Social Services expects that, over the next year, it will need about 120 additional workers at a cost of $12.5 million to handle the increased administrative workload.
Other states projected similarly large costs. The AP reported that Maryland expects to spend more than $32 million, Kentucky more than $46 million, and Colorado more than $51 million to implement the Medicaid changes. Arizona estimated it could cost $65 million and require 150 additional staff, while some states surveyed reported even higher expected costs without always breaking down the portion tied specifically to the Medicaid work mandate versus other changes in the same federal law.
The AP also described how private contractors may play a role in the short timeline. Many states will turn to contractors because the work is not like updating a consumer device. Jason Reilly, a partner at Guidehouse, which advises several states, said, “Making those technology upgrades ‘is going to be a lift. It’s not something straightforward. It’s not easy.’”
Georgia’s experience underscores the risk that administrative costs and system changes can grow. The AP reported that Georgia is the only state currently requiring some Medicaid recipients to work, after receiving special federal approval to expand coverage to certain adults. In Georgia’s Pathways to Coverage program, the U.S. Government Accountability Office found the program racked up more than $54 million in administrative costs from 2021 through the first part of 2025, driven largely by technology changes to its eligibility and enrollment system.
Some Medicaid analysts pointed to Georgia’s experience and to earlier outcomes in Arkansas as examples of why states may need caution as additional states roll out work requirements. Joan Alker of Georgetown University’s Center for Children and Families said, “A huge amount of funding is going to go to vendors to construct these complicated red-tape systems that prevent people who need it from getting health care,” adding that she views “that is a big, big risk.”
Arkansas is among the states that previously implemented a Medicaid work requirement and saw thousands of people lose coverage before a federal court ended it. The AP reported that Arkansas has said some technology changes required by the new federal mandates could be covered under existing vendor contracts and that it anticipated “a minimal financial impact on our Medicaid budget,” though the state said it was still working on cost estimates for the Medicaid changes more broadly.
Nebraska said it planned to launch Medicaid work requirements in May, seven months ahead of the federal deadline, but the state did not provide details on costs to the AP.