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UPDATE 1-Arkansas becomes third U.S. state to add Medicaid work requirements

(Adds detail on plan, quotes, background)

WASHINGTON, March 5 (Reuters) - Arkansas on Monday became the third U.S. state to require that Medicaid recipients work or participate in employment activities as a condition of receiving health insurance as the Trump administration continues to approve state requests that fundamentally change the 50-year-old program.

Arkansas's waiver would require beneficiaries to work or participate in job training or job search activities for at least 80 hours per month as a condition of receiving Medicaid, the government health insurance program for the poor and disabled. Those who fail to meet the requirements for three months of a plan year will not be able to re-enroll until the following plan year.

Arkansas Governor Asa Hutchinson said he believes Arkansas will be the first state to implement the requirements, but did not specify when they would go into effect. He said the state already had most of the systems in place to administer the requirements.

"This is good news for Arkansas because it's not about punishing anyone. It's about giving people the opportunity to work," Hutchinson told a news conference.

Arkansas and 30 other states expanded Medicaid to those earning up to 138 percent of the federal poverty level under the Affordable Care Act, former Democratic President Barack Obama's signature domestic policy achievement commonly called Obamacare. The law extended insurance to 20 million Americans.

The Trump administration has also approved requests in Kentucky and Indiana to add work requirements. Kentucky's work requirements go into effect in July. At least eight other states have similar proposals awaiting approval.

Democrats and health advocacy groups have called the work requirements cruel and said it will make it harder for the most vulnerable to access healthcare. Kentucky faces a lawsuit attempting to block the requirements.

Some individuals are exempt from Arkansas's requirements, including the medically frail, those served by the Indian Health Service or tribal facilities, people in school, those caring for an incapacitated person or child under 6, pregnant women and those in substance abuse treatment. The rules apply to people between 19 and 64 years old.

Arkansas submitted a federal waiver to the U.S. Centers for Medicare and Medicaid Services last year that also would roll back part of Obamacare's Medicaid expansion, proposing to limit the Medicaid expansion to those at 100 percent of the federal poverty level.

That portion of the waiver has not been approved but Hutchinson and CMS Administrator Seema Verma said they were working on the proposal. That would throw about 60,000 people off of health coverage, state officials said. (Reporting by Yasmeen Abutaleb Editing by Chizu Nomiyama and James Dalgleish)