The HCBS Relief Act of 2025 authorizes a temporary, emergency increase of 10 percentage points to a State’s Federal Medical Assistance Percentage (FMAP) for expenditures on Medicaid home and community‑based services (HCBS) during fiscal years 2026 and 2027, subject to a 95% cap. States must apply to HHS, describe planned activities, and give assurances that funds will supplement— not supplant—existing State HCBS spending and be spent by September 30, 2029.
The statute limits eligible uses to a broad menu of workforce and service‑stability interventions (rate increases tied to increased worker compensation, paid leave, hazard pay, recruiting, training, assistive technology, moving costs for people who were institutionalized, and other items the Secretary allows). The bill also creates state reporting requirements and an HHS‑commissioned external evaluation, and exempts those reports from the Paperwork Reduction Act.
At a Glance
What It Does
The bill increases the FMAP by 10 percentage points for qualifying HCBS spending in FY2026–FY2027, capped at 95%. States must submit an application describing planned HCBS improvement activities and assurances on spending and oversight. Funds must be used for a prescribed list of workforce, service access, emergency, and community‑integration activities.
Who It Affects
State Medicaid programs that elect to apply; home health agencies, direct support professionals (including self‑directed providers), Area Agencies on Aging, 1915/1115 waiver administrators, and Medicaid‑eligible individuals—especially those on HCBS waiting lists or displaced from community living. HHS/CMS will have new evaluation and oversight responsibilities.
Why It Matters
It injects near‑term federal resources targeted at stabilizing and expanding HCBS capacity and workforce, while conditioning funds on specific spending goals and documentation. For policymakers and compliance officers, the bill combines generous federal financing with explicit pass‑through and reporting rules that will shape state rate‑setting, contractual obligations, and waiver management.
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What This Bill Actually Does
The bill creates a two‑year, emergency FMAP increase: states that apply and are approved receive an additional 10 percentage points on the FMAP for qualifying HCBS expenditures in fiscal years 2026 and 2027. The increase applies on top of the state’s existing FMAP calculation (including other statutory FMAP add‑ons), but the combined federal share may not exceed 95 percent.
The Secretary of Health and Human Services (HHS) will specify the application timing and form; applications that are certified complete within 90 days are treated as approved.
To receive the enhanced FMAP, a state must submit an application describing which HCBS improvement activities it will implement, how it will implement them, and provide assurances that federal funds will be expended by September 30, 2029, will supplement (not supplant) state HCBS funding, be used to increase reimbursement rates in ways that raise worker compensation, and be subject to adequate oversight and valid data collection. The statute lists a broad set of permissible uses—focused heavily on workforce improvements (rate increases, paid leave, hazard pay, recruitment, training), service continuity (retainer payments, travel costs), assisting family caregivers, purchasing emergency supplies or assistive technologies, and helping people relocate back to the community from institutions.States must report to HHS by December 31, 2029, on funded activities, numbers of eligible individuals served, and numbers who resumed HCBS because of the funding.
HHS must engage an external evaluator experienced in HCBS and disability programming to assess implementation and outcomes across states, document changes in access, availability, and quality, identify promising practices, and publicly disseminate findings. The bill also exempts the required state reporting from the Paperwork Reduction Act, and clarifies definitions and interactions with title XIX waivers and demonstrations.
The Five Things You Need to Know
The bill increases FMAP for HCBS spending by 10 percentage points for FY2026 and FY2027, but caps the federal share at 95 percent.
States must apply to HHS; an application certified complete by the Secretary within 90 days is deemed approved and makes the state an "HCBS program State.", Federal funds must be spent by September 30, 2029, must supplement—not supplant—existing State HCBS spending, and must be used to raise rates in ways that increase worker compensation.
Permissible uses include rate increases tied to compensation, paid sick/family/medical leave, hazard and shift pay, recruitment and training, retainer payments, assistive technologies, relocation supports for people moved into institutions, and costs to serve individuals on waiver waiting lists.
States must submit a report by December 31, 2029; HHS must contract with an external evaluator to document state‑level and aggregate changes in access, availability, and quality and publish the findings.
Section-by-Section Breakdown
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Short title
Designates the bill as the "HCBS Relief Act of 2025." This is a formal naming clause with no operational effect, but it signals the legislative intent to position the measure as emergency relief targeted to HCBS.
10‑percentage‑point FMAP increase and cap
Authorizes a 10 percentage‑point add‑on to the FMAP for qualifying HCBS expenditures for fiscal years 2026 and 2027 and explicitly prevents the resulting FMAP from exceeding 95 percent. Practically, this is a near‑term federal financing boost to reduce state shares for covered HCBS spending; the 95 percent ceiling limits federal liability for states with already very high FMAPs.
Application requirement and deemed approval
Requires states to submit an HHS application describing planned activities and implementation details, plus assurances on timing, supplementarity, workforce compensation pass‑through, and oversight. The Secretary must certify completeness within 90 days; once certified complete the application is deemed approved. That tight certification window creates a predictable approval path but places a premium on submitting a complete application up front.
Permitted uses: workforce, access, emergency, and reintegration supports
Provides a detailed and flexible list of allowable uses, centered on workforce stabilization (rate increases contingent on worker compensation increases, paid leave, hazard/shift pay, scheduling stability, recruitment, and training), service access (using day providers for home visits, travel costs, retainer payments), assistive technologies and communication supports, supplies and PPE, interpreter costs, and supports to move individuals back to community settings. The Secretary may also designate other appropriate expenses and references the 2014 HCBS settings rule as an eligibility criterion for some costs.
Reporting, evaluation, and oversight
Mandates state reports by December 31, 2029 describing funded activities and beneficiaries served. Directs HHS to hire an external evaluator to assess implementation and aggregate outcomes—documenting access, availability, and quality changes—disseminate findings to Congress and state Medicaid directors, and make results public in accessible formats. The section also requires states to ensure oversight consistent with Medicaid waiver rules and exempts these reports from the Paperwork Reduction Act, accelerating data collection but reducing one layer of federal review.
Definitions and scope
Defines core terms including "eligible individual," "Medicaid program," "Secretary," and "State," and clarifies that title XIX programs and related waivers (1115, 1915) are in scope. This anchors the funding and permissible uses to existing Medicaid authorities and waiver frameworks.
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Explore Healthcare in Codify Search →Who Benefits and Who Bears the Cost
Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- Medicaid‑eligible individuals on HCBS waiting lists — the bill explicitly allows states to use funds to serve people on 1115 or 1915 waiting lists and to resume services for people who had been moved to institutions.
- Home health agencies and direct support professionals — the statute conditions rate increases on raising worker compensation and authorizes pay enhancements, paid leave, and stabilization measures, which can raise income and job quality for these workers.
- Family caregivers and informal providers — permitted uses include caregiver pay, respite, supplies, and supports that can reduce caregiver burnout and enable continued community living.
- Area Agencies on Aging, Centers for Independent Living, and non‑profit HCBS providers — these community partners are named in the bill as implementation partners and may receive funds for expanded services, training, and accessible public health outreach.
- State Medicaid programs — short‑term federal relief reduces state fiscal shares for HCBS spending and creates new funding to tackle workforce shortages and waiting lists without requiring new state appropriations in the two covered fiscal years.
Who Bears the Cost
- State Medicaid administrations — although the federal share rises, states must prepare applications, track compliance with the supplementarity assurance, validate pass‑through of increased rates to workers, and meet reporting deadlines, all requiring administrative capacity and potential upfront state spending.
- State budgets beyond FY2027 — the temporary nature creates fiscal cliffs; states that raise baseline wages or rely on higher reimbursement rates may face higher state shares when the FMAP add‑on ends.
- Home and community‑based providers — to continue higher wages after federal funds end, providers may need new revenue streams; small providers could face cash‑flow stress even with increased FMAP, especially if billing and payment timing lag.
- HHS/CMS — the agency must review applications for completeness, oversee expenditures under waiver rules, and manage an external evaluation and public dissemination—adding program oversight workloads and contract management responsibilities.
- Federal taxpayers — the 10‑point FMAP increase expands federal outlays for HCBS during the covered fiscal years and may reduce incentives for states to pursue systemic reforms that improve long‑term cost‑effectiveness.
Key Issues
The Core Tension
The bill balances two legitimate goals—rapidly injecting federal dollars to stabilize and expand HCBS access and workforce, and protecting against federal funds simply replacing state commitments—by requiring supplementarity and pass‑through assurances; but enforcing those assurances and converting short‑term federal relief into lasting system change are in tension, because quick spending can boost access now while leaving unresolved who pays to sustain improvements once the temporary FMAP increase expires.
The statute ties enhanced federal reimbursement to a long, prescriptive menu of permissible uses and to assurances that funds will supplement—not supplant—state spending and raise worker compensation. In practice, verifying the pass‑through of higher rates into worker pay is technically and administratively difficult: states will need clear audit trails, contract clauses, or reporting requirements to demonstrate compliance, and providers with diverse pay structures will complicate measurement.
The spending deadline (September 30, 2029) and the two‑year eligibility window for the FMAP boost create timing pressures. States may prioritize quick, one‑time expenditures (retainer payments, equipment purchases, moving assistance) over investments that yield durable workforce capacity (ongoing wage increases, benefit structures).
The 95 percent cap and the temporary nature also create a fiscal cliff risk: employers and workers may see immediate gains that could be hard to sustain without ongoing state or federal funding. Finally, exempting state reporting from the Paperwork Reduction Act expedites information collection but may limit opportunities to standardize data elements across states, complicating the external evaluator’s task of producing comparable, high‑quality outcome measures across heterogeneous HCBS programs and waiver arrangements.
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