The federal-state collaboration has become the nation's largest health insurance program.
States can also require alternatives to work, including volunteering, caregiving, education, job training and even treatment for a substance abuse problem.
Seema Verma, the administrator of the Centers for Medicare & Medicaid Services (CMS), said the policy change is an effort to give states more flexibility.
"This is about helping people rise out of poverty", Verma said Thursday in a conference call with reporters.
As of October 2017, almost 75m individuals were enrolled in Medicaid and the children's health insurance program (Chip).
The federal guidelines say the administration would consider work requirements for "able-bodied, working-age" Medicaid recipients.
However, the Obama administration did not approve any state waivers that would impose work mandates, saying it was not in keeping with the program's mission to provide access to medical services.
Ten states have applied for a federal waiver to add a work requirement - Arizona, Arkansas, Indiana, Kansas, Kentucky, Maine, New Hampshire, North Carolina, Utah and Wisconsin. Advocates for low-income people say they expect Kentucky's waiver to be approved shortly. Gov. Matt Bevin, a Republican, first sought to add such a provision in 2016. The requests prompted CMS to issue today's guidance about how to obtain federal approval for waivers imposing work requirements on "able-bodied" adults.
In Kentucky, which expanded Medicaid, Republican state Sen.
In a statement released this afternoon, Baker's office said it "does not support applying work requirements to the MassHealth program".
-Exempting pregnant women, disabled people and the elderly. So are the more than 10 million people on Medicaid because they have a disability.
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The guidance represents a fundamental and much-disputed recalibration of the compact between the government and poor Americans for whom Medicaid coverage provides a crucial pathway to health care.
Still, critics fear a work requirement could have a chilling effect on people signing up for Medicaid or make it harder for people to get coverage.
"The state has little evidence for why the current Gateway to Work program would fare better if mandatory", wrote Jon Laramore, executive director of Indiana Legal Services. Sharon Hewitt, a Slidell Republican, proposed the idea previous year, but it went nowhere amid worries raised by the state health department and others about forcing people off Medicaid rolls.
Walthall said she expects CMS to give IN full approval of its application, which would allow HIP to continue for another three years.
But work requirements have strong public backing.
Sixty percent of Medicaid's non-elderly adults already work, according to a recent analysis of census data by the Kaiser Family Foundation.
But congressional Democrats said the Trump administration is moving in the wrong direction. The failed efforts in the House to replace Obamacare included a work requirement for Medicaid.
States will be required to describe strategies that assist individuals in looking for work and what the state will do to connect Medicaid enrollees to employment or community programs.
"This new guidance paves the way for states to demonstrate how their ideas will improve the health of Medicaid beneficiaries, as well as potentially improve their economic well-being", said Brian Neale, CMS Deputy Administrator and Director for the Center for Medicaid and CHIP Services.
"People who participate in activities that increase their education and training are more likely to find sustainable employment, have higher earnings [and] a better quality of life", Verma said.
"Our policy guidance was in response to states that asked us for the flexibility they need to improve their programs and to help people in achieving greater well-being and self-sufficiency", Verma said. "Believing that community engagement requirements do not support or promote the objectives of Medicaid is a tragic example of the soft bigotry of low expectations consistently espoused by the prior administration".