Cancer Survivor Lost Medicaid After Giving Up Disability Benefits to Work

A Montana teenager who has been in remission from Hodgkin lymphoma for five years lost her disability-based Medicaid coverage after she voluntarily stopped receiving Social Security disability payments. Taya Hailstone, now 19, halted the payments because she hoped to save enough money to work, a goal complicated by strict income caps attached to the benefits. However, her health remains unstable, and she stated she is currently too ill to maintain consistent employment.

The Montana Department of Public Health and Human Services determined last year that Hailstone no longer qualified for low-cost disability coverage through Medicaid. Consequently, her enrollment was switched to the state’s Children’s Health Insurance Program three months prior to her aging out of that system. According to letters from her treating physicians reviewed by KFF Health News, the state did not request medical records from her care team before issuing the administrative ruling. Instead, the decision was based on her cessation of Social Security payments.

Hailstone, who lives with her mother in Roundup, Montana, has managed to retain her Medicaid coverage while appealing the decision. She emphasized that without this insurance, she cannot afford the ongoing treatment required to manage the lasting damage to her organs and nerves caused by the cancer and its treatment.

“It feels like this process was made to make you give up,” Hailstone said.

Her case illustrates broader challenges faced by patients with disabilities navigating the complex administrative landscape of federally subsidized health coverage. These difficulties are expected to intensify under new federal Medicaid work requirements, which mandate that states determine eligibility for medical exemptions. This adds a layer of scrutiny for a significantly larger population of Medicaid enrollees.

Anthony Wright, head of the nonprofit Families USA, noted that while Hailstone’s situation is distinct from the incoming work mandates, it signals that states are unprepared to fairly adjudicate who should be exempt. “This will be the story of millions of people,” Wright said, predicting more denials due to the opaque nature of the review processes.

Under legislation passed last year, the One Big Beautiful Bill Act, Congress established national work requirements for Medicaid, giving states until January 2027 to implement the rules. The Congressional Budget Office estimates that approximately 18.5 million people must prove they are working, attending school, or volunteering to maintain coverage. More than 40% of these enrollees have chronic health conditions. The CBO projects that over 5 million people could lose Medicaid coverage by 2034 as a result of these requirements.

The federal law allows exemptions for individuals deemed “medically frail.” However, states have encountered friction after federal guidelines released in June expanded the criteria beyond what Congress originally outlined, requiring enrollees to prove their illness prevents them from working. In June, 25 states sued the Trump administration, arguing the medical frailty rules are excessively difficult for both patients to satisfy and states to assess.

Hailstone was diagnosed with blood cancer at age 10. The illness led to the partial removal of her intestines and left her prone to severe dehydration and difficulty processing food. Side effects from treatment include cognitive fog and swelling in her hands and feet, which impairs her ability to grip objects or walk comfortably. She undergoes approximately three medical appointments weekly in Billings, nearly two hours away.

Megan Dishong, deputy director of the Montana Legal Services Association, pointed out that state capacity for independent medical reviews is inconsistent. “Whether that happens is always a bit of a crapshoot just based on state capacity,” Dishong said. “Things fall through the cracks.”

Jon Ebelt, a spokesperson for the Montana health department, stated that the state accepts disability determinations from the Social Security Administration but can conduct its own reviews if necessary. He added that the state is committed to helping eligible clients receive appropriate coverage.

Pamela Herd, a social policy professor at the University of Michigan, criticized the complexity of the current system. “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,” Herd said, noting the huge implications for future eligibility disputes.

As the appeal continues, Hailstone has reapplied for Social Security disability payments. While this benefit would restrict her earning potential, it would also secure her access to Medicaid, ensuring she can continue receiving care for her condition.