CMS Medicaid Waivers: Authorities, Eligibility, and Coverage

CMS Medicaid waivers are programs the Centers for Medicare and Medicaid Services approves under the Social Security Act that let states set aside specific federal Medicaid rules so they can deliver long-term care in people’s homes and communities rather than in institutions. More than 250 home and community-based waiver programs operate across nearly every state, and for many of them the 2026 income ceiling reaches $2,982 per month for an individual. To use one, you generally have to meet both a financial test and a functional test showing you would otherwise need nursing-facility, hospital, or intermediate-care-facility level services.

The Four Waiver Authorities

Federal law creates four main pathways, and the one that matters to you depends on what kind of care you need.

Section 1915(c) Home and Community-Based Services Waivers

These are the core long-term care waivers. A 1915(c) waiver lets a state cover services for people who would otherwise qualify for care in a nursing facility, a hospital, or an intermediate care facility for people with intellectual disabilities. About 257 of these programs are active nationwide, and states can run several at once, each targeting a different group such as older adults, people with physical disabilities, or people with traumatic brain injuries.¹

States get flexibility, but with strings attached. They can waive the usual federal requirement that Medicaid services be uniform statewide and identical for everyone eligible, but they must prove cost neutrality: average per-person waiver spending cannot exceed what institutional care would have cost the same group.² States can also cap enrollment and use waiting lists.³

Section 1915(b) Managed Care Waivers

A 1915(b) waiver lets a state require Medicaid enrollees to receive care through a managed care plan or a primary care case management arrangement, limiting which providers they can see. Because this overrides the federal freedom-of-choice rule, these are sometimes called freedom-of-choice waivers.⁴

Section 1115 Demonstration Waivers

Section 1115 is the broadest authority. It lets the Secretary of Health and Human Services waive nearly any Medicaid requirement so a state can test something new, as long as the project promotes Medicaid’s objectives.⁵ States have used 1115 waivers to expand coverage to new populations, restructure payment, add premiums or work requirements, and fund substance-use treatment. CMS will not approve an 1115 demonstration unless projected federal spending stays at or below what it would have been without the waiver.⁶

Section 1915(i) State Plan HCBS

The 1915(i) option is not technically a waiver. It lets a state add home and community-based services directly to its Medicaid state plan, and the eligibility test is different: you do not have to need an institutional level of care. The state sets its own needs-based criteria, which can be less strict.⁷ The trade-off is that 1915(i) benefits must be offered statewide and cannot use waiting lists, which tends to make the service package broader in reach but sometimes narrower in depth.⁸

Financial Eligibility

Financial eligibility for most HCBS waivers follows institutional Medicaid rules, not the stricter limits used for regular community Medicaid. In plain terms, you can often have more income and still qualify.

Income

Many states use the “special income level” rule, which caps monthly income at 300% of the Supplemental Security Income federal benefit rate. For 2026, the SSI federal benefit rate is $994 per month for an individual, putting the waiver income ceiling at $2,982 per month.⁹ If your income runs higher, some states offer a “medically needy” spend-down: you apply the excess income toward medical bills until what remains falls below the state’s cutoff.

Assets

Most HCBS waivers cap countable assets. The most common ceiling for a single applicant is $2,000, though the number varies by state and by waiver. Your home usually does not count as long as you intend to return to it or continue living there. Vehicles, personal belongings, and certain burial funds are typically excluded as well.

Spousal Impoverishment Protections

When one spouse needs waiver services and the other stays home, federal rules protect the community spouse from being left with nothing. For 2026, the community spouse can keep between $32,532 and $162,660 of the couple’s combined countable assets, depending on total assets and state policy, and is entitled to a minimum monthly maintenance needs allowance of $2,643.75 drawn from the couple’s income.¹⁰ These figures adjust annually.

Functional Eligibility

Clearing the financial limits is only half the test. For a 1915(c) waiver, you also have to show you need the level of care provided in a nursing facility, an intermediate care facility, or a hospital.¹¹ The state conducts an individualized assessment, usually a home visit or in-person interview, that focuses on how much help you need with activities of daily living such as bathing, dressing, eating, transferring, and toileting. Many assessments also weigh instrumental tasks like managing medications, preparing meals, and handling finances.

Two people with the same diagnosis can get different results. The assessment measures your actual functional limitations, not just your condition on paper. If the finding is that your care needs can be safely met at home with waiver supports, you meet the functional test.

Look-Back Rules and Estate Recovery

Waiver eligibility carries enforcement rules that reach backward before your application and forward past your death. Families often miss both.

The Five-Year Look-Back

When you apply, the state reviews your financial transactions for the previous 60 months. Assets you gave away or sold below fair market value during that window trigger a penalty period in which Medicaid will not pay for your long-term care.¹² The penalty is calculated by dividing the total value transferred by the average monthly cost of nursing home care in your state. There is no cap on the length, so a large gift can produce a penalty that runs well past five years. The clock does not start until you both need care and have applied, so giving assets away early does not always help if care becomes necessary soon after. States may grant a hardship waiver when a penalty would leave the applicant unable to pay for food, clothing, or shelter and the transferred assets cannot be recovered.

Estate Recovery

Federal law requires every state to seek repayment from the estate of a deceased Medicaid beneficiary who was 55 or older and received nursing facility services, HCBS waiver services, or related hospital and prescription drug services.¹³ In practice, that often means a claim against the home. States cannot pursue recovery if the beneficiary is survived by a spouse, a child under 21, or a blind or disabled child of any age, and they must establish undue-hardship waiver procedures. Many states offer additional protections for heirs who acted as caregivers or would lose their primary residence.

Applying and the Wait

A complete packet is worth the extra hour. For the financial side, expect to submit recent bank statements, proof of income such as Social Security award letters and pension statements, and documentation of countable assets like deeds and investment account statements. For the functional side, gather current medical records, clinical assessments describing your limitations, and physician documentation of your need for ongoing long-term support. Contacting your state Medicaid office or a local Area Agency on Aging before you file can flag state-specific forms.

Applications move through your state’s designated channels: online portal, mail, or an in-person office. After submission the state verifies your finances and schedules the level-of-care assessment. Incomplete applications are one of the most common causes of delay.

Then comes the harder wait. Most 1915(c) waivers cap enrollment, and when demand exceeds slots, states use waiting lists. Recent data show over 600,000 people on HCBS waiver waiting lists nationally, with an average wait of roughly 32 months. Some high-demand states report waits of several years. The most common ordering method is first-come, first-served by application date. Other states use priority systems based on health status or loss of a caregiver, and some combine both by ordering applicants by date within priority tiers.¹⁴ Applying early is the single biggest lever you have. Getting on the list does not commit you to accepting services when your name comes up.

After Approval: Service Plan and Renewals

Once you clear the list and are approved, the state builds an Individualized Service Plan. This person-centered document sets out which services you get, how many hours per week, and which providers deliver them. It is the formal authorization for state funding, and no services start without it.

Approval is not permanent. Federal rules require states to redetermine Medicaid eligibility at least once every 12 months.¹⁵ The state first tries to confirm eligibility from data it already has, such as federal tax and Social Security records. If it cannot, it mails a pre-populated renewal form you must complete and return, usually within at least 30 days. Missing the deadline can cost you your coverage and your waiver services, so keep your address up to date with the Medicaid office. If your coverage is terminated because you missed the renewal, most states let you reapply within 90 days and be reconsidered without starting over.

What Waivers Actually Cover

The point of a waiver is the whole mix of supports that lets someone stay home safely, not just medical treatment. The specific menu varies, but federal guidance identifies standard categories.¹

Personal care: hands-on help with bathing, dressing, eating, and transferring, plus instrumental tasks like meal preparation and light housekeeping.
Respite care: short-term relief for an unpaid family caregiver.
Home modifications: ramps, grab bars, widened doorways, roll-in showers. States typically cap these by project or lifetime dollar amount.
Case management: a coordinator to help navigate the system and keep the service plan on track.
Habilitation: day and residential programs that build or maintain skills for daily living, communication, and community participation.
Adult day health: structured daytime programs with supervision, activities, and health monitoring outside the home.
Non-medical transportation: rides to waiver services and community activities not covered by standard medical transportation.
Specialized medical equipment: devices and supplies not covered under the regular state plan but necessary for safe home living.

States can propose additional services tailored to their waiver populations, including assistive technology, nutritional counseling, and transition services for people moving out of a facility.³

Self-Directing Your Care

Many waivers let you run your own services under a self-direction option. CMS calls the two pieces “employer authority” and “budget authority.” Employer authority means you recruit, hire, train, schedule, and if needed fire your caregivers. Budget authority means you decide how your allocated dollars are spent across approved services and goods.¹⁶

You are not left to figure it out alone. States must provide a Financial Management Services entity to handle payroll, tax withholding, workers’ compensation, and budget tracking.¹⁶

One of the most common questions is whether a family member can be the paid caregiver. Under 1915(c) waivers, the answer is generally yes, including legally responsible relatives like spouses and parents, but only when the state finds an “extraordinary need,” such as a shortage of other workers.¹⁷ When a relative is hired, the Fair Labor Standards Act applies: the caregiver must be paid at least minimum wage for all hours in the plan of care, and the state cannot cut authorized hours just because the worker is family.¹⁸

If You Are Denied or Services Are Cut

If your application is denied, your services are reduced, or your eligibility is terminated, you can challenge the decision through a fair hearing. Every state must offer this process.¹⁹

You have up to 90 days from the date the state mails its notice to request a hearing. Requests can go by phone, online, in writing, or through other channels the state provides. If you already receive services and file the request before the effective date of the state’s action, the state must keep your services running at their current level until a final decision.²⁰ The window between the mailed notice and the effective date can be as short as 10 days, so move quickly. If the hearing upholds the state’s decision, some states may require you to repay the cost of services you received during the appeal.

The state must issue a final decision on a standard hearing within 90 days of your request. For expedited hearings on eligibility questions, the deadline can be as short as seven working days.¹⁹ You can represent yourself or bring a family member, advocate, or attorney.

1
Medicaid.gov. Home and Community-Based Services 1915(c)
2
Centers for Medicare & Medicaid Services. Cost Neutrality – HCBS 1915(c)
3
MACPAC. Waivers
4
MACPAC. 1915(b) Waivers
5
eCFR. 42 CFR Part 431 Subpart G – Section 1115 Demonstrations
6
Medicaid.gov. Budget Neutrality
7
Centers for Medicare & Medicaid Services. 1915(i) State Plan Home and Community Based Services
8
eCFR. 42 CFR Part 441 Subpart M – State Plan Home and Community-Based Services
9
Social Security Administration. SSI Federal Payment Amounts for 2026
10
Centers for Medicare & Medicaid Services. 2026 SSI and Spousal Impoverishment Standards
11
Centers for Medicare & Medicaid Services. Home and Community Based Services 101
12
Office of the Law Revision Counsel. 42 USC 1396p – Liens, Adjustments and Recoveries, and Transfers of Assets
13
Medicaid.gov. Estate Recovery
14
MACPAC. State Management of Home and Community-Based Services Waiver Waiting Lists
15
eCFR. 42 CFR Part 435 Subpart J – Redeterminations of Medicaid Eligibility
16
Medicaid.gov. Self-Directed Services
17
Centers for Medicare & Medicaid Services. Key Components of Self-Directed Services – HCBS
18
U.S. Department of Labor. Fact Sheet 79F – Paid Family or Household Members in Certain Publicly Funded Programs Under the FLSA
19
eCFR. 42 CFR Part 431 Subpart E – Fair Hearings for Applicants and Beneficiaries
20
Medicaid.gov. Understanding Medicaid Fair Hearings