Medicaid work requirements will land on your plan — not theirs

The 2027 Medicaid eligibility shift is a funding-structure problem that fully insured employers need to model now, before the carrier models it for them.

According to the Kaiser Family Foundation, the 2025 reconciliation law — signed July 4, 2025 — conditions Medicaid eligibility for ACA expansion adults on meeting work requirements starting January 1, 2027. Forty-one states, including DC, currently cover nearly all adults up to 138% of the federal poverty level under that expansion. When those requirements take effect, a meaningful share of that population will lose Medicaid coverage — not because they stopped working, but because states have to build entirely new verification systems, train new staff, and execute outreach strategies on a compressed timeline. Disenrollment from administrative friction alone has historically been significant. Some of those people work for your company.

That last sentence is the one most CFOs aren't sitting with yet. Medicaid-covered dependents and employees exist in every workforce. They're quiet line items right now — zero cost to your plan, zero cost to your renewal. The moment they lose Medicaid eligibility, the most natural place they land is your group health plan. That's a special enrollment event. It's legal, it's expected, and it's coming.

The funding structure you're in determines how badly this hurts

Here is where the conversation gets structural. If you are self-funded, a population shift like this is visible. You see the claims. You can model the trend. You have stop-loss to absorb catastrophic spikes, and you have the data to make decisions before the next plan year. You are not flying blind.

If you are fully insured, you see none of that. Your carrier sees it. Your carrier prices your renewal based on what it knows about your emerging risk — and increasingly, what it can infer about your industry, your geography, and your workforce demographics. When your 2026 renewal letter arrives in October or November, the Medicaid disenrollment wave will already be priced in. You just won't be told that's what you're paying for. You'll be told your renewal is up 14% and that trend is trend.

Fully insured employers transfer claims risk to the carrier, which sounds like protection until you realize the carrier transfers it right back through the renewal premium — with margin on top. There is no mechanism in a fully insured arrangement that rewards you for a population that was previously healthy and Medicaid-covered. There is every mechanism for the carrier to charge you for a population that just became your problem.

Plan design is the lever you still control

This is where zero-deductible plan design enters the conversation — not as a feel-good benefit upgrade, but as a structural response to an enrollment risk. When new enrollees join a plan with a high deductible, they defer care. Deferred care becomes expensive care. Expensive care becomes next year's renewal increase. The design of the plan itself shapes the claims trajectory of a population that just arrived.

A zero-deductible structure, with the same carrier your employees already use — no disruption, no network swap, no re-enrollment chaos — removes the deferral behavior from the equation. Cardwell clients have seen average premium savings of around 20% through this kind of structural redesign. The savings come from the plan design, not from switching carriers or cutting benefits. That distinction matters when you're about to absorb an enrollment population you didn't budget for.

What we'd tell a client this week

The time to model a population-shift scenario is before your carrier does it for you — quietly, in an actuarial spreadsheet you'll never see. The 2026 renewal window is the last clean opportunity to audit your funding structure and your plan design before January 2027 makes this theoretical problem a real one. If you're fully insured and you haven't had a conversation about what your plan design does to newly enrolled, previously Medicaid-covered employees, that conversation is overdue. Book the discovery call. We'll start with the structure.