What are Medicaid Waivers?
To better understand Medicaid waivers, it is helpful to start with an overview of the regular state Medicaid program. Medicaid is a jointly funded state and federal health care program for low-income persons of all ages. The rules governing Medicaid are federally set and require that all states provide assistance to specific groups of people, such as pregnant women, disabled persons, and seniors, who meet the eligibility requirements. All states must also provide nursing home care and home health care for those that demonstrate a functional and financial need. Other government set parameters, such as income and asset limits, offer a little more wiggle room, with states working within those parameters. Therefore, there is not consistency of eligibility criteria across state Medicaid programs.
Medicaid waivers, which are approved by the federal government, allow states even more flexibility to run their Medicaid programs as they see fit. Waivers allow states to “waive” certain rules. They enable states to expand their coverage to specific groups of people, make certain benefits available only to select groups, limit coverage to just part of the state, and test other ways to run their Medicaid programs.
For seniors and disabled persons, waivers can extend long-term home and community based services (HCBS) to persons who require assistance to live at home or in the community. Examples of care that may be provided by waivers is attendant care, supervision, adult day care, respite care, and homemaker services. Prior to these waivers, the only option for long term care may have been nursing home care.
Pros and Cons of Medicaid Waivers
Offering HCBS through Medicaid waivers is ideal for both care recipients and their families. As most elderly people prefer to age at home or in their communities, long-term care benefits through waivers help to prevent and / or delay the need for nursing home care. That said, it is common that services and support provided via HCBS waivers be complimented by unpaid care assistance from family members or other loved ones. Assistance through HCBS waivers takes some of the pressure off of family caregivers. It allows them to continue to work outside of the home, or simply give them a break from caregiving. It also gives them peace of mind knowing that their loved one is safe, supervised, and receiving needed care assistance. (Receiving care via Medicaid waivers is more cost efficient than is nursing home care for the state. Therefore, it is a win-win for care recipients, their families, and the state).
Some Medicaid waivers allow for consumer direction, also called cash and counseling, or self-directed care. This means that care recipients are able to choose from whom they receive services. This often includes the ability to hire relatives. While not as common, some waivers even allow spouses to be paid as care providers.
Different from a state’s regular Medicaid program, waiver programs are not entitlements. Instead, waivers have participant caps. Stated differently, meeting the wavier criteria for eligibility does not mean one will receive program benefits. Once all the enrollment slots are filled, waitlists form. The wait for services can be several months to several years.
Common Benefits / How They Help Seniors Live at Home
While the benefits of waivers are specific to each waiver, many Medicaid waivers offer a similar set of long term care services and supports. Examples include case management, personal care assistance, home health aides, adult day care / adult day health, respite care, home / vehicle modifications, durable medical equipment, skilled nursing care, homemaker / chore services, meal delivery / congregate meals, non-emergency transportation, personal emergency response systems, and transitional services from an institution back into the community.
Many of these benefits are relevant not only to frail, elderly persons and disabled individuals, but also to persons with Alzheimer’s disease and other related dementias. In the earlier, and sometimes middle stages of the diseases, persons can continue to live independently with waiver support.
Again, a major benefit of Medicaid waiver services is that seniors do not have to relocate to nursing home facilities, and instead can remain living in their homes or in the community. The settings in which a senior can live and receive support vary based on the waiver. However, the settings may include one’s home, the home of a loved one, an adult foster care home, an assisted living residence, and even a memory care unit (also called an Alzheimer’s unit). To be clear, Medicaid waivers will not cover the cost of room and board in a community setting, but may cover the cost of long term care to support independent living.
Typical Waiver Eligibility Requirements
Not all states use the same eligibility criteria for Medicaid waivers. However, in all states, applicants must be a resident in the state in which they are applying and demonstrate a financial and functional need.
As a general rule of thumb, the income limit is 300% of the Federal Benefit Rate (FBR). As of 2020, this means an applicant can have up to $2,349 / month in income. There is also an asset limit, which in most states, is $2,000 for a single applicant.
Functionally speaking, most HCBS waivers require that applicants need a level of care consistent to that which is provided in a nursing home. What this means, exactly, is determined differently by states, but often is determined by a need for assistance with everyday living activities (activities of daily living), such as walking, eating, dressing, and bathing. Basically, without waiver assistance, one would need to move to a nursing home. (Learn more about nursing home level of care here). However, some waivers only require that an applicant be “at risk” of nursing home placement. Again, how this is defined varies based on the state, but generally requires a functional assessment.
As a side note, the eligibility criteria for nursing home Medicaid is often consistent with the requirements for HCBS Medicaid waivers. Therefore, in 2020, states commonly limit one’s income to $2,349 / month and cap one’s assets at $2,000. However, this is not always the case. Some states do not have a strict income limit. Instead, one’s income cannot be greater than the monthly cost of nursing home care, and in other states, the income limit is much more restricted. However, regardless of the income limit, a nursing home beneficiary is not able to retain monthly income up to the income limit. Instead, all of one’s income, with a few exceptions, such as a monthly personal needs allowance, must be paid towards the cost of nursing home care.
Being over the income and / or asset limit(s) does not mean that one cannot qualify for Medicaid. Implementation of planning techniques can guide the way for eligibility.
Application Process for Care Recipients and Their Families
It is advised that persons determine if they are income and asset eligible for the Medicaid program for which they want to apply prior to filing an application. A non-binding Medicaid eligibility test is available here.
If an applicant is over the income and / or asset limit(s), it will result in a denial of benefits. It is also important to ensure that the Medicaid look-back period has not been violated. The look-back rule checks all past transfers for a period of time prior to application. In California, the look back period is 2.5 years, and beginning October 1, 2020, the look back period will be 2.5 years for New York Community Medicaid (NY’s long term home and community based services). Currently NY Community Medicaid, as well as all of the remaining states have a 5 year look back period. This “look back” is done to ensure no assets were given away or sold for less than fair market value in order to meet the asset limit. Violating the look-back period is cause for Medicaid ineligibility for a period of time.
Generally, the application process and the exact eligibility criteria is state specific. Often, supporting documentation is required, such as statements from checking and savings accounts, proof of health insurance (if applicable), and verification of income. Learn more about the Medicaid application process. The application process is complicated, and if one has any questions, is married, or is over the income and / or asset limit(s), it is highly suggested that one seek the counsel of a professional Medicaid planner. Find one here.
Unfortunately, elderly persons cannot apply in advance of the need of long-term care and be put on a waiting list for home and community based services. This is because if they do not meet the functional need, they are not program eligible. That said, there is one exception to this rule, which is California’s Assisted Living waiver. In CA, seniors who are eligible for aged, blind and disabled Medicaid (Medi-Cal) can apply for the waiver and have their names added to the waiting list.
To apply for a Medicaid waiver, persons must contact the Medicaid agency in their state.
How to Find Medicaid Waivers in Your State
As mentioned previously, Medicaid waivers are state specific. To find Medicaid waiver programs in your state, click here.
Different Types of Medicaid Waivers
Section 1915(c) Waivers
Particularly relevant to the elderly population, HCBS Medicaid waivers, also known as 1915(c) waivers, provide long-term services and supports to seniors in their home and community. While specific benefits are waiver specific, common benefits include personal care assistance, in-home and out-of-home respite care, transportation assistance, delivery of hot meals, home and vehicle safety and accessibility modifications, assisted living (memory care) services, adult foster care services, adult day care, mobility devices (wheelchairs and walkers), assistance with laundry, light housecleaning, preparation of meals, and more.
Many states offer more than one HCBS Medicaid waiver, but not all states have a HCBS waiver for the aging population. As mentioned previously, participant enrollment is capped and meeting the eligibility requirements does not ensure that one will receive benefits. Some waivers might have waitlists that extend for months or even years.
Many 1915(c) waivers allow for consumer-direction, which means that care recipients are able to hire, train, manage, and even fire, the caregiver from who they would like to receive assistance. It is not uncommon for friends and family members to be hired. Some waiver programs even allow the hiring of spouses.
Section 1915(b) Waivers
Section 1915(b) Medicaid waivers are also called Freedom of Choice waivers or Managed Care waivers. 1915(b) waivers allow states to utilize a managed care system, offer varying benefits, as well as require Medicaid beneficiaries to receive benefits and supports via a managed care network. This type of delivery system limits from whom program participants are able to receive services. They cannot simply choose any Medicaid-approved provider. Instead, the provider must be a part of the managed care plan in which the program participant is enrolled.
1915(b) Medicaid waivers can be administered in combination with 1915(c) HCBS Medicaid waivers. (This is called a Combination waiver). In simple terms, this means that long-term care services via 1915(c) waivers are provided via managed care networks. Stated differently, the providers from which one can choose services is limited, and self-direction of care is not an option. Some Combination waivers include all services provided by Medicaid, not just long-term services and supports. That said, home and community based services via a Combination waiver may not be entitlements. Rather, some states may limit program participation, and there may be a waitlist for long-term care services. For state plan benefits, such as doctor’s appointments, hospitalization, and laboratory work, no waitlist would exist. (Learn more about long term care via Medicaid managed care here).
1115 Demonstration Waivers
1115 Demonstration waivers are also referred to as Research and Demonstration Waivers. This type of waiver offers a considerable amount of flexibility on how states run their Medicaid programs. Nearly any requirement under a state’s Medicaid plan can be waived with the objective of testing new approaches that improve a state’s Medicaid program. States use 1115 Demonstration waivers to expand Medicaid coverage, such as increasing availability of home and community based services, administer benefits not otherwise provided by a state’s Medicaid program, and implement a change in the delivery system of benefits, such as applying a managed care system for long term care benefits. A somewhat controversial change some states have made through this type of waiver is to limit and / or do away with retroactive Medicaid. (Retroactive Medicaid allows Medicaid-covered expenses to be paid up to 3 months prior to Medicaid application for eligible applicants.)
In addition to long-term home and community based services, 1115 Demonstration waivers can cover nursing home care, behavioral health services, primary care, and emergency care. In other words, they can cover the state’s entire Medicaid program. Some services can also be consumer directed. Please note that waitlists for long-term care services may exist.
How States Apply for Medicaid Waivers
States have to apply for Medicaid waivers, which are state specific. This is done via the Centers for Medicare and Medicaid Services (CMS). This is a federal agency that is part of the Department of Health and Human Services (HHS).
While public input is encouraged for both 1915(b) and 1915(c) waivers, it is required for 1115 Demonstration waivers. The approval process is limited to 90-days for 1915(b) and 1915(c) waivers, while there is no time limit for approval of 1115 waivers. 1915b waivers are initially approved for 2 years, but can be approved for 5 years if the waiver is extended to persons who are dual eligible (enrolled in both Medicare and Medicaid). 1915(c) waivers are initially approved for 3 years, but can be approved for up to 5 years if Medicaid-Medicare enrollees are eligible for the waiver. 1115 Demonstration waivers are initially approved for 5 years. States must reapply for renewal of waivers. Please note that even after approval of a waiver, a state does not have to implement it.