Medicaid & Work: Most Adult Workers Lack Access to Job-Based Health Insurance

The passage of the “One Huge, Beautiful Bill” reconciliation law in July 2025 has brought renewed attention to the intersection of Medicaid coverage and employment, particularly regarding access to health insurance through jobs. Whereas the new law introduces perform requirements for some Medicaid enrollees, a closer look reveals that most adults subject to these requirements are already working, and often face significant barriers to obtaining employer-sponsored health coverage. Understanding these dynamics is crucial as policymakers assess the potential impact of the new rules on coverage rates and access to care.

Limited Access to Employer-Sponsored Insurance

Employer-sponsored insurance remains the primary source of health coverage for working-age adults in the United States. However, access to these plans is far from universal, especially for those in lower-wage jobs, certain industries, part-time positions, or those employed by smaller firms. The KFF 2025 Employer Health Benefits Survey highlights these disparities, showing that many employers – both little and large – recognize the important role Medicaid plays in providing healthcare access to their employees.

Data from the 2025 Current Population Survey Annual Social and Economic Supplement (CPS ASEC) underscores this point. The analysis focuses on adult Medicaid workers aged 19 to 64 in states that have adopted Medicaid expansion (or a partial expansion, like Wisconsin) – the populations most directly affected by the new work requirements. It excludes self-employed individuals, those enrolled in Medicare, and those receiving disability-related benefits, providing a focused view of the working population relying on Medicaid.

The data reveals that nearly two-thirds (65%) of Medicaid adult workers in expansion states and Wisconsin either work for an employer that doesn’t offer health coverage at all (52%) or are not eligible for the coverage offered (13%). This contrasts sharply with non-Medicaid covered workers in the same states, where only 21% face similar barriers to employer-sponsored insurance.

Affordability and Hours Worked as Key Barriers

Even when job-based insurance is offered, it isn’t always accessible. About a quarter (26%) of adult Medicaid workers decline coverage when eligible, compared to 17% of those not covered by Medicaid. A significant reason is affordability. Many workers who are eligible for job-based insurance uncover the costs prohibitive, with Medicaid often providing a more affordable – and sometimes more comprehensive – alternative.

The issue of affordability is particularly acute for those in lower-wage jobs. Workers at firms where a substantial portion of employees (at least 35%) earn $37,000 or less annually face higher average premium contributions for both family and single coverage compared to those at firms with fewer low-wage workers (31% vs 26% for family coverage and 19% vs 16% for single coverage). This means low-income families with access to job-based insurance may still spend a larger share of their income on healthcare costs overall.

Hours worked also play a critical role. Approximately one-third (32%) of adult Medicaid workers are employed part-time. Among these part-time workers, only 21% are eligible for coverage from their employer, compared to 42% of full-time workers. This disparity stems from the Affordable Care Act’s shared responsibility mandate, which requires employers with at least 50 full-time equivalent employees to offer minimum essential coverage to employees working an average of at least 30 hours per week. Many firms offering health benefits do not extend them to part-time staff.

Industry-Specific Disparities in Coverage Eligibility

Eligibility for job-based insurance varies significantly across industries. While 56% of adult Medicaid workers in the mining industry are eligible for employer-sponsored coverage, that figure drops to just 20% in the agricultural and forestry industry. A substantial portion of Medicaid adult workers (23%) are employed in the educational and health services sector, where 41% are eligible for employer-based insurance. Conversely, only 22% of those working in the leisure and hospitality industry are eligible.

Reasons for Ineligibility and Medicaid’s Role as Wrap-Around Coverage

Among Medicaid adult workers who are offered insurance by their employer but are not eligible, the most common reason is insufficient hours worked (69%). Other reasons include not having worked for the employer long enough (13%) or being employed through a contract or temporary agency that isn’t covered by the employer’s health plan (5%).

For the roughly 9% of adult Medicaid workers who are covered by both Medicaid and their employer’s plan, Medicaid often serves as a supplemental “wrap-around” coverage, helping to cover premiums, cost-sharing, and benefits not included in the employer plan.

Implications of New Work Requirements

The new work requirements included in the 2025 reconciliation law, also known as the “One Big, Beautiful Bill” Act (P.L. 119-21), are unlikely to substantially increase employment or reduce reliance on Medicaid. Most adults subject to the requirements are already working or face significant barriers to employment. Given the limited availability and eligibility for job-based coverage among low-wage workers, the requirements are not expected to significantly shift coverage to employer-sponsored plans. However, they will likely lead to reduced Medicaid enrollment, as some working enrollees may struggle to verify their work status.

Lawmakers are already considering legislation to reverse the Medicaid cuts and expand Medicare benefits, including repealing the work requirements. The “Produce Billionaires Pay Their Fair Share Act” aims to restore the expired Medicaid expansion funding and address the tightened eligibility rules.

Looking Ahead

The ongoing debate surrounding Medicaid work requirements and access to job-based insurance highlights the complex interplay between employment, healthcare coverage, and economic security. Continued monitoring of enrollment trends, employment rates among Medicaid enrollees, and the availability of affordable employer-sponsored insurance will be crucial for informing future policy decisions. Further research is needed to fully understand the long-term impacts of the 2025 reconciliation law and to identify strategies for ensuring that all working adults have access to affordable, comprehensive healthcare coverage.