A new KFF issue brief lays out how extensively states now rely on Medicaid to pay and assist family members who provide care, and how vulnerable those services may be in the decade ahead. Medicaid HCBS, or home and community based services, are a critical support for millions of older adults who want to age at home, helping their families provide round-the-clock care.
Older people and their caregivers depend on Medicaid not just for services, but for income, training and respite that can make the difference between aging at home and entering a nursing facility. However, massive federal cuts threaten that support, at the same time that paid caregivers are increasingly difficult to find.
There are several underreported issues reporters can look into when it comes to possible Medicaid HCBS cuts in the states. You can start by checking your state’s budgets and line items for aging services to see whether — and how much — any cuts impact vital programs and supports. Here are some additional questions to pursue:
- Have states denied waivers allowing payment to caregivers, or reduced payment amounts?
- Have they cut back on home based and respite services?
- Are local nonprofits or public-private partnerships stepping in to fill these gaps?
Why this matters
For many low-income older adults, Medicaid home and community based services are the only realistic way to get help with bathing, eating, dressing and managing medications at home. KFF, an independent health policy and research organization, estimates that 5.1 million Medicaid enrollees used home care in 2023; approximately 1 in 5 were adults 65 and older with chronic illnesses or disabilities.
Medicaid now pays about two-thirds of all U.S. spending on home- and community-based services, filling a gap left by Medicare, which generally does not cover long-term home care for older adults.
The “One Big Beautiful Bill Act,” also known as H.R. 1, was signed into law last July. It is projected to reduce federal Medicaid spending by $911 billion over the next decade. The cuts are raising alarms among aging and caregiving advocates, who fear states will respond by trimming optional benefits, especially home- and community-based services that help older adults remain at home. Since most home care programs in Medicaid are not mandatory, they are an obvious target when states are forced to make budget choices.
“Unlike the federal government, states are required to balance their budgets,” said Alice Burns, Associate Director of KFF’s Program on Medicaid and the Uninsured. “We don’t yet know how these cuts will play out.” However, if states pull back on payments and supports for family caregivers, some older adults may find their only option is either institutional care, or having unpaid relatives do even more with less help.
Reporters can see how their states stack up by analyzing the data in this KFF issue brief’s tables that look at states’ policies on waivers, caregiver payments and other supports, as well as paid worker shortages.
Worker shortages and financial stress
While demand for home care for older adults is rising, the availability of paid home care workers is shrinking. Nearly one in three home care workers are immigrants, and the Trump Administration’s more restrictive immigration and enforcement policies are expected to worsen shortages of aides willing and able to work in people’s homes.
Since the crackdown began, about 13% of paid home care workers report not going to work and about 40% of undocumented workers have not worked, according to Burns. “It’s inconceivable that this won’t place a further strain on home care.”
Paid care from family members
All responding states in the KFF survey allow waiver payments to family and friends; 44 permit waivers to pay “legally responsible relatives,” which usually includes spouses caring for older partners.
States may pay those relatives when they are providing care that exceeds usual family responsibilities and is necessary for the older person’s health, safety, and ability to remain in the community rather than in an institution. They must also meet provider requirements, receive close supervision and have a documented, demonstrable need, such as a shortage of other qualified workers. These payments are another waiver option that could be on the chopping block in some states.
The issue brief also noted that the reach of these policies is unclear. When asked what percentage of waiver participants receive paid care from relatives, more than two-thirds of states could not provide data.
States are also using Medicaid waivers to shore up caregivers’ well being and skills. All responding states cover some form of respite care, which provides short-term relief so family members caring for older adults can rest, go to their own medical appointments, or attend to other family obligations.
Older caregivers’ own health coverage at risk
Millions of family caregivers rely on Medicaid for their own health insurance. AARP’s 2025 Caregiving in the U.S. report estimated that more than 8 million people, about 13% of the 63 million U.S. family caregivers, get their own health coverage through Medicaid. That includes spouses in their 60s and early 70s caring for partners, as well as middle-aged and adult children juggling jobs, raising families and helping older parents.
If states decide to narrow waivers for older adults, freeze enrollment or scale back caregiver payments and supports, critical services that keep older adults out of institutions will be lost, and families will find themselves under increased economic, physical and psychological strain.
Family caregivers are supposed to be exempt from new Medicaid work requirements, Burns explained, but it’s still unclear how this will be documented or what reporting requirements are being put in place to ensure the exemption. These provisions go into effect in 2027 in the 41 states that have expanded eligibility for Medicaid coverage.
Resources
- New Federal Medicaid Policies Compound State Budget Pressures, Pew Research
- A Summary of Federal Medicaid Work Requirements, Center for Health Care Strategies
- States Are Planning Their Responses to H.R. 1 Cuts in Medicaid Funding — Will Enrollees Lose Benefits?, The Commonwealth Fund
- Home and Community Based Services Waiver program basics, Centers for Medicare and Medicaid Services
- How Does Use of Medicaid Wraparound Services by Dual-Eligible Individuals Vary by Service, State, and Enrollees’ Demographics? KFF
