Types and Purposes of Medicaid Waivers

How States Use Medicaid Waivers to Customize Their Medicaid Programs

Baby getting vaccinated by Doctor
Getty Images/Bjarte Rettedal

Medicaid is jointly funded by the federal government and the state government, to provide assistance to individuals and families with low income who lack health insurance and for whom health care would otherwise be a significant financial burden. Medicaid is managed by each individual state, and eligibility rules differ from state to state.

A Medicaid waiver allows states to test and develop ways it delivers its own Medicaid-funded programs that differ from the standard federal program.

These programs may have unique eligibility requirements, or the programs may operate like managed care organizations. For example, Medicaid programs might be designed for specific populations in need, such as the elderly or for pregnant women

In the United States, Medicaid is the largest funded social service for medical and health care needs of low-income populations. Though all states currently accept some Medicaid funding and have their own Medicaid programs, those programs vary. In addition to being able to apply for Medicaid waivers, states may also "opt-out" of accepting new Medicaid funding and requirements. 

Waivers may also be applied to the Children's Health Insurance Program (CHIP), which provides federal funds to match state funds for programs to cover uninsured children and families that are low income but may not meet Medicaid eligibility requirements.

Medicaid Waivers

Medicaid waivers can go by a variety of names.

These names include 1115 waivers (authorized by Section 1115 of the Social Security Act ), 1915 waivers (authorized by Section 1915 of the Social Security Act), waiver services, waiver programs, Home and Community Based Services (HCBS) waivers, as well as names unique to specific states.

There are several types of Medicaid waivers, although they fall under the authority of Sections 1115 and 1915 of the Social Security Act:

  • Section 1115 waivers allow for research and demonstration projects designed to temporarily test expanded eligibility or coverage options, as well as methods for financing and delivering Medicaid. Section 1115 waivers essentially allow "pilot" or "demonstration" programs that are expected to enhance or promote coverage and efficiency. With the expansion of Medicaid under the Affordable Care Act, 1115 waivers have become increasingly popular as states look for unique ways to implement Medicaid expansion and utilize the additional federal funding that has flowed to the states to expand access to coverage. To be approved, a Section 1115 waiver proposal has to be budget neutral for the federal government (ie, the federal government can't spend more with the waiver in place than they would spend without it).  
  • Section 1915(b) waivers allow states to develop Medicaid managed care plans. State Medicaid agencies can contract with managed care organizations (MCOs) to help manage quality, utilization, and costs, while also working to improve plan performance and patient outcomes. MCOs provide health care services to Medicaid beneficiaries and receive payment for these services from the state Medicaid fund. 
  • Section 1915(c) Home and Community-Based Services (HCBS) waivers allow beneficiaries to receive long-term health care benefits at home or in community settings outside of institutional settings, such as nursing homes. Native American Tribes can contract with states to administer 1915(c) waivers via Indian Health Services. Within the realm of HCBS, states can also propose 1915(i) and 1915(j) waivers, and 1915(k) waivers, all of which provide additional flexibility in providing HCBS to eligible residents.
  • Combined or concurrent Section 1915(b) and 1915(c) waivers allow a state to provide services identified in Section 1915(c) by contracting with managed care organizations defined in Section 1915(b). The contracted managed care organizations deliver home and community-based health care services.

    Rules and Waiver Approval Process

    Each type of Medicaid waiver has various rules that apply to it. This page has a good summary of the various waivers, how they're used, and the requirements that apply to each one.

    A list of all the approved and pending Medicaid waivers is available on the Medicaid website. State waiver proposals are evaluated and approved (or rejected) on a case-by-case basis. Section 1115 waivers are approved for up to five years initially, with three-year renewals. Section 1915 waivers used to be approved for two-year periods, but in some circumstances, they can also be approved for five years.

    What Is Institutional Care and Home and Community-Based Services?

    For individuals who require long-term care, such as the elderly, Medicaid helps pay for this care in institutions, such as nursing homes. This may not always be possible for or helpful to the beneficiary, however. Medicaid's Section 1915(c) Home and Community-Based Services waivers provide services to those who do not live in nursing homes. Beneficiaries may instead reside in their own homes, or they may live with family members or other caregivers, or in special assisted living or senior living residences and communities other than their own homes or nursing homes.

    Medicaid "Opt-Out"

    In addition to waivers to create unique Medicaid programs, states may also choose to "opt-out" of certain Medicaid funding but still retain previously established funding.

    The Affordable Care Act provides funding for the expansion of Medicaid for low-income families, and lawmakers had intended to make acceptance of that funding mandatory, with states unable to retain their existing federal Medicaid funding if they didn't accept Medicaid expansion funding. But the Supreme Court rules in 2012 that states could not be obligated to accept the new funding (and in turn, cover the state's portion of the cost of Medicaid expansion, which will eventually be 10 percent of the total), and that rejecting the Medicaid expansion funding could not result in a state losing its existing Medicaid funding.

    As a result, there are 19 states that have not expanded Medicaid, but that continue to receive their pre-ACA federal Medicaid funding. 


    Centers for Medicare and Medicaid Services. National Overview of 1915(c) HCBS Waivers.

    Medicaid.gov. About Section 1115 Demonstrations

    Medicaid.gov. Medicaid and CHIP eligibility levels. June 2016.

    Medicaid.gov. State Waivers List.