States Have an Extra Year to Use Funds from the American Rescue Plan for Home and Community-Based Services

Today, HHS and CMS are notifying states that they now have an additional year — through March 31, 2025 — to use funding made available by the American Rescue Plan (ARP) to enhance, expand, and strengthen home- and community-based services (HCBS) for people with Medicaid who need long-term services and supports.

As the primary funder of HCBS nationally, Medicaid plays a critical role in supporting states’ efforts to strengthen these services for their beneficiaries. Section 9817 of the American Rescue Plan provides states with a temporary 10 percentage point increase to the federal medical assistance percentage (FMAP) for certain Medicaid expenditures for HCBS — an estimated $12.7 billion. As a result of the ARP increase in the federal matching rate on activities, states originally had a three-year period — from April 1, 2021 through March 31, 2024 — to use the available state funds, attributable to the ARP’s increased FMAP, on activities to enhance, expand, or strengthen HCBS in Medicaid. The extended timeframe, of an additional year, will help to facilitate high-quality, cost-effective, person-centered services for people with Medicaid. This will allow Medicaid beneficiaries to remain in the setting of their choice—whether it is their home or another setting—and remain a valued part of their communities.

This ARP funding allows states to identify and implement changes aimed at addressing existing HCBS workforce and structural issues. It will also help expand states’ capacity to provide critical services and meet the needs of family caregivers and people on HCBS waitlists. Moreover, states can use these funds to tailor HCBS activities based on the needs and priorities of their residents. For example, states can use the funds to provide additional support to address the continued impact of the COVID-19 pandemic on individuals who need long-term services and supports, who are at higher risk for contracting COVID-19, and who might otherwise be in more costly nursing homes and other institutions instead of their own homes. Some states are also using the funds to increase pay and benefits for direct service workers, which many states were unable to do before the ARP funding increase due to funding shortages and restrictions.

Critical safeguards are in place through the ARP legislation and CMS’ guidance to certify that these funds are used appropriately. Between now and the March 2025 deadline, CMS will continue to monitor states’ progress and compliance to ensure funding is used to strengthen HCBS under their Medicaid program.

Find additional information on states’ spending plans— including a recently updated infographic summarizing planned activities and key investments — at

Review the guidelines for the use of the ARP funds – PDF.

Review the State Medicaid Director Letter extending the spending deadline – PDF.