When New Jersey Human Services Commissioner Sarah Adelman testified before the state legislature in late 2025, she offered a number that reframed the entire work requirement debate for the Garden State. Up to 300,000 New Jerseyans could lose Medicaid coverage or fail to obtain it due to what she called “bureaucratic barriers” created by H.R.1. Of those, approximately 50,000 would lose coverage specifically because of work requirement documentation failures. The distinction mattered. Adelman was not arguing that 300,000 people would fail to work. She was arguing that the administrative machinery of compliance would overwhelm a population that, by and large, already did.
The data supported her framing. Seventy-one percent of New Jersey’s Medicaid expansion adults were already employed: 43 percent working full-time and 28 percent working part-time. The state’s $15.49 minimum wage, among the highest in the nation, meant that many part-time workers earning above the poverty line nonetheless qualified for Medicaid at 138 percent of federal poverty. These were home health aides in Bergen County, warehouse workers along the Turnpike corridor, restaurant staff in the Shore towns, childcare workers in Camden. They worked. They just did not carry the documentation that a federal compliance system would demand.
New Jersey enters work requirement implementation as a state where the gap between actual work and documented work is the central policy challenge. Unlike states where large populations genuinely face employment barriers, New Jersey’s problem is mechanical: how to verify what is already happening without creating a documentation burden that causes people who are compliant in fact to become non-compliant on paper.
Expansion and Its Reach#
New Jersey expanded Medicaid in 2013 under Republican Governor Chris Christie, who accepted the expansion while declining to establish a state health insurance exchange. The decision was pragmatic rather than ideological: New Jersey’s hospitals carried enormous uncompensated care burdens, and expansion offered federal funding to address them. Democratic Governor Phil Murphy, who took office in 2018, embraced expansion more enthusiastically, investing in enrollment outreach and extending coverage to additional populations.
Current expansion enrollment stands at approximately 550,000 to 568,000 adults, served through NJ FamilyCare, the state’s Medicaid program. New Jersey’s relatively compact geography, dense population, and robust healthcare infrastructure create conditions more favorable to compliance than most states. No resident lives more than 30 miles from a major medical center. The state’s 21 County Welfare Agencies, known as County Boards of Social Services, administer eligibility determinations with varying efficiency but within a geographic footprint that makes physical access less burdensome than in sprawling rural states.
But New Jersey’s advantages are relative, not absolute. The state’s cost of living, among the highest in the country, means that Medicaid-eligible populations face housing, transportation, and childcare costs that consume income and create instability even among the employed. A home health aide earning $16 per hour in Passaic County who works 35 hours per week grosses $29,120 annually, well within Medicaid eligibility, while spending 45 percent of that income on rent. The financial precariousness of New Jersey’s working poor means that any disruption, a missed shift, a childcare crisis, a documentation deadline, can cascade into coverage loss that compounds existing instability.
H.R.1 and Federal Requirements#
H.R.1 requires 80 hours monthly of work, education, job training, job search, community service, or caregiving for expansion adults aged 19 to 64. New Jersey must verify compliance at application and semi-annual redetermination. CMS issued initial guidance on December 8, 2025, with detailed regulations expected by June 1, 2026. The compliance deadline is December 31, 2026, with good-faith extensions available through December 31, 2028.
Exemptions cover pregnancy through 60 days postpartum, medical frailty, disability, full-time students, caregivers of dependents under 14 or incapacitated individuals, unemployment benefit recipients, and substance use disorder treatment participants. The mandatory outreach period from June 30 through August 31, 2026, requires New Jersey to communicate requirements to its expansion population before enforcement begins.
New Jersey faces additional H.R.1 provisions beyond work requirements that compound its implementation challenge. Citizenship verification restrictions, effective October 2026, are projected to cause 15,000 to 25,000 immigrants to lose coverage. The emergency Medicaid federal matching rate drops from 90 percent to 50 percent in October 2026, costing the state an estimated $446 million annually. And proposed changes to provider tax structures, where New Jersey is considering reducing its rate from 2.95 percent to 2.5 percent while eliminating the $350,000 cap, add fiscal uncertainty for hospitals and health systems already calculating work requirement exposure.
The County System#
New Jersey’s 21 County Boards of Social Services handle Medicaid eligibility with significant variation in capacity, technology adoption, and processing speed. Unlike Virginia’s 120 local agencies, New Jersey’s county structure provides somewhat more manageable administrative geography. But county-level variation is real. Essex County, serving Newark and its surrounding communities, processes a volume of applications that dwarfs rural counties like Salem or Hunterdon. Bergen County’s relatively affluent population generates fewer applications but more complex verification scenarios involving multiple income sources and self-employment.
The state’s eligibility technology, the New Jersey Eligibility and Benefits Integrated System, handles current determinations but was not designed for ongoing work activity verification. Adding semi-annual work requirement compliance checking to existing annual redetermination processes doubles the eligibility workflow for expansion adults. The Department of Human Services has indicated that system upgrades are in progress, but the timeline for deployment remains unclear.
Commissioner Adelman’s 300,000 coverage loss estimate implicitly accounts for the county system’s capacity constraints. When the bureaucratic infrastructure cannot process compliance documentation at the speed the law demands, the system’s default is coverage termination. People who miss deadlines, submit incomplete documentation, or cannot reach county offices during business hours lose coverage not because they are not working but because they could not prove it within the system’s parameters.
The Working Poor Profile#
New Jersey’s expansion population differs from the national profile in ways that matter for work requirement implementation. The state’s labor market, driven by healthcare, logistics, retail, and hospitality, employs a large share of Medicaid-eligible adults in jobs that provide hours but not necessarily the documentation infrastructure that compliance systems assume.
Warehouse and logistics workers along the Interstate 95 and New Jersey Turnpike corridors often work through temporary staffing agencies, which may provide pay stubs but create confusion about employer-of-record documentation. A worker dispatched by a Secaucus staffing agency to a Cranbury distribution center works for one entity but is paid by another, and the wage records in the state’s labor database may reflect the staffing agency, the client company, or both, depending on reporting practices.
Home health aides represent one of New Jersey’s fastest-growing occupations and one of the most Medicaid-dependent. Many work for multiple agencies simultaneously, combining hours across clients to reach full-time status. Verifying 80 hours per month across three employers, each with different pay periods and reporting formats, is straightforward in concept but difficult in execution, particularly for workers who are already managing the logistics of traveling between clients across multiple counties.
The gig economy adds another layer. New Jersey’s proximity to New York City and Philadelphia creates a large population of workers who drive for ride-share services, deliver food, or perform freelance work that does not generate traditional wage records. The state’s ABC test for worker classification, among the strictest in the nation, theoretically limits misclassification, but enforcement varies, and many gig workers remain classified as independent contractors whose earnings appear in tax records but not in the quarterly wage data that automated verification systems access.
The Opioid Dimension#
New Jersey’s opioid crisis has been among the most severe in the nation, with overdose death rates consistently ranking in the top five states. Medicaid expansion significantly increased access to medication-assisted treatment, and the state invested heavily in treatment infrastructure during the Murphy administration. Approximately 85,000 Medicaid enrollees receive some form of substance use disorder treatment.
H.R.1 exempts individuals in SUD treatment from work requirements, which should theoretically protect this population. But the exemption requires documentation of active treatment participation, which means people must be enrolled in and attending treatment programs to qualify. The gap between needing treatment and being in treatment is where coverage losses occur. A person struggling with opioid use disorder who has not yet entered treatment does not qualify for the SUD exemption and must meet work requirements that their condition makes difficult to sustain.
New Jersey’s treatment infrastructure, while better developed than many states, operates at or near capacity in urban areas. Wait times for medication-assisted treatment programs in Newark, Camden, and Paterson can extend weeks. During that waiting period, the person is neither exempt as a treatment participant nor able to reliably work 80 hours per month. The interaction between treatment access, exemption eligibility, and work requirement timelines creates a documentation trap specific to populations in the earliest and most vulnerable stages of recovery.
The MCO Landscape#
NJ FamilyCare contracts with five MCOs: Aetna Better Health, Fidelis Care (a Centene subsidiary), Horizon NJ Health, UnitedHealthcare Community Plan, and WellPoint (formerly Amerigroup). Horizon NJ Health holds the largest market share, reflecting the dominant position of Horizon Blue Cross Blue Shield in the state’s commercial insurance market. Fidelis Care, acquired by Centene through the Centene-Fidelis transaction, brings national Medicaid managed care operational experience.
New Jersey’s MCO market is relatively consolidated and well-capitalized compared to states with more fragmented managed care landscapes. This consolidation provides operational advantages for work requirement implementation. Fewer plans mean fewer interfaces with the state eligibility system, more standardized member communication, and larger care coordination teams per plan. Horizon’s extensive provider network and brand recognition in New Jersey give it particular capacity for member outreach.
Financial exposure from coverage losses will be significant across all five plans. If 50,000 expansion adults lose coverage due to documentation failure, as Adelman projected, each MCO faces member losses proportional to market share. More consequentially, risk pool composition shifts as healthier members who fail documentation requirements exit while sicker members who qualify for medical exemptions remain. This adverse selection dynamic degrades risk adjustment scores over time and compresses margins even on retained members.
Political Context#
New Jersey’s political landscape provides strong opposition to work requirements but limited tools to prevent implementation. Governor Murphy, who served through January 2026, was succeeded by a governor inheriting a federal mandate that state-level politics cannot override. The state legislature, controlled by Democrats, has limited ability to soften implementation beyond the discretion H.R.1 provides.
Commissioner Adelman’s public framing of coverage losses as a “bureaucratic barrier” problem rather than a work participation problem reflects the state’s political positioning: compliance with federal law while documenting the harm it causes. This approach positions New Jersey to pursue legal challenges if implementation data reveals discriminatory impact, to advocate for federal regulatory flexibility during the CMS rulemaking process, and to build a factual record that supports future legislative modification.
The state’s congressional delegation, predominantly Democratic, has been vocal in opposing work requirements. But opposition at the federal level has not produced legislative alternatives, and the reconciliation process that produced H.R.1 is not easily reversed through normal legislative procedure.
What New Jersey Will Likely Do#
New Jersey will implement work requirements with maximum investment in automated verification and administrative streamlining designed to minimize documentation burden on a population that largely already works. The state’s compact geography, relatively consolidated MCO landscape, and existing technology infrastructure provide advantages that most states lack.
Specific approaches will likely include aggressive use of Department of Labor wage data matching to auto-verify employment for workers in formal payroll systems, broad interpretation of exemption categories to shelter populations with complex circumstances, investment in county-level staffing and technology to reduce processing variation, and targeted outreach to populations whose employment patterns, such as gig workers, home health aides, and temporary staffing employees, resist standard verification.
The 71 percent already-working figure will be central to New Jersey’s implementation messaging. If the state can auto-verify employment for even 60 percent of expansion adults through wage data matching, the active documentation burden falls on a much smaller population, reducing both administrative cost and coverage loss risk.
Coverage losses will occur disproportionately among populations at the margins of the documentation system: gig workers, people in informal employment, individuals transitioning between jobs, and those whose exemption status requires active documentation. Commissioner Adelman’s projection of 50,000 work-requirement-specific losses may prove conservative or generous depending on how effectively automated verification covers the working population and how generously exemptions are interpreted.
New Jersey’s experience will be closely watched as a test case for whether a high-capacity, politically opposed state can implement work requirements in ways that minimize harm while complying with federal law. The answer will depend less on political will, which favors accommodation, than on whether administrative systems can be built fast enough to match the compliance timeline federal law imposes.