Paid Family Caregiving Through Medicaid HCBS Waivers

In April 2026, Secretary of Health and Human Services Robert F. Kennedy testified in a congressional committee hearing about the budget for Fiscal Year 2026-2027, describing Medicaid home-care programs that pay family members to care for disabled relatives as "rife with fraud" because they pay parents to provide services they used to do for free.

The statements were met with a strong reaction from the disability community, with many disability organizations issuing statements, including ANCOR, The ARC, and Disability Rights California. The comments also sparked questions about the evidence behind claims of widespread fraud. Disability advocates pointed out that family caregivers are generally paid only for authorized services and are subject to documentation, oversight, and program-specific requirements. They argued that the larger challenge facing many states is not fraud, but a shortage of available direct support workers and home-care providers.

In this article, we'll walk through how HCBS programs actually work and why some states allow parents and family members to be paid for the care they provide. We'll look at what the evidence really says about concerns like fraud, costs, and oversight — and what those findings mean for families like yours. We'll also get into the realities so many parents know firsthand: what happens when you can't find a qualified caregiver, when services simply can't be staffed, and when you become the only person who can be there for your child.

A week after his testimony in Congress on April 23, the Director of the Center for Medicaid Services (CMS), Dr. Mehmet Oz, held a press conference and sent a letter to all 50 state governors directing states to review Medicaid providers considered at high risk of waste, fraud, abuse, and corruption. The letter pointed to providers without National Provider Identifiers (NPIs) as potentially most vulnerable to fraud. While NPIs are commonly used by healthcare professionals and agencies, many parent caregivers do not have them. As a result, some disability advocates expressed concern that paid family caregiving programs could face increased oversight or restrictions, even though these services are often essential for families who cannot find enough direct support workers. They are also more cost-effective for states.

Dr. Oz specifically called out California’s In-Home Supportive Services (IHSS) program, which is often considered the gold standard of at-home care programs, saying that the services “include personal care like bathing or grooming, household tasks, cleaning and cooking, shopping, transportation. Now, these are tasks that your family could do for you, but having the government pay has generated some significant cash for unethical people.”

During the same period, high-profile fraud-busting cases were announced — with Dr. Oz making a big show of his personal involvement in these arrests — targeting large Medicaid providers across various states, none of which involved parents.

On May 13, in a press conference about his anti-fraud taskforce, Vice President Vance announced that the federal government would defer $1.3 billion in Medicaid reimbursements to California, alleging the state "has not taken fraud very seriously." The move was targeted at the IHSS program — confirmed by Dr. Oz and the CMS as — which has grown from $8 to $28 billion over the past decade.

These headlines are alarming, but California state officials, Medicaid directors, disability rights organizations, and national health law advocates are pushing back hard. Here's what you need to know.

No evidence of fraud

A major point of contention in California's funding freeze is that federal officials have not publicly presented evidence of widespread fraud in home and community-based services (HCBS) programs like IHSS. Instead, advocates and state officials argue that the growth in spending reflects the fact that more people are receiving services — not that the programs are being abused.

The National Health Law Program (NHeLP) criticized the funding freeze, noting, “The administration has offered no evidence that California’s HCBS programs are fraudulent, only that more people are receiving the services that they need.”

Advocates point out that the federal actions unfolded quickly — including congressional testimony, a letter to all 50 governors, targeted press conferences, and ultimately a payment freeze — before any completed investigation or findings showing that family caregiving programs are a significant source of fraud. As California's Department of Health Care Services (DHCS) explained, “CMS is deferring these funds simply because the growth rate in California’s IHSS program is greater than other states. In addition, CMS’ letter cites program integrity concerns, but provides no specifics as to what these concerns are other than ‘statistical outliers.’”

California's own Medicaid director Tyler Sadwith condemned the withholding of $1.3 billion federal funds owed to California and called the payment freeze an attempt to undermine decades of federal HCBS policy: “CMS has used what once was a routine payment reconciliation process with states to undermine exactly what federal HCBS policy has long sought to achieve: helping more people remain safely at home, rather than enter institutions for long-term care.”

The growth of IHSS is not a sign of fraud — it's a sign of a program doing its job

California state officials say that the growth of IHSS has been intentional. A recent LAO report showed that it could be attributed to three factors: a larger caseload, higher hourly wages for home health workers, and more hours logged as workers serve more people with greater needs. Between 2023 and 2025, caseload increased 17.5%, and the average hourly wage for home health workers grew from $19 to $21, driven by minimum wage increases and county-negotiated rates. The report calculated that roughly 50 percent of the growth is due to caseload growth, 40 percent is due to cost per hour growth, and 10 percent is due to hours per case growth.

Disability and health advocates agree this is not about fraud

California's Department of Health Care Services (DHCS) stated, “This action sends a troubling message about the value CMS places on the essential work IHSS caregivers perform every day and creates significant fiscal strain for California.”

Disability advocates have also raised concerns about the broader impact of the decision. Disability Rights California stated, “This decision comes amid many such major cuts under the pretense of combatting fraud that will do great harm to disabled people in America.”

Jennifer Cannistra, Executive Director at NHeLP, was even more direct: "This decision is a distraction and an unsubstantiated, cruel justification for deeply unpopular trillion-dollar Medicaid cuts. These attacks are aimed at the health and dignity of low-income people, people with disabilities, and the care workers who support them. Medicaid home and community-based services help people thrive in their communities. Threatening those services puts people at risk of institutionalization, worse health outcomes, and needless suffering."

The current threats to home and community-based services funding aren't happening in a vacuum. Under federal Medicaid regulations, coverage of nursing facilities is mandatory. Every state must provide it. Coverage of most home and community-based services, however, is optional. States choose whether to offer it, how much to offer, and who qualifies. This is the structural "institutional bias" that means when budgets get cut, HCBS typically goes first.

During the budget crises that followed the 2008 recession, every single state and the District of Columbia cut spending to at least one of their HCBS programs between 2010 and 2012. States were more likely to quietly reduce what they spent per person — sometimes by capping or cutting benefits — than to openly reduce how many people could enroll. Spending cuts averaged 11 to 12% for waiver and personal care services. The number of people being served dropped by anywhere from 2 to 15%, depending on the program.

Although the HCBS program is optional for states, the percentage of people with IDD receiving Medicaid-funded long-term supports and services in home- and community-based settings reached 94% in 2020. According to the 2026 Case for Inclusion Report, “Limiting available funding for the program that supports the vast majority of people with IDD risks significant program closures, which will in turn leave many turning to services that are costlier and more restrictive such as nursing homes and hospitals—while leaving others with no options whatsoever.”

Worker shortage

If you've ever tried to find a direct support professional for your child, you already know this problem firsthand. There is a longstanding crisis in recruiting and retaining the frontline workers who deliver home and community-based services. The core problem is simple: Medicaid reimbursement rates are too low for providers to pay competitive wages — meaning DSP jobs often pay no more than a position at a fast food counter or retail register. Turnover is brutal and vacancies are chronic. Stats show that 90% of community-based service providers experienced moderate or severe staffing challenges in 2024, forcing some to discontinue their programs, even if they’re the only providers in their area.

When there aren't enough DSPs, families face a stark choice: go without services, or turn to more expensive and restrictive settings until a provider becomes available. Neither is acceptable. And neither is cheap. This is the gap that paid family caregiving fills — not because parents want to be the backup plan for a broken system, but because when the worker isn't there, someone still has to show up. It's almost always the family.

The scale of unmet needs

While states were serving fewer people, the waitlists exploded. For services specifically supporting people with intellectual and developmental disabilities, 23 states saw a median 54% increase in the number of people waiting for help. Right now, more than 600,000 people with disabilities are already sitting on HCBS waiting lists — meaning they qualify for home and community-based services but cannot access them — making up nearly three-quarters of everyone on HCBS waiting lists. Those waitlists will only grow if states are forced to cap or close programs due to federal funding cuts. These are real people, waiting for help that exists on paper but not in practice. Between 2016 and 2024, the number of states with waiting lists has fluctuated between 37 and 41, and is currently at 40 states.

Over 80% of people on HCBS waiting lists lived in one of five states: Texas, South Carolina, Florida, Illinois, and North Carolina. Nearly two-thirds were in Texas alone. That concentration tells you what "a state without a healthy HCBS program" looks like in practice.

In-home services are often provided by direct support professionals funded by Medicaid or, in some circumstances, by family members paid to provide the service, often when no one else can. These services were developed by states in an effort to deinstitutionalize care and make it affordable for families to care for their loved ones in their homes.

The process started with the 1965 Social Security Act, Title XIX on Medicaid. All states were to have Medicaid programs to provide health coverage for low-income individuals, but each state runs their Medicaid program differently. For the most part, when Medicaid was created, long-term care was almost exclusively provided in institutional settings — nursing homes and intermediate care facilities. Medicaid paid for individuals (including children) to live in an institution. If you wanted to keep your child at home, you were largely on your own.

RFK’s uncle President John F. Kennedy was a key factor in the deinstitutionalization of people with disabilities. He demanded a decrease over a number of years and by hundreds of thousands of persons confined in institutions. He wanted to revitalize their lives through better health programs and strengthened educational and rehabilitation services.

The long road away from institutions

For people with intellectual and developmental disabilities — such as Down syndrome and autism — exposés of horrific institutional conditions helped unite parents, self-advocates, and attorneys in an emerging disability rights movement grounded in the notion that segregation is discrimination.

One of the most infamous examples was Willowbrook State School, a state-run institution for children with intellectual disabilities. During a 1965 visit, Senator RFK described the institution as a "snake pit," where children were "living in filth and dirt, their clothing in rags, in rooms less comfortable and cheerful than the cages in which we put animals in a zoo."

Public outrage over overcrowding, neglect, and questionable medical practices continued for decades before Willowbrook finally closed in 1987. For many families and self-advocates, Willowbrook became a powerful symbol of what can happen when people with disabilities are isolated from their families and communities. The scandal helped galvanize parents, advocates, and attorneys around a growing belief that people with disabilities should have the right to live, learn, and receive services in their communities rather than in institutions. It also helped build support for disability rights protections and community-based services that remain central to disability policy today.

But not everything is as it should be. With the threat of HCBS funding being cut, local disability rights advocates are worried. One such advocate in Ohio tells WOUB Public Media that “he worries the funding cuts could lead states to move backwards” toward institutionalization again. And having helped around 80 people move out of institutional living into community living, he said almost every single one of those people suffered some type of abuse within the institutional system.

In fact, a large national study of adults with intellectual and developmental disabilities found a significant share of those who previously lived in institutions continue to experience worse outcomes in the community — including more isolation, fewer natural relationships, and more reliance on congregate living arrangements instead of living with family. They also experience more loneliness, less choice, and have a consistent pattern of disability-service-focused rather than community-based social connections.

In another study, research across disability populations shows a consistent pattern: people who begin care in the community are far less likely to end up in long institutional stays than those who begin care in institutions. Among the 13,609 beneficiaries with intellectual or developmental disabilities who started services in the community, fewer than 1% later had a long institutional stay. In contrast, among the 1,008 beneficiaries who began services in institutional settings, about 73% experienced a long institutional stay.

The introduction of HCBS Medicaid waivers

In 1981, Congress passed Section 2176 of the Omnibus Budget Reconciliation Act of 1981, which allowed states to apply for home and community-based services (HCBS) 1915(c) Medicaid waivers, which provide opportunities for Medicaid beneficiaries to receive services in their own homes or communities rather than institutions or state hospitals. The waivers are often called Katie Beckett waivers, named after the little girl whose plight led President Reagan to develop the law. The primary goal was to prevent the abuses common in big institutions, and as it turned out, community care generally costs the taxpayer less.

HCBS waivers give states flexibility to provide services to people who might otherwise fall through the cracks. In practice, that means states can:

• Target waivers to areas of the state where the need is greatest, or where certain types of providers are available.
• Make waiver services available only to certain groups of people who are at risk of institutionalization, such as people with intellectual disabilities.
• Provide Medicaid to people who would not be eligible outside an institutional setting, often due to the income and resources of a spouse or parent.

The waiver allows families in many states to qualify for Medicaid based on “institutional deeming” rules because if the child didn’t qualify for Medicaid, the family might be forced to institutionalize them in order to afford the healthcare they need. However, states have to demonstrate cost neutrality, i.e. that HCBS waiver spending per person would not exceed what institutionalization would cost. The community option had to prove it was at least as cheap as the institution.

The ADA and Olmstead

The Americans with Disabilities Act (ADA) was officially signed into law by President George H.W. Bush on July 26, 1990. Bush said that the ADA would take a sledgehammer to a wall which has “for too many generations separated Americans with disabilities from the freedom they could glimpse, but not grasp.” That legislation led to a court case in 1999, Olmstead v. L.C., that required all public entities to provide community-based services and refrain from unnecessary segregation of individuals with disabilities.

Olmstead confirmed a legal mandate for states to fund and expand the very programs we're talking about in this article. Home and community-based services are, in large part, how states fulfill that obligation. The numbers tell the story of what followed.

At the time of the Olmstead decision in 1999, 73 percent of Medicaid long-care spending went to institutional care, with only 27 percent going to home and community-based services. Three decades later, that ratio has nearly flipped: about 86 percent of long-term services and support (LTSS) users received HCBS in 2021, while only 63 percent of LTSS expenditures were for HCBS in 2021, demonstrating planned cost effectiveness.

All 50 states have Medicaid. Many states have waivers so that children can qualify for Medicaid services based on their own income rather than their parents' income. One important thing for families to know is that HCBS waivers are administered by individual states, not the federal government.

Because each state designs its own waiver programs, available services can vary. Depending on the waiver, families may be able to access supports such as service coordination, personal care, home health aides, respite care, adult day programs, homemaker services, and habilitation services that help people build skills and independence. States can also fund other services that help people remain safely at home and avoid institutional care.

With federal Medicaid cuts on the table, knowing exactly what your state's waiver covers — and whether it allows you to be paid as your child's caregiver — may be the most important thing you can do right now. You can look up the waiver that your state has using the CMS HCBS waiver portal, which is searchable by state and waiver type. It shows approved provider qualifications, including whether legally responsible individuals (LRIs) can be paid. Also search: "participant-directed services" and "self-directed HCBS"— these are the program structures most likely to allow parent providers.

Historically, Medicaid generally did not allow parents of minor children to be paid caregivers. The reasoning was that parents are considered a child's "Legally Responsible Individual" (LRI), meaning they already have a legal obligation to provide care for their child. Under that view, Medicaid would pay for services provided by outside caregivers but not for care provided by a parent.

However, over time, many states have used HCBS waivers and other Medicaid authorities to create pathways for parents to be paid caregivers. Most states do have some pathway for paid parent caregiving of minors (often limited or waiver-specific), but a smaller set either don’t allow it, don’t have clear information, or only allow very narrow exceptions. The website Paid Parent Caregiving Information - Kids' Waivers has great information on waivers and services (but laws and policies in each state are always changing, so the page might not be up to date).

All of the states that do allow parents to be paid to provide Medicaid services to their children have strict limits and requirements that demonstrate that it is NOT the case that parents are paid to do things they would normally do for their children for free. In all cases, we are talking about extraordinary care, and a complex administrative process is in place to ensure that the requirements are met.

In Alaska, for example, the service must be one that the parent would not ordinarily provide in the household on behalf of a person without a disability of the same age, and the service must be habilitative, documented in the support plan, and necessary to assure the health and welfare of the participant and avoid institutionalization. On top of that, one of two additional conditions must be met: there must be a lack of qualified providers who can furnish services at necessary times and places, or the parent has unique abilities necessary to meet the needs of the participant — for example, when the parent is a qualified nurse.

In California, in comparison, IHSS can provide funding to help cover a child's care needs for certain tasks beyond what a parent would be expected to provide to a typically developing child of the same age. In some cases, parents who meet those extraordinary care needs for their child can be authorized as the paid IHSS provider for those services for. The rules around this have also recently changed in parents' favor. Previously, a parent could be paid as their child’s IHSS provider only if the parent was prevented from working full-time (40 hours per week) due to the child’s extraordinary needs, and there was not another suitable provider available with a legal obligation to care for the child. Effective February 20, 2024, the state repealed all work limitations and third-party provider limitations for minors receiving IHSS.

For examples of paid parent caregiving across states, including increases and cuts in funding, head to our article Medicaid Paid Parent Caregiving Across States.

The reality of caregiving

When people talk about "family caregivers," they often picture someone helping an aging parent a few hours a week. The reality for families of people with intellectual and developmental disabilities is something else entirely.

The average caregiver in the United States provides about 27 hours of care per week. For families of people with IDD, that number nearly doubles. According to the Arc’s Family and Individual Needs for Disability Supports (FINDS) survey, family caregivers of individuals with IDD provide more than 40 hours of care per week, with an average of 57 hours of support, including 40% who provide more than 80 hours of care per week. To put this in context: 80 hours per week is two full-time jobs. The federal definition of full-time employment is 40 hours. 40% of IDD family caregivers are doing that twice over, unpaid.

“Most of us would rather just be parents”

For many families, these policy debates can sound abstract on paper — hours caps, reimbursement rules, eligibility criteria. But in real life, they determine whether a family can stay afloat and actually meet their children’s needs at home. A father in Indiana put it plainly in a recent op-ed in the Indiana Capital Chronicle about proposed changes to his state's Medicaid waiver program — and his words capture what so many parents of children with disabilities already know.

He starts with the math: a week is 168 hours. Capping paid caregiving at 40 of them doesn't reduce the need for care, it just eliminates the compensation for the rest. When we loop back to the government’s stance on fraud in these programs, his message is this: "Let me say something that may surprise people who assume families like mine are trying to ‘game the system.’ Most of us would rather not be paid caregivers. Most of us would rather be parents... But when there are no workers, families become the workforce. When the workforce turns over, families fill the gaps. When the workforce burns out, families are the backup plan... families cannot do that and also keep a job the way the world expects."

Like he writes, these waiver changes and funding cuts land directly on families trying to keep daily life stable and their children safe at home. And when systems are stretched this thin, the long-term risk grows in ways policymakers often say they are trying to prevent. The waiver itself is intended to “avoid institutionalization.” But when hours are capped, reimbursement is reduced, and staffing is already unstable, families can be pushed into impossible situations.

Home and community-based care has multiple benefits for people receiving care, their families, government programs, and taxpayers.

Community care costs far less than the alternative

The reality is that providing care at home remains far less expensive than institutional care — it’s a more efficient use of taxpayer funding, and it has been federal government policy since the Reagan era. So what do the numbers actually say?

According to the 2025 Case for Inclusion Report by United Cerebral Palsy (UCP) and ANCOR, “Medicaid HCBS is far less costly for states compared to the alternative: long-term isolation of people in large, statefunded residential institutions. In 2020, the average annual cost to serve a person with IDD in their community through an HCBS waiver was $49,764, whereas the average cost to deliver those same services in a state-operated institution was $313,188.6. In other words, an investment in HCBS produces long-term savings by enabling more people to be supported in more affordable settings.”

Even using the more conservative CMS data, in 2020, 5.6 million people used LTSS with 72% of those receiving only home and community-based services. HCBS costs averaged just over $36,000 per person while institutional costs averaged more than $47,000.

HCBS expansion saves money and creates growth in the long run

One of the most common reasons states resist expanding home and community-based services is the fear that more available services will draw in new Medicaid enrollees and drive up costs. The data says otherwise.

Research shows that HCBS expansion was not associated with increased Medicaid enrollment among older adults at all. What it was associated with: a 1% increase in HCBS spending reduced both the nursing home population and institutional Medicaid spending. Every $1 spent on home-based care was was associated with $0.74 increase in total LTSS spending, suggesting each dollar directed to HCBS was offset by $0.26 savings from decreased nursing home use. So, increased HCBS waiver spending didn’t create drive up costs, it was actually associated with more older adults receiving LTSS at a lower cost per beneficiary served relative to the nursing home setting.

It can also grow our economy. In New York, the positive economic impact of investing in HCBS was more than double the cost: $6.7 billion invested by the state into the disability services system led to $14.3 billion in economic activity. The mechanism is simple: family members of people with IDD can maintain employment when HCBS exists.

Community care produces better health and life outcomes

Beyond cost, there is a growing body of research showing that home and community-based care produces better life outcomes for people with disabilities — and for families.

• HCBS recipients who live in the community tend to have better health and life outcomes than persons living in institutional settings.

• For people with intellectual and developmental disabilities specifically, individual settings — including their own homes and family homes — are associated with better quality of life and less caregiver turnover compared to congregate settings like group homes. The key mechanism: having control over daily decisions is what drives quality of life improvement, not just the physical setting.

• Research also shows that people without access to HCBS have higher rates of emergency room visits and overall healthcare utilization, and that expanding HCBS access helps bring those rates down for both children and adults with autism.

• Researchers found that states with more generous HCBS waiver programs had significantly lower rates of unmet health care needs in children with autism, stating that the waivers “may have had more of an impact than private health insurance mandates in reducing unmet need for healthcare” among autistic children.

• A study out of Hawaii comparing how people fared functionally across three settings: their own homes, adult foster homes, and nursing homes — found that people who remained at home had the slowest rate of functional decline by a significant margin. However, researchers do note that systematic reviews have yielded mixed results comparing HCBS versus institutional care on some health outcomes, and the failure to consider within-group differences and selection bias may contribute to the inconclusiveness of parts of the literature.

The research is clear. The cost data is clear. The impossible math of caregiving and working, the waiting lists, the families holding everything together without backup is clear too. What isn't clear yet is whether the people making decisions about these programs understand any of it.

We need to tell people beyond the disability world about the work we do for our children and the impossibility of holding down a regular job at the same time. When people say ridiculous things like parents are being paid to carry groceries, we need others to say, “No that’s not what this is” — especially decision makers in legislature. Here’s what we can do:

Tell your story to your legislators. Reach out to your members of Congress, your U.S. senators, and your state representatives. Remind them that HCBS programs are cost-saving programs that allow children with disabilities to live with their families in a loving home — rather than in expensive institutions at taxpayer expense. Personal stories from constituents carry more weight than any data point. Check out our article here for tips on telling your story to legislators.

Learn what your state's program covers. Know your waiver. Know what you're entitled to. Know what's at risk. Families who understand their programs are far better positioned to advocate when changes come. For more on California's HCBS-DD waiver, start here.

Talk to people outside the disability community. Share this article and share your story. The more people understand what HCBS actually is — and what it actually costs to lose it — the harder it becomes for policymakers to cut it quietly.

Connect with advocacy organizations in your state. You don't have to do this alone. Disability rights organizations, Arc chapters, and HCBS advocacy groups are actively monitoring these policy changes and can help you stay informed and take action.