Medicaid Recipients Benefit from the American Rescue Plan’s Funding for Home and Community-Based Services

Home and community-based services (HCBS) help seniors and people with disabilities with their daily needs, allowing them to remain in their own homes. Services can include supportive housing, home health aid services, assistive technology, and support with daily activities. Without these supports and services, these individuals might not be able to live independently in their communities and could be forced to seek institutional care.  

Home-based care allows individuals to remain in a familiar and comfortable environment, live closer to critical support networks such as family and friends, participate in community life, and have more control over their daily routines. A review of multiple studies detailing the experiences of individuals with intellectual and developmental disabilities (IDD) found evidence that a home-based model offers greater benefits than institutional care.1 HCBS programs were shown to improve independent living skills, decrease unmet healthcare needs, reduce the likelihood that caretakers would need to leave their jobs, and reduce racial disparities in accessing care. HCBS care is also more cost-effective for the state.

Medicaid is the main source of coverage for HCBS services and pays for almost 60% of all HCBS.2 In 2018, over 2.5 million people received services through Medicaid HCBS in 50 states and DC. Despite this coverage, there is significant unmet need for HCBS that was exacerbated during the COVID-19 pandemic. In response, the American Rescue Plan (ARP) provided additional funding to states for the delivery of Medicaid HCBS. Specifically, it increased the federal matching rate—better known as the FMAP—by 10% for Medicaid HCBS. This means that for every dollar a state spends to support HCBS for seniors and people with disabilities, the federal government will pick up 10% more of the cost. This increase is in effect through March 31, 2022.

States can use these extra funds to support a variety of different projects, but they must be dedicated to strengthening Medicaid HCBS. The Centers for Medicare and Medicaid Services (CMS), the agency that administers the Medicaid HCBS program, released a list of examples for how a state might use the funds to support individuals to safely remain in their homes and communities and to support the direct care workforce.3 Examples include expanding the types of services that are covered, reducing waitlists for services, addressing social factors of health such as housing, and raising worker compensation.4

  1. McLean, K. J., Hoekstra, A. M., & Bishop, L. (2021). United States Medicaid home and community-based services for people with intellectual and developmental disabilities: A scoping review. Journal of applied research in intellectual disabilities : JARID, 34(3), 684–694.
  2. Musumeci, M. B. (2020, May 5). How Are States Supporting Medicaid Home and Community-Based Services during the COVID-19 Crisis? Kaiser Family Foundation.
  3. Centers for Medicare & Medicaid Services. (2021, May 13). Implementation of American Rescue Plan Act of 2021 Section 9817: Additional Support for Medicaid Home and Community-Based Services during the COVID-19 Emergency. Baltimore, Maryland.
  4. Chidambaram, P., & Musumeci, M. B. (2021, May 28). Potential Impact of Additional Federal Funds for Medicaid HCBS for Seniors and People with Disabilities. Kaiser Family Foundation.