New Mexico expects 89,000 people to lose Medicaid under new work rules

Since Aug. 31, New Mexico’s Health Care Authority has been mailing a turquoise envelope to about 230,000 people on Medicaid. Inside is a notice about a rule that starts Jan. 1, 2027: work, volunteer or go to school 80 hours a month, or risk losing coverage.

The agency has already run the numbers on what that rule will do to its own program. At an Aug. 31 press conference, it put a figure on how many of those 230,000 people it expects to actually lose Medicaid because of the work rule alone: about 89,000, more than a third of everyone the rule reaches.

The state is careful to call that a projection, not a count of anyone who has lost coverage yet. Those 230,000 people are only a slice of a much bigger program: New Mexico’s Medicaid rolls held 825,287 people as of July.

New Mexico didn’t write this rule

It’s in H.R. 1, the federal reconciliation law that became Public Law 119-21 on July 4, 2025, and the state has to carry it out on the federal government’s timeline, not its own.

Starting Jan. 1, most Medicaid enrollees ages 19 to 64 who qualified through the state’s 2014 expansion of the program will need to log 80 hours a month of work, school at least half-time, job training or volunteering, and show it at their next renewal. Having a monthly income of at least $580 counts too. Anyone applying for Medicaid for the first time after Jan. 1 will need to show the same 80 hours from the month before they apply.

Miss it, and the state sends a 30-day notice asking for proof of the hours or of an exemption. Miss that, and Medicaid ends.

The exemption list is long

HCA exempts:

• American Indian or Alaska Native members, who also keep the old 12-month renewal
• Parents or caregivers of a child 13 or younger
• Former foster youth ages 18 to 25
• Veterans with a 100% VA disability rating
• People the state determines are medically frail
• Pregnant or postpartum members
• People in jail, prison or a drug or alcohol treatment program

How members prove an exemption varies. American Indian or Alaska Native status is taken on the member’s word alone. For the medically frail exemption, HCA checks its own past claims first and only asks the member to say so if those records don’t already show it.

Three more cuts, same law

The work rule isn’t the only change H.R. 1 makes to New Mexico Medicaid. The state has projections for three others, too.

Renewal periods for anyone covered by the work rule shrink from every 12 months to every 6, starting the same day. Retroactive coverage, which pays medical bills from before someone applied, drops from up to three months to just one for most working-age adults, and to two months for people 65 and older or with a disability.

The immigration change lands earliest, on Oct. 1: some lawfully present immigrants, including refugees, asylees and trafficking victims, lose federal Medicaid eligibility unless they’re pregnant. New Mexico built its own state-funded program to catch most of that group, but they have to act on a letter from BeWell New Mexico, the state’s insurance marketplace, to actually enroll in it.

Renewal notices start going out in January

The Sept. 23 session HCA announced has already happened; a recording is posted on the agency’s Medicaid Changes page. Two more virtual sessions are scheduled, Oct. 16 and Dec. 8.

The renewal notices that actually enforce the work rule don’t go out until January, and the first ones cover people with a March 2027 renewal date. That gives New Mexicans on Medicaid a few months to find 80 hours a month of something that counts, or the paperwork proving they don’t have to.