Thousands of family caregivers who are paid through Medicaid to care for relatives with intellectual and developmental disabilities are facing significant reductions in their hourly wages, cuts that some say could force them to stop providing care at home and send their loved ones to more expensive institutional settings.
Maryland, Idaho, Indiana, Missouri, and Colorado have all introduced proposals in 2026 that would dramatically reduce pay for family caregivers and community care workers serving people with intellectual and developmental disabilities, according to a STAT News investigation published July 13, 2026.
In Maryland, one caregiver described a potential cut from roughly $47 per hour to $29.98 — a reduction of more than $17 per hour. Another caregiver whose pay was approximately $41 per hour described facing the same $29.98 floor rate, raising serious questions about her ability to maintain a mortgage in Prince George's County. Maryland had originally scheduled its payment changes to take effect July 1, 2026. Following sustained advocacy from disability organizations and caregivers, those changes were postponed until October — but the cuts themselves have not been withdrawn.
Why This Matters
The Medicaid self-direction program allows people with disabilities to hire, supervise, and in many cases pay family members as their caregivers. Users of the program have doubled in the last decade to over 1.5 million individuals who manage their own care in the community, according to a 2024 report from AARP cited in the STAT investigation.
For families of people with intellectual and developmental disabilities, the alternative to home-based care is often residential or institutional care — which is significantly more expensive for state Medicaid programs and, for many individuals, far less appropriate. Critics of the current cuts argue that reducing family caregiver pay is a short-term budget decision that will generate larger long-term costs through increased institutionalization.
Kim Musheno, senior director of Medicaid policy at The Arc — a national nonprofit that advocates for people with developmental and intellectual disabilities — noted that whenever the federal government has reduced Medicaid in the past, nearly every state has made cuts to home and community-based services, and that those optional services include paying family caregivers.
The stakes extend beyond finances. Many people with high-support needs depend on family members who have spent years learning how to provide safe, individualized care. Replacing that caregiver is not always possible, regardless of what the state pays a non-family substitute.
What We Know So Far
The payment changes unfolding in these five states are driven by two converging forces.
The first is state budget pressure. Colorado's Joint Budget Committee voted to make cuts to Medicaid caregivers and reduce services for Coloradans with developmental disabilities to help fill a budget shortfall of approximately $1 billion driven primarily by rising health-care costs, according to Colorado Public Radio.
The second is the anticipation of major federal Medicaid reductions. The states' moves reflect a looming deadline as the $1 trillion in Medicaid funding reductions contained in the 2025 reconciliation legislation — widely referred to as the One Big Beautiful Bill Act — is scheduled to take effect January 1, 2027, according to STAT News.
In Colorado, the specific impact is stark. The state's Department of Healthcare Policy and Financing pays family caregivers approximately $20 per hour. The state is proposing to cap billable weekly caregiver hours at 56, down from levels that in some cases exceeded 100 hours per week, according to Rocky Mountain PBS. For caregivers providing intensive care to a medically complex child or adult, that cap would reduce their total income by more than half.
In Maryland, the General Assembly cut $126 million in state funding to the Developmental Disabilities Administration this year. When federal matching dollars are factored in, the total reduction exceeds $250 million, according to Maryland Matters.
Where the Impact Is Highest
The five states with active payment changes are not alone. Since federal Medicaid reductions were signed into law, at least nine states have proposed eliminating or reducing funding for home and community-based services, according to a March 2026 policy brief from Caring Across Generations.
In Maryland, the concentration of impact falls on families enrolled in the self-direction waiver program — primarily those caring for relatives with the highest support needs. Advocates describe the community as being in a "complete tailspin," with families experiencing stress and uncertainty about what happens if wages drop to the floor rate, according to Maryland Matters.
In Colorado, a father in Westminster caring around the clock for his 15-year-old daughter — who has a rare genetic disorder and requires supplemental oxygen and a feeding tube — told Rocky Mountain PBS he would lose more than half his household income if the proposed hour cap takes effect.
Across all five affected states, the populations served by these programs are among the most vulnerable: people who are nonverbal, who cannot self-advocate, and whose daily health and safety depend entirely on the consistency and quality of their caregivers.
What Caregivers and Advocates Say
Tracie Feron, a Baltimore County resident who testified against the Maryland budget cuts with her son Connor, asked who will provide care when wages are cut and the caregiver workforce continues to shrink. She noted that with complex behavioral and medical needs, families cannot hire just anyone — and that the strain on the community is already significant before further cuts take effect.
Republican state Sen. Barbara Kirkmeyer of Colorado's Joint Budget Committee voted against several of the proposed caregiver cuts, saying the state appears to be adding cuts on top of cuts targeting the most medically fragile members of the community — people who already struggle to find providers willing to work with them, according to KUNC.
Julie Reiskin, co-executive director of the Colorado Cross-Disability Coalition, acknowledged that cuts are going to happen and said her organization is working with lawmakers to find reductions that cause the least harm. She noted that fighting cuts entirely is not a realistic strategy given state budget constraints, though others in the disability community disagree with that approach.
What the Evidence Shows and What It Does Not
The financial case for home and community-based care over institutional care is well established. Nursing home and residential facility care costs states substantially more per person than equivalent care provided at home by a family member. States cutting family caregiver pay to reduce short-term Medicaid spending may be generating larger long-term costs if those cuts result in institutionalization. What remains less clear is whether the current cuts will trigger that shift immediately, gradually, or in ways that vary significantly by state, diagnosis category, and family circumstance.
MedicalDaily Policy Check
- States actively reducing family caregiver wages: Maryland, Colorado, Idaho, Indiana, Missouri
- Maryland delay: Original July 1 effective date postponed to October following caregiver advocacy
- Federal driver: One Big Beautiful Bill Act (2025 reconciliation legislation) — $911 billion in projected Medicaid reductions over 10 years, effective January 1, 2027
- Affected population: People with intellectual and developmental disabilities using Medicaid self-direction waivers
- What is confirmed: Wage reduction proposals and in some cases approvals in five states
- What is not confirmed: Final implementation details, including all state-specific effective dates and rates, in some cases pending CMS approval
Who Is Most Affected?
- Family caregivers — particularly parents caring for adult children with complex disabilities — who depend on Medicaid reimbursement as their primary income
- People with intellectual and developmental disabilities who rely on family members for daily personal care, medical management, and safety oversight
- Families in which the caregiver cannot seek other employment because the care needs of their relative are too intensive to allow outside work
- Caregivers in states with the steepest proposed reductions: Maryland (some rates may fall below $30 per hour) and Colorado (total billable hours may be reduced by more than 40 percent in some cases)
- People on waitlists for residential placement who may have no alternative if home-based care becomes economically unsustainable for their families
Symptoms and Warning Signs to Watch For
This is a policy and financial impact story. The warning signs for families are not medical — they are financial and logistical.
Caregivers in affected states should watch for formal notice from their state Medicaid or Developmental Disabilities Administration about rate changes or hour caps; changes to their annual budget letters or individualized support plans; and guidance from their fiscal employer agent or self-direction support organization about what the new rates mean for their specific situation. Anyone who has not yet received official communication from their state agency about upcoming payment changes should request that information in writing before the effective date.
What You Can Do Now
- If you are a caregiver in Maryland, Colorado, Idaho, Indiana, or Missouri, contact your state's Medicaid office or Developmental Disabilities Administration to confirm the current timeline and effective dates for any payment changes specific to your waiver program.
- Contact your state legislators. Caregiver advocacy already produced a meaningful result in Maryland — the postponement of the July 1 effective date. Continued organized advocacy may affect implementation or rates.
- Connect with national and state advocacy organizations: The Arc , the American Network of Community Options and Resources , and state-level disability coalitions are actively tracking these changes.
- If you are experiencing income loss as a result of these changes, contact your local Medicaid office to ask about appeals, exceptions, or alternative waiver programs that may apply to your situation.
- If you are a caregiver in a state not yet affected, monitor your state Medicaid program's communications. The federal funding pressure driving these cuts is national in scope and is expected to intensify after January 1, 2027.
Cost and Access: What Families Should Know
Medicaid finances nearly three-quarters of all home and community-based care in the United States, according to the Caring Across Generations policy brief. It is the only insurance program that meaningfully covers long-term disability care for most American families. Private insurance does not cover these services. Out-of-pocket costs for comparable agency-based care or nursing facility placement typically exceed $60,000 to $100,000 or more per year.
Families who lose Medicaid waiver support have limited alternatives: private-pay agency care that is unaffordable for most, unpaid family care that removes a wage earner from the workforce, or nursing home or residential placement that is more expensive for the state and often less appropriate for younger people with developmental disabilities. Learn more about what Medicaid covers for home and community-based services at medicaid.gov.
What Happens Next
Maryland's payment changes are now expected to take effect in October 2026, pending approval from the Centers for Medicare and Medicaid Services. Advocates are continuing to contact CMS directly to urge reconsideration.
Colorado's hour cap is expected to be implemented gradually over several months, with some exceptions for cases involving rare diagnoses or specific risk factors.
The broader federal deadline — the implementation of the One Big Beautiful Bill Act's Medicaid reductions — takes effect January 1, 2027. States are already adjusting their programs in anticipation, and more states are expected to announce reductions to home and community-based services before the end of 2026. MedicalDaily will track state-level implementation dates, CMS approvals or rejections, and the downstream effects on families and people with disabilities as this story continues to develop.
The Bottom Line
Family caregivers of people with intellectual and developmental disabilities in five states are facing wage reductions in 2026 that some describe as financially devastating. In Maryland, cuts postponed from July to October have not been withdrawn. In Colorado, hour caps would reduce some caregivers' income by more than half. The federal Medicaid changes driving these state decisions have not yet fully taken effect — that pressure increases in 2027. Families facing these cuts should contact their state Medicaid office, reach out to disability advocacy organizations, and engage their state legislators now. The situation is evolving, and organized advocacy has already produced at least one meaningful delay.
