How Section 1115 Medicaid Waivers Work

Section 1115 of the Social Security Act lets the secretary of Health and Human Services approve state experiments that deviate from standard Medicaid rules, so long as the projects are budget-neutral to the federal government and advance the program's objectives. The waiver authority, written in 1962 and applied to Medicaid from its 1965 start, has become the main lever states use to customize the joint federal-state program that covers over 70 million low-income Americans, per the Centers for Medicare and Medicaid Services' enrollment reports. Nearly every state operates at least one active waiver, from family-planning programs to full expansion demonstrations.

What can a waiver change — and what can't it?

Waivers can restructure eligibility, benefits, premiums, and delivery systems in ways federal law otherwise forbids: the ACA expansion itself was implemented in many states through 1115 authority, and states have used it to add work requirements, cap enrollment periods, add premium contributions, or create reentry coverage for people leaving prison. What waivers cannot do is cost the federal government more money — every demonstration carries a budget-neutrality cap negotiated with CMS — and, per the statute, they must further the objectives of the Medicaid program, a phrase that carries the legal weight: courts have used it to police what counts as a permissible experiment.

How does the approval process run?

A state drafts an application, posts it for public comment — 30 days federal, plus state-level notice — and negotiates terms with CMS, which publishes the terms and conditions as a special terms document. Approvals last up to five years initially, ten for some renewals, with evaluation requirements: states must hire independent evaluators and report outcomes. The process is administrative, not legislative — a new administration can reverse a predecessor's approvals, which is exactly what has happened to work requirements: approved in over a dozen states in 2018–2020, rescinded in 2021, re-approved in renewed forms from 2023 onward, per CMS's waiver tracker. Litigation follows each swing: in Stewart v. Azar (2019) and related cases, federal courts vacated work requirements for failing to advance Medicaid's objectives — coverage.

• Tool: experimental, time-limited, budget-neutral deviations from Medicaid rules.
• Authority: HHS secretary's approval, renewable, revocable.
• Check: courts reviewing the “program objectives” limit.

Why do waivers matter in 2026?

Because Medicaid is the largest single federal-state program in most state budgets, and 1115 is where its politics play out. Life-without-parole in program terms: states currently operating reentry demonstrations, substance-use treatment pilots, and housing-support wraparounds are mid-experiment with federal money attached. The contested frontier is conditioning coverage on work or community engagement: approvals in the current administration cover a set of states, each with pending litigation over the objectives test. For beneficiaries, the practical stakes are whether enrollment stays automatic or requires periodic paperwork; for state budgeteers, the stakes are federal matching funds that cover between 50 and over 80 percent of program costs depending on the state's per-capita income.

What are the limits of waiver policy?

Waivers cannot touch core entitlements Congress wrote: they operate around the edges of statute, and a hostile court or successor secretary can unwind them. They also measure poorly: evaluations frequently lack comparison groups, and CMS's own commissioned reviews of work-requirement experiments found coverage losses without employment gains in the Arkansas and Michigan-adjacent pilots. The waiver's real function is less rigorous experiment than negotiated federalism — a way for a state and an administration of like mind to move program design beyond what Congress will legislate.

LMH News publishes information, not medical or benefits advice. Program mechanics follow CMS's Section 1115 guidance and court records as of April 2026.