What Is Medicaid HCBS and Who Relies on It
Medicaid home and community-based services (HCBS) are a lifeline for millions of older Americans who want to age in place rather than enter nursing facilities. These services help families provide round-the-clock support — covering everything from bathing and dressing to medication management and meal preparation. For low-income older adults, Medicaid HCBS is often the only realistic option for receiving care at home.
According to KFF, an independent health policy and research organization, approximately 5.1 million Medicaid enrollees used home care services in 2023. Roughly one in five of those recipients were adults aged 65 and older living with chronic illnesses or disabilities. Medicaid currently funds about two-thirds of all U.S. spending on home- and community-based services — filling a significant gap that Medicare does not cover, since Medicare generally excludes long-term home care for older adults.
The $911 Billion Federal Funding Cut
The “One Big Beautiful Bill Act,” also known as H.R. 1, was signed into law last July. The legislation is projected to reduce federal Medicaid spending by $911 billion over the next decade. Aging and caregiving advocates are raising serious alarms, warning that states will respond by cutting optional Medicaid benefits — and home- and community-based services are among the most likely targets.
Unlike federally mandated Medicaid services, most HCBS programs are optional. That makes them especially vulnerable when states face budget pressure. As Alice Burns, Associate Director of KFF’s Program on Medicaid and the Uninsured, noted, “Unlike the federal government, states are required to balance their budgets. We don’t yet know how these cuts will play out.” If states reduce caregiver supports and waiver payments, some older adults may have no choice but institutional care — or leaving the burden entirely on unpaid family members.
Reporters covering this issue should examine their state’s budget line items for aging services, track whether waivers allowing caregiver payments have been denied or reduced, and investigate whether local nonprofits or public-private partnerships are stepping in to fill emerging gaps.
Worker Shortages Compound the Crisis
Demand for home care is rising while the workforce is shrinking. Nearly one in three home care workers are immigrants, and the current administration’s stricter immigration enforcement policies are expected to significantly worsen existing staffing shortages. Since enforcement actions intensified, approximately 13% of paid home care workers report missing work shifts, and around 40% of undocumented workers have stopped working entirely. Burns described the situation bluntly: “It’s inconceivable that this won’t place a further strain on home care.”
Paid Care From Family Members at Risk
All states responding to the KFF survey currently allow waiver payments to family members and friends who provide care. Forty-four states permit payments to legally responsible relatives — typically including spouses caring for older partners. These payments are authorized when the care provided exceeds normal family responsibilities and is medically necessary for the older adult to remain safely at home rather than in an institution.
However, this waiver option is also on the chopping block. More than two-thirds of states could not provide data on what percentage of waiver participants currently receive paid care from relatives, leaving significant gaps in understanding the scope of these programs. States are also using Medicaid waivers to support caregiver well-being through respite care — short-term relief services that allow family caregivers to rest, attend their own medical appointments, or manage other personal obligations. All responding states cover some form of respite care, but these programs may face cuts as budgets tighten.
Caregivers’ Own Health Coverage Under Threat
The impact of Medicaid cuts extends beyond older adults receiving care. According to AARP’s 2025 Caregiving in the U.S. report, more than 8 million people — roughly 13% of the 63 million U.S. family caregivers — rely on Medicaid for their own health insurance. This group includes spouses in their 60s and early 70s, as well as middle-aged adult children balancing jobs, raising families, and supporting aging parents.
Family caregivers are technically exempt from new Medicaid work requirements under the legislation, but it remains unclear how states will document and enforce this exemption. These provisions are scheduled to take effect in 2027 across the 41 states that have expanded Medicaid eligibility.
What Reporters and Advocates Should Watch
The KFF issue brief includes detailed state-by-state data on waiver policies, caregiver payment structures, worker shortages, and respite care coverage. Reporters can use this data to track how their state compares and identify which programs are most at risk. If states pull back on HCBS funding, the consequences will be felt not only by older adults but by the millions of family caregivers who depend on these supports to continue providing care without sacrificing their own health, finances, or well-being.
