More than 86 percent of Medicaid beneficiaries who need long-term care now receive it at home or in their community instead of inside a nursing facility, a reversal from a system that once defaulted almost automatically to institutional beds. The shift runs through a set of federal waiver authorities that let states redirect Medicaid dollars away from nursing homes and toward home health aides, personal care attendants, and adult day programs instead. Roughly 257 of these Home and Community-Based Services waiver programs operate nationwide today, covering aging adults who need help with daily tasks alongside people with disabilities who would otherwise face institutionalization. None of it is automatic, though — every dollar still has to clear a cost test before a state can spend it that way.
The 1983 Waiver That Changed Where Care Happens
Home and Community-Based Services trace back to 1983, when Congress added Section 1915(c) to the Social Security Act and gave states the option to request a waiver of the Medicaid rules that otherwise steered long-term care spending toward institutions. Before that authority existed, a Medicaid beneficiary who needed help with daily living had few paths to coverage that did not run through a nursing facility. The waiver did not eliminate institutional care, but it opened a second, parallel system that states could build out at their own pace, state by state and waiver by waiver.
That system has grown into roughly 257 active HCBS Waiver programs running across the country, with nearly all states and the District of Columbia operating at least one. By 2009, according to federal figures, nearly one million people were already receiving services under an HCBS waiver, and the caseload has continued to expand as states add new waivers or widen the eligibility rules on existing ones.
None of that spending is unconditional. Every state HCBS Waiver program has to demonstrate that paying for care in someone’s home will not cost more than paying for the same person’s care in an institution, a cost-neutrality test that shapes how generous a state can afford to be. States must also protect enrollees’ health and welfare, set provider standards adequate to the population being served, and build each recipient’s services around an individualized, person-centered plan of care rather than a one-size-fits-all package.
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Four Legal Pathways, Each With Its Own Rules
The 1915(c) waiver is not the only route into home-based Medicaid coverage. States can also use Section 1915(i) to make home and community-based services a permanent part of their Medicaid state plan rather than a waiver that has to be renewed, an option that became formally available in 2005. Two narrower authorities round out the list: Section 1915(j), which lets beneficiaries direct and manage their own personal assistance services, and Section 1915(k), the Community First Choice option, which funds attendant-care services for people who would otherwise need an institutional level of care. Forty-seven states and the District of Columbia currently run at least one 1915(c) waiver alongside whichever of the other three options they have chosen to adopt.
The 1915(c) authority also lets states waive three specific Medicaid requirements that would otherwise apply everywhere in the state. States can waive statewideness, meaning a waiver only has to operate in the parts of the state where the need or the provider capacity exists. They can waive comparability of services, meaning coverage can be targeted narrowly to groups such as older adults, technology-dependent children, or people with a specific diagnosis rather than offered uniformly. And they can waive the income and resource rules that would normally apply, extending eligibility to people who would otherwise qualify for Medicaid only inside an institution, often because of a spouse’s income.
Eligibility itself is not automatic just because a state runs a waiver. An applicant has to demonstrate a level of care that would qualify them for admission to an institution in the first place, the same clinical bar used to decide nursing-home eligibility. States also set a cap on how many people a given waiver can serve, which is the reason waitlists exist in many states even after someone has been found eligible on paper; the waiver carries a budget and an enrollment ceiling, and applicants can be queued behind it.
The Services Covered, and the Numbers Behind the Shift
Coverage under an HCBS waiver is broader than home health visits alone. Standard services include case management, homemaker help, home health aide visits, personal care, adult day health programs, and respite care that gives an unpaid family caregiver a break, along with habilitation services delivered either in the home or in a residential day setting. States can also propose additional services aimed specifically at diverting someone from an institution or transitioning them back into the community once they are ready to leave one.
The scale of the shift shows up clearly in federal long-term care spending data. In 2021, 86.2 percent of the people using Medicaid long-term services and supports received at least some of that care through HCBS rather than in an institution, and 63.2 percent of long-term care dollars nationally went toward home and community-based services rather than nursing facilities. That is close to a full inversion of a program that spent its first decades built almost entirely around institutional beds.
Oversight sits with the Centers for Medicare & Medicaid Services, which works with states to monitor quality inside HCBS waiver programs even though each state designs and runs its own version. The combination of federal minimum standards and state-level design choices means the specific services, provider network, and waitlist length a Medicaid beneficiary encounters can look very different depending on which state they live in, even though the underlying 1915(c) authority behind the waiver is the same nationwide.
For someone approaching the point where a nursing home admission looks likely, the practical question is not whether HCBS exists in their state — nearly all states now offer it in some form — but whether their specific waiver still has room. A cost-neutrality test can cap how much a state is willing to spend, an enrollment limit can cap how many people it serves, and neither number is guaranteed to move in step with how many people actually qualify for care at home instead of in an institution.
This article was produced with the assistance of AI and reviewed by The Money Overview editorial team before publication.
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