Section 1115 waivers are the tool the federal government uses to let a state try something new in Medicaid or another public assistance program that ordinary federal rules would not allow. Under 42 U.S.C. 1315, the Secretary of Health and Human Services can waive specific requirements of certain Social Security Act programs so a state can run an experimental, pilot, or demonstration project, provided the Secretary judges it “likely to assist in promoting the objectives” of the program. A single waiver can reshape eligibility, benefits, or delivery for millions of enrollees in one state, which is why these decisions draw close attention from advocates, providers, and the courts.
What Section 1115 Authorizes
The statute covers Medicaid (Title XIX), CHIP (Title XXI), Temporary Assistance for Needy Families (Title IV-A), Child Support Enforcement (Title IV-D), and several legacy assistance programs for aged and disabled individuals.1Office of the Law Revision Counsel. 42 USC 1315 – Demonstration Projects In practice, most Section 1115 activity happens in Medicaid.
States have used the authority to expand eligibility to populations not otherwise covered, put enrollees into managed care, test work requirements as a condition of coverage, pay for services addressing housing and nutrition, and fund reentry coverage for people leaving incarceration.2Medicaid.gov. About Section 1115 Demonstrations These are not small pilots. They often run statewide and touch a large share of a state’s Medicaid population.
What Can and Cannot Be Waived
Three Medicaid requirements come up again and again in waiver applications:
- Statewideness. Medicaid normally has to operate uniformly across the state. A waiver lets a state pilot a new delivery model in some regions first.
- Comparability. Medicaid generally requires the same benefit package for everyone. Waiving this lets a state offer different benefits to different groups.
- Freedom of choice. Federal law lets beneficiaries pick their own providers. A waiver can require enrollment in a managed care plan with a limited network.3Medicaid.gov. Managed Care Authorities
The Secretary’s authority has limits. Structural features like the federal matching payment system cannot be waived. And courts have set outer boundaries when a waiver appears to work against Medicaid’s core purpose of covering low-income people, which comes up in the case law below.
How Section 1115 Differs From Section 1915 Waivers
Medicaid has more than one waiver authority, and mixing them up is common. Section 1915(b) waivers are narrower: they let states run managed care programs that restrict provider choice or limit managed care to particular counties, and they are approved for two-year periods with two-year renewals. Section 1915(c) waivers authorize home and community-based services for populations like seniors or people with developmental disabilities, typically for three years with five-year renewals.4MACPAC. Medicaid 101 – Waivers
Section 1115 is the broadest of the three. A single demonstration can change eligibility, benefits, cost-sharing, financing, and service delivery at once. Initial approval usually runs five years, with renewals of three to five years, and a small number of demonstrations have received ten-year extensions. Section 1115 also carries an evaluation requirement the 1915 waivers do not, because the statute is built around producing evidence about whether the experiment worked.4MACPAC. Medicaid 101 – Waivers
How a Section 1115 Waiver Gets Approved
A state has to build a detailed application showing that the demonstration will promote Medicaid’s objectives. That means explaining the policy changes, the populations affected, projected enrollment and cost impacts, and an evaluation design that describes how results will be measured.
Public engagement starts before the state even submits to CMS. Federal regulations require at least a 30-day state-level public notice and comment period, during which the state must post the application and accept written comments.5eCFR. 42 CFR 431.408 – State Public Notice Process Beneficiaries, providers, and advocacy groups can weigh in at that stage. Skipping or shortcutting the state process delays federal review.
Once CMS deems the application complete, it posts the application on Medicaid.gov for a separate 30-day federal comment period.6Medicaid.gov. 1115 Transparency Requirements CMS staff then negotiate with the state, often pushing for stronger beneficiary protections or a better evaluation design. The Secretary of HHS makes the final approve-or-deny call, and approved demonstrations come with formal terms and conditions that spell out what the state can do, what it must report, and what counts as noncompliance.2Medicaid.gov. About Section 1115 Demonstrations
Woven through all of this is budget neutrality. CMS will not approve a demonstration unless the state shows it will not cost the federal government more than Medicaid would have spent without the waiver.7Medicaid.gov. Budget Neutrality States build financial projections comparing expected demonstration costs against a “without waiver” baseline, and unrealistic savings assumptions get revised or rejected. Budget neutrality has been enforced as CMS policy for years. Starting January 1, 2027, it becomes a statutory requirement under Section 1315(g), with the CMS Chief Actuary required to certify that a new waiver, renewal, or amendment is not expected to increase federal expenditures before the Secretary can sign off.1Office of the Law Revision Counsel. 42 USC 1315 – Demonstration Projects
Emergency and Disaster Waivers
The standard process takes months. That can be dangerous when a natural disaster or public health emergency hits, so CMS has a fast-track pathway tied to federally designated emergencies.
Under the expedited process, a state can submit requests verbally or in writing to its CMS project officer. Two of the biggest normal requirements come off the table: budget neutrality is presumed to be met, and CMS can waive both the federal and state public comment periods. To qualify for the public notice exemption, the state has to show it acted in good faith and with diligence, that the circumstances were unforeseeable, and that delay would compromise the demonstration and harm beneficiaries. CMS publishes any exemption determination within 15 days of approval, together with a revised timeline for any post-award public comment.8Medicaid.gov. Using Section 1115 Demonstrations for Disaster Response
Monitoring, Enforcement, and Withdrawal
Approval does not end federal oversight. States have to perform periodic reviews of implementation and submit those findings to CMS. Within six months after a demonstration launches, and annually after that, the state must hold a public forum where community members can comment on how the project is going. A summary goes into the state’s quarterly and annual reports.9eCFR. 42 CFR 431.420 – Monitoring and Compliance
CMS reviews documented complaints about noncompliance and shares them with the state, along with monitoring concerns of its own. States have to cooperate fully with federal evaluators. When a state deviates from approved terms, CMS can require a corrective action plan with deadlines. More serious or persistent noncompliance can lead to withheld federal matching funds, which for a large state Medicaid program means tens or hundreds of millions of dollars. CMS also reserves the right to withdraw waiver authority at any time, which forces the state back to standard Medicaid rules. The Biden administration used that withdrawal authority to revoke all previously approved Medicaid work requirement waivers, on the ground that those provisions did not promote Medicaid’s objectives.
Court Challenges to Waiver Decisions
Courts review the Secretary’s waiver decisions under the Administrative Procedure Act, applying the “arbitrary and capricious” standard. A reviewing court does not substitute its own judgment, but it examines whether the decision was based on relevant factors and whether the administrative record supports the conclusion. The court can set aside agency action that is arbitrary, capricious, an abuse of discretion, or otherwise contrary to law.10Office of the Law Revision Counsel. 5 US Code 706 – Scope of Review
The most prominent line of cases involves Medicaid work requirements. In Stewart v. Azar, a federal district court twice vacated CMS approval of Kentucky’s waiver, which required certain enrollees to spend 80 hours per month working or doing community engagement. The court found the Secretary had not adequately explained why the waiver was justified given the substantial coverage losses it was expected to produce. The D.C. Circuit affirmed. In Gresham v. Azar (2020), the D.C. Circuit struck down Arkansas’s work requirement waiver on similar grounds, holding that the Secretary approved the plan without analyzing whether it would promote Medicaid’s primary objective of furnishing medical assistance. The court noted that Congress has never conditioned Medicaid benefits on fulfilling work requirements.11Justia. Gresham v Azar
Cost-sharing has drawn scrutiny too. In Newton-Nations v. Betlach (2011), the Ninth Circuit reversed a district court ruling and directed that the Secretary’s approval of Arizona’s heightened copayments be vacated and reconsidered, finding the approval did not satisfy the requirements of 42 U.S.C. 1315.12Justia. Newton-Nations et al v Betlach et al The through-line is that waivers reducing coverage or raising costs for low-income enrollees, without evidence that doing so promotes Medicaid’s objectives, are vulnerable to challenge.
What Changes in 2027
Two shifts land at the same time. The statutory budget neutrality certification described above takes effect January 1, 2027, adding a formal actuarial gate to every new approval, renewal, or amendment.1Office of the Law Revision Counsel. 42 USC 1315 – Demonstration Projects The same date is when federal legislation requires Medicaid work requirements to take effect, which may reduce state reliance on Section 1115 for that specific purpose and push waiver activity toward other experiments, such as reentry coverage for incarcerated individuals and programs addressing social determinants of health.
Waiver priorities also swing between administrations. In mid-2025, CMS signaled it does not anticipate approving new demonstrations or renewing existing ones for designated state health program or designated state investment program funding, expanded continuous eligibility beyond what current Medicaid or CHIP statute allows, or workforce initiatives funded through Section 1115 authority.2Medicaid.gov. About Section 1115 Demonstrations Anyone tracking a specific waiver should check where CMS stands now, because the answer changes.