Section 1115 Medicaid Waiver

A Section 1115 Medicaid waiver—formally, a Section 1115 research and demonstration waiver—is a federal authority under Section 1115 of the Social Security Act that lets the Secretary of Health and Human Services approve state-designed pilot or demonstration projects that further Medicaid's program objectives, even when those projects would otherwise conflict with standard Medicaid rules. It is, by design, the broadest and most flexible of the several Medicaid waiver types states can pursue.

States have used Section 1115 authority for a wide range of purposes: adding work or community-engagement requirements to Medicaid eligibility, restructuring premiums or benefits, expanding substance-use-disorder treatment coverage into institutions for mental disease, and testing non-traditional interventions like temporary housing assistance for people with serious mental illness. Every demonstration must be "budget neutral," and as of 2025's Working Families Tax Cuts legislation, budget neutrality is now a statutory requirement rather than a matter of CMS agency policy alone. KFF's overview of Section 1115 waivers notes that waivers are typically approved for an initial five-year period and can be renewed, commonly for another three to five years, with some 10-year extensions granted in limited cases.

Notably, CMS signaled in July 2025 that it does not anticipate approving new state proposals, or extending existing 1115 authority, for two specific use cases going forward: expanded continuous-eligibility provisions beyond current statute, and workforce-development initiatives funded through 1115 waivers. This is a meaningful recent policy shift for any state considering a workforce-focused 1115 approach.