A Medicaid Home and Community-Based Services Waiver Has Two Separate Doors. Most Applicants Only Ever Knock on the Income One.

9 min read · Last updated August 17, 2026

In this article

• What a 1915(c) waiver is
• Door one: the level-of-care test
• Door two: the financial test, and why it is different
• What a waiver actually pays for
• How to apply, and how the waiting list works
• Why applications get denied
• Frequently asked questions

Grace Okonjo is 79, lives alone in the Toledo house she has owned since 1988, and can no longer bathe or get out of a chair without help. Her income is a $1,180 monthly Social Security payment. Her daughter found the state’s home-care waiver, confirmed the income figure was low enough, filed the paperwork, and assumed that settled it. Six weeks later the answer came back that eligibility was not established. Income was never the problem. Nobody had done the assessment that actually decides these cases.

What a 1915(c) waiver is

Medicaid pays for nursing facility care as a matter of course. Paying for that same care at home requires a waiver of ordinary Medicaid rules, authorized by section 1915(c) of the Social Security Act.

These programs are numerous and local. The Centers for Medicare and Medicaid Services (CMS) reports that nearly every state and the District of Columbia runs them, and that about 257 are active nationwide. A state can run as many as it wants and aim each at a particular group. CMS notes that states may target by age or diagnosis, naming autism, epilepsy, cerebral palsy, traumatic brain injury, and HIV/AIDS as examples.

That matters early. There is no national waiver with one set of rules. What your neighbor two states away qualified for may not exist where you live.

Door one: the level-of-care test

This is the test Grace’s family did not know about, and it decides most cases.

Federal regulation at 42 CFR 441.301 permits waiver services only for people whom the agency determines “would, in the absence of these services, require the Medicaid covered level of care provided in” a hospital, a nursing facility, or an intermediate care facility for individuals with intellectual disabilities. The same section limits waiver services to people who are not currently inpatients of such a facility.

Read plainly, the assessment asks what you cannot do alone. It reviews your condition, not your bank statements, and it has to conclude that without help at home you would end up in a facility. Someone who needs housekeeping and a ride to appointments is unlikely to clear it. Someone who cannot bathe, transfer, or manage medications safely usually does.

Two timing details in 42 CFR 441.302 matter to real applicants. The initial evaluation is required “when there is a reasonable indication that a beneficiary might need the services in the near future (that is, a month or less),” so the standard is near-term need, not eventual decline. And reevaluations happen “at least annually.” People forget that second one. Improve enough to fail the level-of-care finding at reevaluation and the waiver ends, even though your income never moved.

The same regulation gives you a right most families are never told about. Once you are found likely to need that level of care, you must be informed of the feasible waiver alternatives and “given the choice of either institutional or home and community-based services.” Nobody can route you into a facility because it is the easier placement.

Door two: the financial test, and why it is different

Waiver financial rules are looser than ordinary community Medicaid rules. The reason is mechanical rather than generous.

One requirement a state may waive is the income and resource rules that normally apply in the community. CMS says this “lets States provide Medicaid to people who would otherwise be eligible only in an institutional setting, often due to the income and resources of a spouse or parent.” States “can also use spousal impoverishment rules to determine financial eligibility for waiver services.” The regulation is 42 CFR 435.217, covering community groups who “would be eligible for Medicaid if institutionalized.”

In plain terms: the state may test your finances as though you were already in a nursing home. When someone enters a facility, a spouse’s income generally stops counting against them. The waiver extends that treatment to care at home. So a married applicant told years ago that a spouse’s earnings put them over the limit may qualify now, on identical household income.

The ceiling itself is set by each state, so there is no national figure. For context on the baseline these rules sit on, the 2026 Supplemental Security Income federal benefit rate is $994 a month for an individual and $1,491 for a couple, per the Social Security Administration. Ask your state Medicaid agency for the waiver’s own limit, and ask specifically whether spousal impoverishment rules apply to you. If you are also on Medicare, the Medicare Savings Programs have separate limits worth applying for at the same time.

What a waiver actually pays for

Covered services vary by program, but CMS lists the standard set: case management, homemaker services, home health aide, personal care, adult day health services, habilitation both day and residential, and respite care. States may propose others that help move someone out of an institution or keep them from entering one.

Ask about respite care by name. It pays someone else to take over so the unpaid family caregiver can stop for a while, and it is what most often keeps a home arrangement from collapsing.

How to apply, and how the waiting list works

Apply through your state Medicaid agency or its area agency on aging or disability office, and ask for two things by name: the waiver application and the level-of-care assessment. Getting the assessment scheduled is what moves the file.

Then there is the queue, which exists because of a cost rule. Under 42 CFR 441.302, a state must assure that average per-person waiver spending “will not exceed 100 percent of the average per capita expenditures” institutional care would have cost. States therefore cap slots, and CMS states plainly that they “choose the maximum number of people that will be served.”

Waiting list measure	2023 figure	What it means for you
People on waiting or interest lists	About 692,000	A slot cap, not an eligibility denial, is what holds these people
States keeping a list	38	In the other states, an approved applicant is served
Average wait for waiver services	36 months, down from 45 in 2021	Plan care for the interim, not just for after approval
Average wait, intellectual or developmental disability	50 months	The longest queue of any group
States screening for eligibility before adding you	32 of 38	In six states your place on the list proves nothing about qualifying

That last row is worth pausing on. KFF, the health policy research organization formerly called the Kaiser Family Foundation, found that only 32 of the 38 states with lists screen people for waiver eligibility before adding them. Six states screen applicants on none of their waivers: Alaska, Illinois, Iowa, Oklahoma, Oregon, and Texas. Those six hold more than half of everyone waiting nationwide. KFF says directly that these lists “are an imperfect measure of unmet need.” So in those six states, being on the list is not evidence you passed anything. Ask whether your level of care has been assessed yet, because it may not have been.

Why applications get denied

Three things account for most denials, and none of them is income.

The level-of-care finding came back negative. Ask for the written assessment and read what it says you can do. Assessments are snapshots taken on one day, and if yours caught you on a good day or missed a condition, you can request reassessment and supply your physician’s documentation. Do not treat the first assessment as the last word.

Your projected cost exceeded what a facility would cost. 42 CFR 441.301 lets a state decline waiver services to a person whose cost would exceed equivalent institutional care. This is rare and applies to unusually intensive care plans.

You applied to a waiver that does not target you. Because states target by age and diagnosis, an eligible person can be turned away from one waiver and belong in another in the same state. Ask which waivers your state operates before you refile. If a nursing facility level of care is already established, PACE, the Programs of All-Inclusive Care for the Elderly, is a separate route to the same goal. For adults who do not clear the functional test at all, ordinary Medicaid adult expansion coverage runs on a pure income test.

Frequently asked questions

Do I qualify for a waiver if my income is low but I can still care for myself? Probably not. Low income satisfies only the financial test. Federal rules limit waiver services to people who would require hospital, nursing facility, or intermediate care facility level of care without them. If you manage bathing, transferring, and medications on your own, you are unlikely to clear the functional assessment.

Does my spouse’s income count against me for a waiver? Often it does not, and that is the point of the waiver. States may waive the community income and resource rules and instead test your finances as though you were institutionalized, where a spouse’s income generally stops counting. States may also apply spousal impoverishment rules. Ask your state Medicaid agency which treatment applies to your case.

What documents do I need to apply? Proof of income and resources, proof of identity and state residency, your Medicare or Medicaid information if you have it, and above all your medical records. Bring physician notes and any therapy evaluations describing what you cannot do without help, because that documentation is what the level-of-care assessment weighs.

How long is the wait once I am approved? It depends entirely on your state. Thirty-eight states kept waiting lists in 2023, with an average wait of about 36 months, and people with intellectual or developmental disabilities averaged 50 months. Twelve states kept no list at all. Ask your state agency for its current figure for the specific waiver you applied to.

Can I lose a waiver after I have it? Yes. Federal rules require reevaluation at least annually to confirm you still need that institutional level of care. If your condition improves enough to fail that test, the waiver ends even if your income has not changed. Keep your medical documentation current ahead of each annual review.