Under the new rule, around 373,000 people on Universal Credit could have their limited capacity for work and work-related activity (LCWRA) payments stopped.
You are eligible for LCWRA payments if you have a health condition which prevents or limits your ability to work.
Currently, claimants undergo a work capability assessment (WCA) to decide whether they qualify for the LCWRA payment, worth £390 a month.
However, a change, announced by the Chancellor in his Spring Budget, will see WCAs and LCWRA payments scrapped.
The Department for Work and Pensions (DWP) said the current LCWRA financial top-up would be replaced with a new “UC health element”.
People will receive the health element if they already receive Personal Independence Payments (PIP), which has its own medical assessment, from the Government.
If a claimant isn’t on PIP, their Universal Credit will remain at the same level initially and will reduce over time through a process called transitional protection, the DWP said.
Shadow Secretary of State for work and pensions Jonathan Ashworth asked the Government about the impact cutting work assessments could have.
In response, Tom Pursglove, the DWP’s minister of state for disabled people, health and work, pledged that nobody would suffer a sudden loss of benefits.
He also said special efforts would be made to protect people who are pregnant where there is a serious risk of damage to their health, or the health of their unborn child, if they do not refrain form work or work-related activity; and also, for anyone receiving, or about to receive, treatment for cancer through chemotherapy or radiotherapy, or those recovering from the treatment.
In a written answer, Mr Pursglove said: “We will put protections in place to ensure that no one experiences financial loss at the point at which the reform is enacted.
“For the group who receive the Limited Capability for Work and Work-Related Activity (LCWRA) payment, but not Personal Independence Payment, there will be transitional protection at the point that they move to the new system.
“We are committed to protecting those claimants who are currently treated as LCWRA due to pregnancy risk, or because they are about to receive, receiving, or recovering from, treatment for cancer by way of chemotherapy or radiotherapy.
“We will provide explicit provision to allow these claimants to access the new UC health top-up, even when they are not in receipt of PIP.”
The reforms would come in by 2026 at the earliest, the Government said, with a rollout for new claims aimed to be complete within three years from then.