Medicaid Makes Supported Employment Possible

Medicaid helps ensure that individuals with disabilities are fully integrated into society and prevents unnecessary and unwanted institutionalization. A variety of efforts have focused on shifting as much of Medicaid Long-Term Services and Supports (LTSS) funding away from institutions, and since 2013 more than half of LTSS nationally are provided in community settings (although this percentage varies from state-to-state).[ii] Nationally, approximately 80 percent non-elderly Medicaid beneficiaries with disabilities who use LTSS receive services in the community instead of institutions.

It is fair to say that Medicaid has been the principal engine of expanded access to home and community-based services that make independent living and community integration possible for people with disabilities as well as elderly Americans.[i]

—The Kaiser Commission on Medicaid and the Uninsured

Medicaid is a major funder of employment services and supports for individuals with disabilities.

  • Under 1915(c) HCBS waivers, 1915(i) HCBS State Plan Option, and the 1915(b)(3) Managed Care Delivery System Waiver, states can offer services that specifically support an employment goal through what are called “habilitation services” which can fund any combination of the following: vocational/job-related discovery or assessment, person-centered employment planning, job placement, job development, negotiation with prospective employers, job analysis, job carving, training and systematic instruction, job coaching, benefits support, training and planning, transportation, asset development, career advancement services, and other workplace support services that enable the participant to be successful in integrating into the job setting. Available services can be offered to any target group for whom they would be beneficial in both obtaining and retaining integrated community employment.[iii]
  • In addition to “habilitation services” the following are examples of other services covered by Medicaid that can be used to assist with employment:[iv]
    • Personal Assistance Services – assist an individual with a disability to perform daily activities on and off the job.
    • Peer Support Services – deliver counseling and other support services to eligible adults with mental illnesses and/or substance use disorders.
    • Targeted Case Management Services – can be used in part to help individuals gain employment, including assessment and developing a treatment plan that can include employment related supports.
  • Rehabilitation Services - restorative or remedial services for an individual who has a condition that has resulted in a loss of functioning. In addition to typical rehabilitation services, the Medicaid Rehab option can be used for employment-related services such as peer support, training in social skills, or counseling.

As the payer of last resort, Medicaid cannot pay for employment services and support available via other sources (such as public Vocational Rehabilitation – VR, the state workforce development system, and educational agencies). VR plays an important and critical role in assisting with employment, and Medicaid funded services work in partnership with VR and other funding sources. However, these other sources do not have the capacity or resources to provide the full level of employment services needed by individuals with significant disabilities, particularly long-term supports. Without Medicaid, many individuals with disabilities would be unable to obtain the necessary assistance and services to find and maintain employment. This is particularly true for individuals with developmental disabilities. Medicaid is the primary if not exclusive funder of employment services and supports available from state agencies serving individuals with intellectual and developmental disabilities.

[i] Julie Paradise, p. 12–

[ii] Audra Wenzlow, et. al., Improving the Balance: The Evolution of Medicaid Expenditures for Long-Term Services and Supports (LTSS), FY 1981-2014 – Truven Health Analytics, June 3, 2016 -

[iii] Information on Employment & HCBS is from the following sources: Medicaid.Gov website:; CMS Information Bulletin– Updates to the 1915(c) Waiver Instructions and Technical Guide Regarding Employment and Employment Related Services (September 2011)

[iv] Information on employment services and supports beyond habilitation services come from the following sources: Medicaid.Gov website -; Bonnie O’Day, et. al., Improving Employment Outcomes for People with Psychiatric Disorders and Other Disabilities, U.S. Department of Health and Human Services, Assistant Secretary for Planning and Evaluation, Office of Disability, Aging and Long-Term Care Policy, April 2014 -