The Centers for Medicare & Medicaid Services said it created an "optional hold harmless period" to give state governments more time to update their eligibility systems and improve the processes for verifying compliance.

"States have made real progress, and they've been clear with us about what it takes to get this right for beneficiaries—at scale and for the long term," Dan Brillman, director of the Center for Medicaid and CHIP Services, said in a statement. "If the state can use data to show that someone is working or qualifies for an exclusion, that person should not have to track down paperwork to prove it. And when someone needs support, they should know exactly what to do, when to do it, and where to go."

The underlying law requires Medicaid enrollees between the ages of 19 and 65 to work, participate in community service, or attend an education program for at least 80 hours a month. It includes exceptions for pregnant people, parents of dependent children, people with complex medical conditions, tribal community members, those in the foster care system, people under 26 who were in foster care, and individuals released from incarceration in the last 90 days, among others.

The extension follows pressure from congressional Democrats, who warned this week that states were not prepared to launch the requirement on the original timeline. In a letter dated Wednesday, House Energy and Commerce Committee ranking member Frank Pallone Jr. of New Jersey and Senate Finance Committee ranking member Ron Wyden of Oregon urged administration officials to use their "discretion to give states additional time to implement work reporting requirements and protect eligible beneficiaries from losing coverage."

The announcement gives states until the new deadline to build the data systems needed to verify work hours and exemptions. For beneficiaries, the change could mean fewer disruptions as states work out the kinks in reporting and eligibility checks. But the requirement itself remains a major shift for Medicaid, the joint federal-state health program that covers millions of low-income Americans.

Advocates for low-income families have argued that work requirements create administrative hurdles that can cause eligible people to lose coverage, even when they meet the rules. The hold harmless period is intended to reduce those risks by giving states more time to align their systems with federal expectations.

CMS said the optional period is designed to strengthen the work requirement systems and improve the experience for beneficiaries. States that opt in will have until the extended deadline to comply.