Types and Purposes of Medicaid Waivers

How States Use Medicaid Waivers to Customize Their Medicaid Programs

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Medicaid is a state and federal program that provides assistance to individuals and families with low income who lack health insurance and for whom health care is a significant financial burden. Medicaid is managed by each individual 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

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 1915 waivers, waiver services, waiver programs, Home and Community Based Services (HCBS) waivers, as well as names unique to specific states.

There are four types of Medicaid waivers:

  • 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 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.
  • 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.

    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. 

    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 caregiver, 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. For example, the Affordable Care Act provides funding for the expansion of Medicaid for low-income families, and some states have opted not to accept the expansion.

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