Generic Supporting Statement

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Generic Supporting Statement
Medicaid Community Engagement — 
Short-term Hardship Exception Requests
CMS-10398 #101, OMB 0938-1148

Notes: This is a new collection of information request.

The contents of this Supporting Statement and the associated attachments have been reviewed to ensure that they are consistent with the Trump administration’s policies, goals, and objectives.

    A. Background

The Centers for Medicare & Medicaid Services (CMS) work in partnership with States to implement Medicaid and the Children’s Health Insurance Program (CHIP). Together these programs provide health coverage to millions of Americans. Medicaid and CHIP are based in Federal statute, associated regulations and policy guidance, and the approved State plan documents that serve as a contract between CMS and States about how Medicaid and CHIP will be operated in that State. CMS works collaboratively with States in the ongoing management of programs and policies.

The interim final rule implementing section 71119 of the Working Families Tax Cut (WFTC) legislation (P.L. 119-21) adds section 1902(xx) to the Social Security Act (the Act) and requires States to establish and administer “community engagement” requirements for certain Medicaid eligibility groups. As part of implementation, 42 CFR 435.555 addresses a State option to deem an individual to have demonstrated community engagement for a month when the individual experiences any one of the “short-term hardship” events described in section 1902(xx)(3)(B)(ii) of the Act, under procedures established by the State.

Generally, these circumstances are as follows: an individual receives for all or part of a month certain hospital or institutional services (or other services of ‘similar acuity’ as the Secretary determines appropriate); an individual resides in a county or equivalent unit of local government in which there has been declared by the President a federal emergency or disaster, or, subject to a request by the State, in which the unemployment rate is equal to or greater than a particular threshold; or the individual or the individual’s dependent must travel outside of their community for an extended period of time for treatment of a serious or complex medical condition.”

Another short-term hardship circumstance is unemployment-related and is contingent on a State first making a request to CMS. The unemployment-related short-term hardship exists when the unemployment rate in a county (or equivalent unit of local government) is at or above either 8 percent or 1.5 times the national unemployment rate. The burden related to this short-term hardship exception is born by the State. 

Additionally, a beneficiary may submit a hardship exception request associated with certain specified medical services and activities that prevent them from meeting community engagement requirements.

Section 1902(xx)(3)(B)(i) of the Act and § 435.555(c) direct that determinations of short-term hardship be made under procedures established by the State. States electing to allow short-term hardship exceptions will be required to establish and document processes and procedures and make any corresponding technical edits to relevant systems (e.g., eligibility and enrollment systems) necessary to effectuate short-term hardship exceptions described at § 435.555(d). Required processes and procedures include the method and timeframe by which an applicable individual or an individual acting on behalf of the applicable individual may request a short-term hardship exception under § 435.555(d)(1) and (4) and the timely process by which the State will determine whether such requests will be granted.

In addition, States electing the short-term hardship exception must notify applicable individuals of the method by which a short-term hardship exception may be requested (for certain hardship circumstances such as institutional/hospital services or travel outside the community for treatment of a serious or complex medical condition), and beneficiaries may submit requests to the State. As directed by § 435.555(c)(1), States electing the option for short-term hardship requests must provide notice informing applicable individuals that the State offers short-term hardship exceptions available under the circumstances described in § 435.555(d)(2) and (3), and the method by which such exceptions may be requested. Separately, § 435.555(c)(2) directs States to provide notice informing applicable individuals of short-term hardship exceptions available under the circumstances described in § 435.555(d)(1) and (4). Beneficiaries may submit requests to the State for hardship circumstances such as institutional or hospital services or travel outside the community for treatment of a serious or complex medical condition.

B. Description of Information Collection

This collection of information covers activities associated with short-term hardship exception requests under § 435.555. Given uncertainty at this time and to be conservative, CMS assumes that all 44 jurisdictions subject to community engagement requirements will elect to make short-term hardship exceptions available under the circumstances described in section 1902(xx)(3)(B)(ii) of the Act and § 435.555(d). This collection therefore includes: (1) one-time State activities to establish and document processes and procedures and make associated technical changes to State systems; (2) one-time State activities to develop short-term hardship exception notices and update operational workflows; (3) initial mailing of required notices, including labor and ancillary non-labor costs; (4) ongoing annual maintenance of notice templates, workflows, and associated technical changes; (5) ongoing annual mailing of updated notices, including labor and ancillary non-labor costs; (6) State requests to CMS related to emergency or disaster declarations under § 435.555(d)(2); (7) State requests to CMS related to unemployment-based short-term hardship exceptions under § 435.555(d)(3); and (8) beneficiary short-term hardship exception requests to States under § 435.555(d)(1) and (4).
 
For emergency or disaster-related exceptions, the exception codified at § 435.555(d)(2) exists when an emergency or disaster is declared by the President pursuant to the National Emergencies Act or the Robert T. Stafford Disaster and Emergency Assistance Act. For emergencies declared pursuant to the National Emergencies Act, States must submit a request to CMS identifying their inclusion in the scope of the emergency, how the emergency affects the ability of applicable individuals to demonstrate community engagement, whether the effect applies in a particular county, multiple counties, or statewide, and the anticipated duration of the effect. For Stafford Act-related declarations, States must submit a request if they seek an extension of the exception beyond the duration described at § 435.555(d)(2)(ii).

For unemployment-related short-term hardship requests, States must assess county-level or equivalent local economic conditions and compile supporting documentation for submission to CMS. Based on an analysis of 2024 county-level unemployment statistics, and using BLS’ 2024 average unemployment rate of 4.0 percent, CMS assumes that around 23 applicable States will have at least one county that could be eligible for an unemployment-related short-term hardship exception. Not all potentially eligible States will request such an exception, whereas some States with multiple qualifying counties may submit more than one request. In total, CMS estimates 40 unemployment-related short-term hardship exception requests annually across 20 State respondents.

For short-term hardship exceptions related to circumstances in which the individual alleges hardship due to the receipt of institutional or hospital services or other services, or in cases in which an individual alleges he or she (or a dependent) must travel outside of the individual’s community for treatment of a medical condition, applicable individuals or individuals acting on their behalf must document and submit a short-term hardship exception request to the State using the method established by the State.

For other short-term hardship circumstances, such as receipt of institutional or hospital services or other services, or travel outside the community to obtain treatment for a medical condition, applicable individuals or individuals acting on their behalf must document and submit a request to the State using the method established by the State.

C. Deviations from Generic Request

No deviations are requested.

D. Burden Hour Deduction

Wage Data

State Wage Data  To derive average costs, we used data from the U.S. Bureau of Labor Statistics’ May 2025 National Occupational Employment and Wage Estimates for all salary estimates (https://www.bls.gov/oes/tables.htm). In this regard, the following table presents BLS’ mean hourly wage, our estimated cost of fringe benefits and other indirect costs (calculated at 100 percent of salary), and our adjusted hourly wage.

BLS’s wage estimates are updated annually. Current and historic wage figures can be found at the BLS address cited above. May 2025 is current as of the date of this collection of information request.

Occupation Title
Occupation Code
Mean Hourly Wage ($/hr)
Fringe Benefits and Other Indirect Costs ($/hr)
Adjusted Hourly Wage ($/hr)
Business and Financial Operations Occupations
13-0000
45.78
45.78
91.56
Business Operations Specialists  
13-1000
44.63
44.63
89.26
Computer Programmers
15-1251
50.56
50.56
101.12
General and Operations Manager  
11-1021
64.87
64.87
129.74
Mail Clerks and Mail Machine Operators, Except Postal Service 
43-9051
20.03
20.03
40.06

As indicated, we are adjusting our employee hourly wage estimates by a factor of 100 percent. This is necessarily a rough adjustment, both because fringe benefits and other indirect costs vary significantly from employer to employer, and because methods of estimating these costs vary widely from study to study. Nonetheless, we believe that doubling the hourly wage to estimate total cost is a reasonably accurate estimation method.

Beneficiary Wage Data  
To calculate the costs for beneficiaries undertaking administrative and other tasks on their own time we use the opportunity cost of time.  Following the White House Council of Economic Advisers (2019) , we estimate the gap between the marginal product of labor (MPL) and the opportunity cost of time as 48 percent of the MPL.  That is, we use an opportunity cost of time of $12.92 per hour (= $24.84*(1-0.48)).  We adopt this as our estimate of the hourly value of time for changes in time use for unpaid activities.  Unlike our State and private sector wage adjustments, we are not adjusting beneficiary costs for fringe benefits and other indirect costs since the individuals' activities, if any, would occur outside the scope of their employment.

Collection of Information Requirements and Associated Burden

For Medicaid, all States receive a 50 percent Federal matching rate for most administration expenditures.  States also receive higher Federal matching rates of 90 percent for design, development, and implementation of and 75 percent for operations and maintenance of Medicaid IT systems.  After taking into account the Federal contribution to the costs of administering the Medicaid programs for purposes of estimating State burden for collection of information, we are estimating that States will contribute 25 percent of the costs for Medicaid IT system updates and 50 percent of all other costs, even though the burden will likely be smaller. 

Establishing and Documenting Short-Term Hardship Exception Processes and Procedures  
For State activities associated with establishing and documenting short-term hardship exception processes and procedures, CMS estimates that each jurisdiction will require 116 hours to complete this one-time effort. Of the 116 hours, we estimate that each jurisdiction will require 80 hours at $91.56/hr for a Business and Financial Operations analyst, 32 hours at $101.12/hr for a Computer Programmer, and 4 hours at $129.74/hr for a General and Operations Manager to review. 

Across 44 jurisdictions we estimate a one-time burden of 5,104 hours (44 jurisdictions x 116 hr/response) at a cost of $487,502 (44 jurisdictions x [(80 hr x $91.56/hr) + (32 hr x $101.12/hr) + (4 hr x $129.74/hr)]). Accounting for the Federal administrative match of 75 percent, the requirement will cost States $121,876 ($487,502 x 0.25). 

Developing Short-Term Hardship Exception Notices and Updating Related Workflows and Systems  For State activities associated with developing short-term hardship exception notices and updating related workflows and systems, CMS estimates that each jurisdiction will require 112 hours to complete this one-time effort. Of the 112 hours, we  estimate that each jurisdiction will require 80 hours at $89.26/hr for a Business Operations Specialist to develop or update the notice templates and associated workflows, 24 hours at $101.12/hr for a Computer Programmer to implement the technical changes required to generate electronic notices, and 8 hours at $129.74/hr for a General and Operations Manager to review. 

Across 44 jurisdictions, we estimate  a  one-time burden of 4,928 hours (44 jurisdictions x 112 hr/response) at a cost of $466,646 (44 jurisdictions x [(80 hr x $89.26/hr) + (24 hr x $101.12/hr) + (8 hr x $129.74/hr)]). Accounting for the Federal administrative match of 75 percent, the requirement will cost States $116,662 ($466,646 x 0.25).

Short-Term Hardship Exception Notices  For the initial mailing of short-term hardship exception notices, CMS estimates that each mailed notice will require 1 minute (0.017 hr) at $40.06/hr for  a Mail Clerk to process and mail each notice. CMS estimates that States will mail 30 million notices in the initial year, resulting in a total one-time labor burden of 510,000 hours (30,000,000 notices x 0.017 hr/notice) at a cost of $20,430,600 (510,000 hr x $40.06/hr). Accounting for the Federal administrative match of 50 percent, the requirement will cost States $10,215,300 ($20,430,600 x 0.50).

In addition to the one-time labor burden for the initial mailing of notices, CMS estimates one-time non-labor mailing costs associated with paper, toner, envelopes, and postage. CMS estimates a per-notice cost of $0.802, based on $0.007 per page for paper, $0.007 per page for toner, $0.044 per envelope, and $0.73 for postage. Applied across 30 million initial mailings, the total one-time non-labor cost is estimated at $24,060,000 (30,000,000 mailings x $0.802/mailing). Accounting for the Federal administrative match of 50 percent, the requirement will cost States $12,030,000 ($24,060,000 x 0.50).

Annual Maintenance of Short-Term Hardship Exception Notices  
For annual maintenance of short-term hardship exception notices and associated workflows, CMS estimates that each State will require 28 hours annually to complete this ongoing activity. Of the 28 hours, we estimate it will take 20 hours at $89.26/hr for a Business Operations Specialist, 6 hours at $101.12/hr for a Computer Programmer, and 2 hours at $129.74/hr for a General and Operations Manager’s review.

Across 44 jurisdictions, we estimate an annual burden of 1,232 hours (44 jurisdictions x 28 hr/response) at a cost of $116,662 (44 jurisdictions x [(20 hr x $89.26/hr) + (6 hr x $101.12/hr) + (2 hr x $129.74/hr)]). Accounting for the Federal administrative match of 75 percent, the requirement will cost States $29,166 ($116,662 x 0.25). 

Mailing of Short-Term Hardship Exception Notices  
For the ongoing annual mailing of short-term hardship exception notices, CMS estimates that each mailed notice will require 1 minute (0.017 hr) at $40.06/hr for a Mail Clerk to process and mail each notice. CMS estimates that States will mail 22.5 million notices annually, resulting in a total annual burden of 382,500 hours (22,500,000 notices x 0.017 hr/notice) at a cost of  $15,322,950 (382,500 hr x $40.06/hr).  Accounting for the Federal administrative match of 50 percent, the requirement will cost States $7,661,475 ($15,322,950 x 0.50).

In addition to the annual labor burden for mailing notices, CMS estimates annual non-labor mailing costs for paper, toner, envelopes, and postage. Using the same estimated per-notice cost of $0.802, CMS estimates that 22.5 million annual mailings will result in total annual non-labor costs of $18,045,000 (22,500,000 mailings x $0.802/mailing). Accounting for the Federal administrative match of 50 percent, the requirement will cost States $9,022,500 ($18,045,000 x 0.50).

Emergency/Disaster-Related Short-Term Hardship Exception Requests  
For State submissions involving emergency/disaster-related short-term hardship exception requests to CMS, CMS estimates that each request will require 22 hours to complete. Of the 22 hours we estimate that each request will take  20 hours at $89.26/hr for a Business Operations Specialist and 2 hours at $129.74/hr for a General and Operations Manager’s review. 

Across 20 annual responses, we estimate an annual burden of 440 hours (20 responses x 20 hr/response) at a cost of $40,894 (20 responses x [(20 hr x $89.26/hr) + (2 hr x $129.74/hr)]). Accounting for the Federal administrative match of 50 percent, the requirement will cost States $20,447 ($40,894 x 0.50).

Unemployment-Related Short-Term Hardship Exception Requests  
For State submissions involving unemployment-related short-term hardship exception requests to CMS, we estimate that each request will require between 84 and 104 hours to complete. To ensure a conservative burden estimate, we use the upper end of that range for scoring purposes. Of the 104 hours, we estimate that each request will require 100 hours at $89.26/hr for a Business Operations Specialist and 4 hours at $129.74/hr for a General and Operations Manager’s review. resulting in a total annual burden of 4,160 hours (40 requests x 104 hr/request) at a cost of $377,798 (40 requests x responses x [(100 hr x $89.26/hr) + (4 hr x $129.74/hr)]). Accounting for the Federal administrative match of 50 percent, the requirement will cost States $188,899 ($377,798 x 0.50).

For States to provide notice of the anticipated expiration of a short-term hardship event, CMS estimates 40 jurisdictions will need to send notices to beneficiaries. CMS estimates that each mailed notice will require 1 minute (0.017 hours) of staff time from a Mail Clerk to process and mail. CMS estimates that States will mail 18.2 million notices annually, resulting in a total annual labor burden of 309,400 hours. The total associated annual labor cost is estimated at $12,394,564 (309,400 hr x $40.06/hr). Accounting for the Federal administrative match of 50 percent, the requirement will cost States $6,197,282.
In addition to the annual labor burden for mailing notices of the anticipated expiration of a short-term hardship event, CMS estimates annual non-labor mailing costs for paper, toner, envelopes, and postage. Using the same estimated per-notice cost of $0.802, CMS estimates that 18.2 million annual mailings will result in total annual non-labor costs of $14,596,400 with the State share amounting to $7,298,200.
Requirement
No. Respondents
Total Responses
Frequency
Time per Response (hr)
Total Time (hr)
Wage / Unit Cost
Total Cost ($)
Federal Match ($)
State Share ($
Subtotal: State Burden (Labor)
Establish and document short-term hardship exception processes and procedures
44 Jurisdictions
44
One-time
116
5,104
Wages Vary
487,502
365,626
121,876
Develop short-term hardship exception notices and update workflows/systems
44 Jurisdictions
44
One-time
Varies
4,928
Wages Vary
466,646
349,984
116,662
Initial mailing notices: Labor
44 Jurisdictions
30,000,000
One-time
0.017
510,000
$40.06/hr
20,430,600
10,215,300
10,215,300
Annual maintenance of short-term hardship exception notices
44 Jurisdictions
44
Annual
Varies
1,232
Wages Vary
116,662
87,496
29,166
Ongoing mailing notices: (labor)
44 Jurisdictions
22,500,000
Annual
0.017
382,500
$40.06/hr
15,322,950
7,661,475
7,661,475
Emergency/disaster-related short-term hardship exception requests to CMS
20 Jurisdictions
20
Annual
22
440
Wages Vary
40,894
20,447
20,447
Unemployment-related short-term hardship exception requests to CMS
20 Jurisdictions
40
Annual
104
4,160
Wages Vary
377,798
188,899
188,899
Mailing Notices (Labor-Burden)
40
Jurisdictions
18,200,000
Annual
0.017
309,400
38.66
12,394,564
6,197,282
6,197,282
Subtotal: State Burden (Labor)
44 Jurisdictions
52,500,192
varies
varies
908,364
varies
49,637,616
25,086,509
24,551,107
Subtotal: State Burden (non-Labor)
Initial mailing notices
44 Jurisdictions
30,000,000
One-time
n/a
n/a
$0.802/notice
24,060,000
12,030,000
12,030,000
Ongoing mailing notices
44 Jurisdictions
22,500,000
Annual
n/a
n/a
$0.802/notice
18,045,000
9,022,500
9,022,500
Ancillary Costs (Non-Labor Burden)
40
Jurisdictions
18,200,000
Annual
n/a
n/a
n/a
14,596,400
7,298,200
7,298,200
Subtotal: State Burden (non-Labor)
44 Jurisdictions
52,500,000
Varies
n/a
n/a
$0.802/notice
56,701,400
28,350,700
28,350,700
TOTAL
44 Jurisdictions
105,000,192
varies
n/a
908,364
varies
106,339,016
53,437,209
52,901,807

Beneficiary Short-Term Hardship Exception Requests  
For beneficiary short-term hardship exception requests to a State for institutional or hospital services, other services, or travel outside the individual’s community for treatment of a medical condition, CMS estimates that each request will require 1 hour of time from an applicable individual, or an individual acting on behalf of an applicable individual, to document and submit the short-term hardship exception request. Across 300,000 annual responses, this results in a total annual burden of 300,000 hours. Using an hourly value of $12.92, the total associated annual beneficiary cost is estimated at $3,876,000 (300,000 hr x $12.92/hr). These short-term hardship exception activities are expected to occur on an annual basis.

Requirement
No. Respondents
Total Responses
Frequency
Time per Response (hr)
Total Time (hr)
Wage ($/hr)
Total Cost ($)
Beneficiary short-term hardship exception requests to State (institutional/hospital services or travel)
300,000 beneficiaries
300,000
Annual
1
300,000
12.92
3,876,000

Burden Summary


No. Respondents
Total Responses
Total Time (hr)
Wage ($/hr)
Total Cost ($)
Federal Match ($)
State Share ($
State Burden
44 Jurisdictions
105,000,192
908,364
Varies
106,339,016
53,437,209
52,901,807
Beneficiary Burden
300,000 beneficiaries
300,000
300,000
12.92
3,876,000
n/a
n/a
TOTAL
300,044
105,300,192
1,208,364
varies
83,260,052
39,790,687
39,557,365

Collection of Information Instruments

n/a

F. Timeline

The changes in this 2026 collection of information request are associated with our Interim Final Rule with Comment Period (CMS-2454-IFC; RIN 0938-AV98) entitled, “Medicaid Program; Community Engagement Requirement for Certain Individuals.” The rule filed for public inspection on June 1, 2026, and published on June 3, 2026 (91 FR 33348). Comments must be received by July 31, 2026.