Medicaid Waivers: What They Are and How They Improve Access

What Are Medicaid Waivers?

Medicaid waivers are state-specific programs that allow Medicaid to cover additional services, expand eligibility, or test new healthcare models. Normally, Medicaid must follow federal rules, but with a waiver, a state can modify those rules—as long as the program still meets federal objectives.

For example, waivers may allow states to:
✔ Cover people who wouldn’t normally qualify for Medicaid (e.g., individuals with higher incomes)
✔ Provide extra services like home-based care, mental health support, or substance abuse treatment
✔ Use different payment models to improve efficiency and cost-effectiveness

Since Medicaid waivers are optional, each state decides whether to apply for waivers and how to design them.

Types of Medicaid Waivers

Several types of Medicaid waivers exist, but the most common include:

1. Section 1115 Waivers (Demonstration Waivers)

🔹 Purpose: Allow states to test new approaches to delivering Medicaid services.
🔹 Key Features:

• Can expand eligibility to groups not normally covered
• Can offer unique benefits not available in traditional Medicaid
• Must be budget-neutral (not increase federal spending)
• Typically approved for 5 years with renewal options

Examples of Section 1115 Waivers in Action:

• Indiana introduced a work requirement for some Medicaid enrollees.
• California expanded services for homeless Medicaid recipients, offering housing assistance and case management.
• Vermont used a waiver to redesign its entire Medicaid program to improve efficiency.

✅ Why It Matters: Section 1115 waivers help test innovative programs that could improve Medicaid nationwide.

2. Section 1915(c) Waivers (Home and Community-Based Services – HCBS Waivers)

🔹 Purpose: Help individuals with disabilities, seniors, and those with chronic conditions receive care at home or in the community instead of in a nursing home.
🔹 Key Features:

• Covers services like personal care, case management, adult day care, and home modifications
• Allows states to limit eligibility based on medical needs
• Can have waiting lists due to high demand

✅ Why It Matters: HCBS waivers help keep people out of institutional care and allow them to receive services in familiar environments.

3. Section 1915(b) Waivers (Managed Care Waivers)

🔹 Purpose: Allow states to require Medicaid enrollees to join managed care plans instead of traditional fee-for-service Medicaid.
🔹 Key Features:

• States can limit provider choices to control costs
• Encourages coordinated care to improve efficiency
• Often used for Medicaid mental health and substance use treatment programs

✅ Why It Matters: Managed care waivers help states control Medicaid spending while improving care coordination.

4. Concurrent Section 1915(b) and 1915(c) Waivers

🔹 Purpose: Allows states to combine managed care with home and community-based services to create a more comprehensive system.
🔹 Key Features:

• Helps states integrate medical and long-term care services
• Can improve access to care while controlling costs

✅ Why It Matters: This waiver type ensures people with disabilities and seniors get the support they need while keeping costs manageable.

How Medicaid Waivers Improve Healthcare Access

Medicaid waivers allow states to customize their Medicaid programs to better serve their populations. Here’s how they make a difference:

1. Expanding Coverage to More People

✅ Example: Some states use Section 1115 waivers to expand Medicaid to low-income adults who don’t qualify under standard Medicaid rules.

2. Increasing Access to Home-Based and Community Care

✅ Example: HCBS waivers allow seniors and disabled individuals to receive care at home instead of in expensive nursing homes.

3. Supporting Mental Health and Substance Use Treatment

✅ Example: Many states use waivers to expand behavioral health services and offer substance use disorder treatment.

4. Improving Care Coordination

✅ Example: Managed care waivers help states reduce fragmentation by requiring Medicaid enrollees to have a primary care provider and a care team.

5. Addressing Social Determinants of Health

✅ Example: Some waivers allow Medicaid to cover non-medical services like housing support, transportation, and food assistance to improve overall health.

Challenges and Limitations of Medicaid Waivers

While waivers can expand Medicaid access, they also have drawbacks:

❌ State-by-State Variability – Coverage depends on where you live; some states offer robust waivers, while others don’t.
❌ Approval and Renewal Processes Can Be Slow – States must get federal approval, which can take months or years.
❌ Budget Neutrality Requirement – Waivers cannot increase federal Medicaid spending, which can limit what states can offer.
❌ Waiting Lists for HCBS Waivers – Many states cap enrollment, leading to long wait times for home-based care services.

Which States Use Medicaid Waivers?

Most states use at least one type of Medicaid waiver, but the programs vary. Some examples:

• California: Uses a Section 1115 waiver to fund community health initiatives and address homelessness.
• Texas: Uses a managed care waiver (1915(b)) to require all Medicaid recipients to enroll in managed care plans.
• New York: Uses HCBS waivers to offer at-home care services for elderly and disabled individuals.
• Florida: Uses Section 1115 waivers to implement Medicaid reform programs and expand behavioral health coverage.

To see what waivers your state has, visit Medicaid.gov.

Final Thoughts

Medicaid waivers give states the flexibility to innovate and expand healthcare access for underserved populations. Whether by covering more people, offering home-based care, or improving mental health services, waivers play a crucial role in shaping Medicaid programs.

However, their availability and benefits vary by state, so it’s important to check your state’s Medicaid website or contact a local Medicaid office for information on available waivers.

For more details, visit Medicaid.gov and explore your state’s waiver programs.