Cancer Survivor Loses Medicaid Disability Coverage

Taya Hailstone was 10 years old when she was diagnosed with Hodgkin lymphoma. Five years into remission, the cancer’s lasting damage still makes basic tasks — loading a dishwasher, gripping a fork, walking across a room — difficult. Now 19 and living in Roundup, Montana, she has lost the low-cost disability health coverage that paid for her care, after Montana’s health department ruled she was no longer eligible.

Her case, reported by NPR in partnership with KFF Health News, illustrates the gaps in the U.S. insurance system for people navigating serious illness and employment — and arrives as states prepare to implement sweeping new federal Medicaid work requirements that will force them to decide, on a massive scale, who is too sick to work.

What happened

Montana’s Department of Public Health and Human Services (DPHHS) decided Hailstone was no longer eligible for disability coverage through Medicaid and switched her to the Children’s Health Insurance Program — another Medicaid program — three months before she aged out, according to NPR.

The administrative ruling came after state officials learned she had stopped receiving Social Security disability payments. Hailstone said she made that choice because she hoped to get healthy enough to work and save money beyond the strict income caps tethered to those payments. But her health changes day to day, and she said she remains too sick to consistently work.

Before making the decision, the state did not seek records from the medical team treating Hailstone, according to letters from those doctors reviewed by KFF Health News. State officials can conduct their own medical review to determine whether someone meets the federal definition of disability for Medicaid, but they are not required to if a person qualifies for coverage another way.

Hailstone has been able to keep Medicaid coverage while her family appeals. Without it, she said, she could not afford the treatment to manage the aftermath of her cancer. “Some days you feel fine and then you suddenly crash,” she said. “If I lose this, this is life-changing.”

Jon Ebelt, a DPHHS spokesperson, said the state does not comment on individual Medicaid cases but that it accepts disability decisions from the Social Security Administration. “We are committed to treating every client with respect and helping those who are eligible receive appropriate Medicaid coverage,” he said.

A window into a national shift

Hailstone’s case is separate from the incoming work requirements, but attorneys, researchers, and advocates who specialize in public aid told NPR it is an early sign that states are not ready to decide who should be exempt. As a result, they warned, more people will be denied coverage through an opaque process.

“This will be the story of millions of people,” said Anthony Wright, who heads Families USA, a national nonprofit advocating for more accessible healthcare. “It feels like this process was made to make you give up,” Hailstone said.

Congress made national work requirements law through last year’s One Big Beautiful Bill Act, giving states until January 2027 to implement work-for-coverage rules. The requirements direct many enrollees to document 80 hours a month of work, volunteering, school, or apprenticeships. An estimated 18.5 million people will have to meet the new rules, and more than 5 million are expected to lose coverage by 2034, according to the Congressional Budget Office. More than 40% of affected enrollees live with a chronic health condition, according to KFF.

States may exempt people who are “medically frail,” but federal rules released in June require enrollees to prove both a qualifying diagnosis and that the condition significantly impairs their ability to work. Federal officials considered — and declined — categorically exempting conditions including cancer, HIV/AIDS, end-stage renal disease, and sickle cell disease.

Montana as an early test

Montana is one of the first states to launch the requirements, beginning July 1 with a three-month grace period that ends in October, when officials can start disenrolling people for noncompliance. As of March, roughly 74,000 people ages 19 to 64 were enrolled through Montana Medicaid expansion, according to Montana Free Press, which reported that advocates and lawmakers have flagged holes in the state’s readiness.

At a June 22 legislative budget meeting, DPHHS officials said the agency had not yet hired dozens of positions, had not completed training for staff reviewing applications, and did not yet have access to medical claims data to verify exemptions. The department published its list of qualifying conditions just a day before launch. As of March, 35% of Montana’s Medicaid eligibility applications were processed beyond the required 45-day window, and the call abandonment rate was 40% — second worst in the nation, the Montana Free Press reported.

Those capacity problems predate the work rules. Montana is also contending with a $183 million budget shortfall that has forced the department to borrow from next year’s budget, and officials have proposed withholding a planned 3% Medicaid provider rate increase — a move health organizations warn would deepen staffing shortages, per KFF Health News.

“Whether that happens is always a bit of a crapshoot just based on state capacity,” said Megan Dishong, deputy director of the Montana Legal Services Association. “Things fall through the cracks.” She added, “This is a problem that’s just starting.”

Lessons for other states

As Wisconsin and other states prepare for a January 2027 deadline, early adopters offer cautionary lessons. Nebraska, the first state to implement the rules in May, began disenrolling people in August. Its health centers reported confusion over who the requirements apply to and denial of at least one applicant who should have been exempt, according to Wisconsin Watch.

The scale of the administrative challenge is striking. The Social Security Administration’s disability review system cost more than $5 billion to administer to roughly 7 million people nationally last year. By comparison, the federal law provided only $200 million for states to share as they implement the work requirements.

In June, 25 mostly Democratic-led states sued the Trump administration over the medical frailty rules, arguing they are too hard for patients to meet and for states to assess. That case is ongoing.

Pamela Herd, a University of Michigan social policy professor, said convoluted disability cases are common enough for attorneys to specialize in them. “When we’ve designed public programs in ways that people can’t figure out whether they’re eligible without consulting lawyers, we’ve done something wrong,” she said. “That has huge, huge implications for what’s to come.”

What’s next

Hailstone is reapplying for Social Security disability payments. That aid would limit how much she can work, but it would also guarantee her access to Medicaid. In the meantime, she and her mother make nearly two-hour round-trip drives to Billings for care, and she typically has three medical appointments a week.

Her mother, Kyla Hailstone, said the state has not clearly defined how it determined her daughter’s disability status, and that the appeal process has been slow and dysfunctional.

As Montana approaches October, when disenrollment begins, advocates say the coming months will reveal whether states can build systems capable of distinguishing between people who can work and those who genuinely cannot. For Hailstone, the stakes are immediate. “If I lose this,” she said, “this is life-changing.”