Texas Medicaid Waivers: What Texas Health Steps Providers Need to Know

Overview of Medicaid waiver programs

Paper cutout family with house under a Medicaid umbrella

Medicaid is a jointly funded state-federal program signed into law along with Medicare in 1965 by President Lyndon B. Johnson. Medicaid began as an assistance program to help individuals with low income but it has grown to provide “health coverage for some low-income people, families and children, pregnant women, the elderly, and people with disabilities” (U.S. Department of Health and Human Services [HHS], 2017).

“Medicaid is the single largest source of health coverage in the United States” (HHS, 2020).

Medicaid by the Numbers


37 millionchildren enrolled

(Center on Budget and Policy Priorities [CBPP], 2020).


3.1 million children and youth enrolled

(Texas Health and Human Services Commission [HHSC], 2020).


40 percentof Texas children receive health services through Medicaid.

(Kaiser, 2019).

Every state operates its own Medicaid program within broad federal guidelines. States have wide flexibility to design and oversee their programs. “As a result, Medicaid eligibility and benefits vary widely from state to state” (CBPP, 2020).

However, federal mandates require states to provide Medicaid to certain groups of individuals and provide certain health coverage. As an entitlement program, Medicaid:

  • Guarantees coverage for eligible services to eligible individuals.
  • Provides funding based on the actual costs to provide eligible services to eligible individuals.

States have options to cover other groups, such as individuals receiving home and community-based services.

Since the early 1980s, programs known as Medicaid waivers have given states the flexibility to waive certain Medicaid requirements to provide care for people who otherwise might not qualify for Medicaid. States receive Medicaid matching funds for specific waiver programs, such as those that provide long-term home and community services for individuals who otherwise would require care in nursing homes, hospitals or other institutions.

A dramatic shift in Medicaid spending has occurred since 1995 (CBPP, 2019):

1995: 18 percent of Medicaid spending for long-term services/supports went to home and community services. 57 percent of Medicaid spending for long-term services/supports went to home and community services.

Important note about this course

Medicaid waiver policies and regulations are complex. This course provides a tailored overview of what are known as “1915(c) waivers” for children and youth with disabilities in Texas. The waivers are named for the section of the Social Security Act that allows such programs. These waiver programs provide services to meet the needs of those who prefer to receive long-term care services/supports in their home or community, rather than in an institutional setting such as a nursing home or other inpatient facility.