North Carolina Personal Care Services Alignment Demonstration FAQs

Section 1115 Demonstrations provide states authority for experimental, pilot, or demonstration projects that are likely to assist in promoting the objectives of the Medicaid program. These demonstrations give states additional program flexibilities, allowing states to evaluate new approaches to better serving Medicaid populations. All 1115 Demonstrations must be approved by the Centers for Medicare & Medicaid Services (CMS).

Session Law 2025-64 (House Bill 546) directs the North Carolina Department of Health and Human services to pursue an expansion of Medicaid coverage of personal care services to individuals who reside in licensed adult care homes and special care units and whose income exceeds the limit for participation in the State/County Special Assistance Program.

The demonstration would extend Medicaid coverage for personal care services (PCS) to eligible Medicare beneficiaries in adult care homes and special care units who are currently ineligible for Medicaid-covered PCS in those settings due to their income. Personal care services are the only Medicaid services that would be covered by this demonstration. Eligible individuals would remain responsible for room and board.

Personal care services are hands-on support with daily activities such as bathing, dressing, eating, mobility and toileting. To be eligible for the demonstration, individuals would need to have an assessed clinical need for these services, along with meeting other eligibility criteria.

Individuals who meet all the following criteria would be eligible for the demonstration:

• Be enrolled in Medicare and reside in, or be seeking admission to, a licensed adult care home or special care unit;
• Have an assessed clinical need for personal care services under North Carolina's Medicaid criteria (Clinical Coverage Policy 3L-1);
• Have income above the State-County Special Assistance limit but within the demonstration ceilings
  • Up to 180% of the federal poverty level for adult care home residents 
  • Up to 200% for special care unit residents; and
• Meet all other Special Assistance program requirements (such as resource limits) and Medicaid non-financial rules (such as North Carolina residency).

Income is counted separately for each person, not for the household. As in the State/County Special Assistance program, the demonstration looks only at the applicant's own income. Each spouse is compared to the limit for one person:

• Adult care home: up to 180% of the federal poverty level, about $2,394 per month in 2026
• Special care unit: up to 200% of the federal poverty level, about $2,660 per month in 2026

A spouse's income is not added to the applicant's, and the limit does not go up for a married couple.

Example 1: Both spouses live in the same adult care home

Mr. and Mrs. Jones are married, both have Medicare, and both have an assessed need for personal care services. They move into the same adult care home.

• Mr. Jones has $2,200 per month from Social Security and a pension. That is above the Special Assistance limit but below $2,394, so he could be eligible for the demonstration.
• Mrs. Jones has $1,300 per month from Social Security. That is below the Special Assistance limit, so she would apply for Special Assistance, which includes full Medicaid coverage, instead of the demonstration.
• Their combined income of $3,500 does not matter. Each is evaluated on their own income.

Example 2: One spouse moves to a special care unit and the other stays home

Mrs. Lee moves into a special care unit, and Mr. Lee stays in their home.

• Mrs. Lee has $2,500 per month. That is above the Special Assistance limit for special care units but below $2,660, so she could be eligible.
• Mr. Lee's income is not counted toward her eligibility.

Note: Dollar amounts are 2026 figures, are updated each year, and are for illustration only. The county department of social services makes final eligibility decisions.

To be eligible for the demonstration, a person must reside in, or be applying to reside in, one of the following types of facilities:

• Adult Care Home 
• Family Care Home
• Special Care Unit within an Adult Care Home
• Adult Care Home section of a Combination Home

No. The demonstration application currently only includes adult care homes and special care units as approved settings in order to align with Session Law 2025-64 (House Bill 546), which directs the North Carolina Department of Health and Human services to pursue an expansion of Medicaid coverage of PCS to individuals who reside in licensed adult care homes and special care units.

Family care homes are a covered setting under the demonstration, as they are a type of adult care home with two to six beds, as defined in North Carolina General Statute 131D-2.1.

A person residing in, or applying to reside in, a family care home could be eligible for the demonstration if they meet all other eligibility requirements. Family care homes were included in the budget calculations and population estimate for the demonstration. 

No. Supervised living facilities, also known as group homes, are not a covered setting currently under the demonstration application. According to North Carolina licensure rule 10A NCAC 27G, supervised living facilities serve individuals with mental illness, a developmental disability or disabilities, or a substance abuse disorder.

The demonstration application currently only includes adult care homes (including family care homes) and special care units as approved settings in order to align with Session Law 2025-64 (House Bill 546).

Under federal regulations, 1115 demonstrations must be “budget neutral” to the federal government. This means that they will not cost more in federal funds than would have been spent without the demonstration. Additionally, Session Law 2025-64 (House Bill 546), the state law authorizing the demonstration, requires the state to ensure the cost of the new coverage is offset by savings or cost avoidance. 

Yes. The budget neutrality projections that will be submitted as part of the waiver application account for the Personal Care Services rate increased mandated as part of S.L. 2026-41.

No, your benefits will not change. The demonstration has no impact on coverage or costs for people already enrolled in Medicaid.

Yes, it does not matter if someone has traditional Medicare or a Medicare Advantage plan. Any Medicare-enrolled individual who meets all other eligibility requirements would be eligible for the demonstration.

The State/County Special Assistance Program provides a cash supplement to low-income individuals to help pay for room and board in residential facilities such as adult care homes. Individuals eligible for the Special Assistance program already qualify for Medicaid and will not participate in the demonstration.

This demonstration would only provide Medicaid coverage of personal care services. Individuals would not receive assistance paying for room and board; Medicaid does not cover room and board.

Yes, the state’s application must be approved by CMS. CMS determines if the demonstration meets the requirement of 42 CFR 431 Subpart G and has broad discretion to approve demonstrations, request changes to demonstrations prior to approval, or deny 1115 demonstration applications. 

The demonstration application that will be submitted to CMS is available here (add link). 

North Carolina is conducting a public comment period before submitting the application to the Centers for Medicare & Medicaid Services (CMS). The public is invited to review the application and submit comments during the State comment period.

State public comment period: Sept. 10, 2026 – Nov. 9, 2026

Submit comments to:  

Email: Medicaid.NCEngagement@dhhs.nc.gov

(Subject line: “NC Section 1115 Waiver”)

Mail: 

North Carolina Department of Health and Human Services
NC Medicaid Section 1115 Waiver Team
1950 Mail Service Center
Raleigh, NC 27699-1950 

(Please indicate “NC Section 1115 Waiver” in the written message)

Public hearings:

North Carolina will host the following four public hearings to seek input regarding this waiver.

CMS does not have a required time limit for reviewing 1115 demonstration applications. They may have additional questions for the state before making a decision. Demonstration approval often takes up to a year from application submission.

If the demonstration is approved, NC Medicaid will need time to make operational and system changes before people can begin applying for the new coverage. Information on when the new coverage will start and how to apply will be made publicly available prior to launch. 

Eligibility will be determined by your local DSS office — the same way Medicaid applications are handled now. For more information visit the How To Apply for NC Medicaid website page.

While it’s impossible to know exactly how many people would enroll in the demonstration if it’s approved, North Carolina’s demonstration application estimates that 6,000 people would enroll during the five-year period of the demonstration.

If the demonstration is approved, there are still many changes that need to be made to the NC Medicaid program before people can begin applying for the new coverage. Information on when the new coverage will start and how to apply will be made publicly available prior to launch.