States may fund services in assisted living or board-and-care settings through Home and Community Based Services (HCBS) waivers or as a regular state plan service. States most often use the Home and Community Based Services Waiver (1915 (c)). However, a few states use Medicaid state plan services, typically personal care. The two forms of coverage differ in three important ways:
First, waiver services are available only to beneficiaries who meet the state's nursing home level of care criteria; that is, they would be eligible to enter a nursing home if they applied. Nursing home eligibility is not required for beneficiaries using state plan services.
Second, states set limits on the number of beneficiaries that can be served through waiver programs. The limits are defined as expenditure caps that are part of the cost neutrality formula required for approval. Waivers are only approved if the state demonstrates that Medicaid long- term care expenditures under the waiver will not exceed expenditures that would have been made in the absence of the waiver. States do not receive federal reimbursements for any waiver expenditures that exceed the amount stated in the cost neutrality calculation. In contrast, state plan services are an entitlement, meaning that all beneficiaries who meet the eligibility criteria must be served. Federal funding continues to match state expenditures without any cap.
Finally, under home and community based waiver service programs, states may use the optional eligibility category that allows beneficiaries with incomes less than 300% of the federal Supplemental Security Income (SSI) benefit ($494 a month) to be eligible and receive all Medicaid services. In the absence of this provision, people who live at home and have too much income to quality for Medicaid would be forced to spend down their income and assets to qualify, often by needlessly entering an expensive nursing home. Using the optional eligibility approach, states can pay for assisted living and other services to give people options to nursing home admission. Tenants who meet the nursing home criteria can become eligible for Medicaid without spending their excess income. They may retain the income to pay the room and board costs while Medicaid covers the services. In contrast to the more generous eligibility option available under 1915 (c) home and community based services waivers, beneficiaries are eligible under the regular Medicaid state plan if they receive SSI or meet the state's medically needy standards.
TABLE 5. Difference in Medicaid Coverage
|Issue||State Plan Service||1915(c) Waivers|
|Entitlement||States must provide services to all beneficiaries who qualify for Medicaid||States limit spending for waiver services|
|Functional criteria||Beneficiaries must need the service covered||Must meet the state's nursing home level of care criteria|
|Income||Must be SSI or otherwise eligible for Medicaid||State may set eligibility up to 300% ($1482) of the federal SSI payment standard ($494)|
Available since 1981, HCBS waivers afford States the flexibility to develop and implement creative alternatives to institutionalizing Medicaid-eligible individuals.6 States may request waivers of certain Federal rules which impede the development of Medicaid-financed community-based treatment alternatives. The program recognizes that many individuals at risk of institutionalization can be cared for in their homes and communities, preserving their independence and ties to family and friends, at a cost no higher than that of institutional care. Waivers are initially granted for three years and may be renewed for five years.
HCFA has streamlined the waiver process. A pre-printed application allows states to simply check off essential aspects of its application. Assisted living has been added as a service on the pre-print although states may submit their own definition of the services, subject to approval. Some states reimburse waiver services--such as personal care, homemaker, chores, and others--in an assisted living setting rather than assisted living services. Waiver services may be provided statewide or may be limited to specific geographic subdivisions.
To gain approval, states must assure HCFA that, on average, it will not cost more to provide home and community-based services than providing institutional care would cost. The Medicaid agency also must provide and document certain other assurances, including that there are safeguards to protect the health and welfare of recipients.
6. Portions of the following have been taken from HCFA's description of the waiver program which is available at its web site (http://www.hcfa.gov).