Credit: (AP Photo/Mel Evans)

Editor’s note: This story has been updated to include new details from state health officials, whose estimate of the number of New Jersey residents has not increased in recent months. Though about 540,000 Medicaid recipients will be subject to new work requirements, the state estimates approximately 350,000 could ultimately lose coverage while others will qualify for exemptions.

WASHINGTON — More than a half-million New Jersey residents are at risk of losing health insurance due to a federal law set to take effect in January, state health officials said, though a significant portion will qualify for exemptions from the law’s requirements.

A law passed by the Republican-majority Congress in summer 2025 requires people to prove that they work, volunteer or are in school for at least 80 hours per month if they are to use Medicaid, the federal health insurance system for low-income adults and children, plus the disabled.

The “community engagement” component — more commonly called work requirements — will apply to more than 540,000 adults in New Jersey who receive medical services through Medicaid, the New Jersey Department of Human Services said Monday. That number may surge higher if the Centers for Medicare & Medicaid Services finalize a pending rule to narrow the work requirement exemptions under the law, which starts Jan. 1.

“I’ve advocated for repeal of the law that imposes these community engagement requirements, but we will follow the law and New Jersey is committed to implementing federal requirements with fidelity while doing everything possible to ensure eligible residents maintain the health coverage they depend on,” Human Services Commissioner Stephen Cha said in a statement.

Medicaid, a federal program, is implemented by the states, and in New Jersey it is known as NJ FamilyCare. The program covers more than 1.85 million people in the state.

The department’s figures are the latest estimate of how New Jersey government and residents will be affected by President Trump’s signature policy of his second term, a tax bill that will cut health services and food benefits to America’s neediest.

State officials estimated in July 2025 that the law could force about 350,000 people out of coverage. “The safety net will get a little bit weaker,” Greg Woods, assistant commissioner of the state Division of Medical Assistance and Health Services, said at the time. That number remains state health officials’ latest estimate, though it could change with new requirements from the Trump administration.

$3.4 trillion cost

The Congressional Budget Office, a nonpartisan economic scorekeeper, estimated the law will cost $3.4 trillion through 2034, a figure that could grow with borrowing costs. An estimated $100 million in costs, shouldered by the federal government, were shifted to state taxpayers on July 1, the start of the state budget period, due to the federal law, according to budget documents from Gov. Mikie Sherrill’s office. Sherrill, a Democrat, voted last year as a member of Congress against the bill before it became law.

New Jersey in July started taxing private companies that have large numbers of workers enrolled in Medicaid. The levied fee can be as much as $725 per employee. The state anticipates $145 million in revenue from that source.

The changes to Medicaid under Trump are estimated to affect 18.5 million adults nationwide, according to the Commonwealth Fund, a private foundation that supports health policy research.

Parts of the law are in effect, including a work-requirement provision that went into effect in December to make it more difficult for people to buy groceries through the Supplemental Nutrition Assistance Program, formerly known as food stamps. That program serves about 850,000 New Jerseyans.

Republicans chose to delay the biggest cuts of their law — the roughly $1 trillion in national Medicaid cuts — until after the midterm elections in November.

In a May estimate, the Department of Human Services said the law will remove 10,000 to 30,000 enrollees in the state’s Medicaid system within the current state budget cycle, which began July 1. Through the three following budget periods, New Jersey could see 165,000 to 330,000 enrollees lose coverage.

Overall, the department estimated the law will cost New Jersey $2.6 billion annually.

Adults age 19-64

Medicaid work requirements under the law will apply to non-pregnant adults age 19-64, with some exceptions. The majority of adults enrolled Medicaid are already working, are in school or area full-time caregivers, often for a family member.

About two-thirds of workers enrolled in federal assistance programs like Medicaid or SNAP work full time, according to a study by the Government Accountability Office, the nonpartisan research arm of Congress. The GAO analysis used Census Bureau data, along with work data from 11 states, for its report, released in July.

In public comments, the Department of Human Services said more people could be blocked from Medicaid because of changes atop the federal law, including a new definition of “medical frailty” and paperwork requirements called “more stringent,” starting in 2028.

In its rule, the Centers for Medicare & Medicaid Services require exemptions for people who “cannot work, rather than the broader statutory category of individuals who are medically frail,” the New Jersey Association of Mental Health and Addition Agencies said.

“Many people in recovery from substance use disorder or living with serious mental illness can sustain employment specifically because they have Medicaid coverage that supports ongoing treatment, medication, and case management,” the association wrote in July comments, opposing the federal rule.

Under the rule the Trump administration proposed, the group said, “these individuals risk losing their exemption and, in turn, the coverage that makes their stability and employment possible in the first place. This creates a perverse incentive that punishes treatment success and increases the likelihood of relapse, disengagement from care, and preventable hospitalization or overdose.”

That rule could remove eligible citizens, according to Céline Fortin and Connor Griffin, respectively the executive director and director of health care advocacy for the Arc of New Jersey, an advocacy group for people with intellectual and developmental disabilities.

“We are deeply concerned that the new rule will harm people with disabilities and their caregivers. The rule uses a narrow definition of ‘medically frail’ that leaves more people out,” they wrote to the Centers on July 9. “In other states that tried similar rules, many people who lost Medicaid were actually eligible.”

State attorneys general, including Jennifer Davenport of New Jersey, sued to challenge portions of the proposed rule. That lawsuit is pending in a federal court in Massachusetts.