New HCBS Bill Boosts Medicaid Funding 10% for Two Years, Mandates Higher Pay for Care Workers

The HCBS Relief Act of 2025 is looking to drop a significant chunk of federal cash into state Medicaid programs to shore up Home and Community-Based Services (HCBS)—the services that keep elderly and disabled people out of nursing homes and in their communities. If a state plays ball and gets its plan approved, the federal government will increase its share of the Medicaid bill—the Federal Medical Assistance Percentage (FMAP)—by an extra 10 percentage points for services provided during fiscal years 2026 and 2027 (Section 2). This is a big, but temporary, financial boost for states, provided they commit to using every penny of that new money to fix the system.

The Mandate: Paying Up and Staffing Up

This isn't just a blank check. To get the extra 10% FMAP, states must promise that this new federal money will supplement, not supplant, the state funds already dedicated to HCBS. In plain English, states can’t pocket the savings and cut their own spending; they have to add this new federal cash on top of what they already spend (Section 2). The biggest mandate is aimed squarely at the HCBS workforce: states must raise provider reimbursement rates enough to ensure those agencies can actually increase the compensation for their workers, including direct support professionals (DSPs).

If you or a family member relies on a home health aide, this provision is massive. It directly tackles the perpetually low pay and high turnover in this critical sector. States are specifically directed to use the funds to offer better pay, provide paid sick, family, and medical leave, and improve job stability through more consistent hours and benefit eligibility. For the workers providing the care—often juggling multiple low-wage jobs—this could mean the difference between staying in the field or leaving for better pay elsewhere, directly improving the quality and consistency of care.

Clearing the Waiting Lists and Supporting Families

Beyond the workforce, the bill focuses on access. States must use the funds to serve eligible individuals currently stuck on waiting lists for HCBS programs. For someone with a disability or an aging parent needing assistance, getting off a waiting list means finally getting the help they need to live independently, which is a huge quality-of-life improvement. The bill also specifically targets individuals who were moved into nursing homes during emergencies, requiring states to help them move back home and resume community services.

Crucially, the legislation acknowledges the silent army of unpaid family caregivers. States are allowed to use the funds to help these caregivers with supplies, equipment, respite services (a much-needed break), and even direct caregiver pay. This is a recognition that supporting the family unit is often the most effective way to keep people at home. Furthermore, funds can be used for things like assistive technology to help people communicate better and integrate into the community (Section 2).

The Catch: Oversight and Expiration

While the funding boost is significant, it’s only guaranteed for two fiscal years: 2026 and 2027. States must spend all the funds generated by the FMAP increase by September 30, 2029. This means states have a short window to make major, lasting improvements. The Secretary of Health and Human Services has 90 days to approve a state’s plan once it’s deemed complete, which is fast, but relies heavily on the state’s ability to put together a solid, detailed plan quickly.

To ensure accountability, every participating state must file a detailed report by December 31, 2029, detailing who was served, how many people got off waiting lists, and exactly how the money was used. The Secretary must then hire an outside expert to evaluate the overall impact on access and quality across all participating states. This robust reporting requirement is essential, as it will be the only way to confirm that the money actually went toward higher wages and better services, rather than just administrative overhead. Ultimately, this bill offers a major, albeit temporary, investment in the infrastructure of care that many working families rely on to keep their loved ones healthy and at home.