TITLE 12. HEALTH

DEPARTMENT OF MEDICAL ASSISTANCE SERVICES

Fast-Track Regulation

Title of Regulation: 12VAC30-122. Community Waiver Services for Individuals with Developmental Disabilities (amending 12VAC30-122-60).

Statutory Authority: § 32.1-325 of the Code of Virginia; 42 USC § 1396 et seq.

Public Hearing Information: No public hearing is currently scheduled.

Public Comment Deadline: October 21, 2026.

Effective Date: November 5, 2026.

Agency Contact: Meredith Lee, Policy, Regulations, and Manuals Supervisor, Department of Medical Assistance Services, 600 East Broad Street, Suite 1300, Richmond, VA 23219, telephone (804) 371-0552, fax (804) 786-1680, TDD (800) 343-0634, or email meredith.lee@dmas.virginia.gov.

Basis: Section 32.1-325 of the Code of Virginia authorizes the Board of Medical Assistance Services to administer and amend the Plan for Medical Assistance and to promulgate regulations. Section 32.1-324 of the Code of Virginia grants the Director of the Department of Medical Assistance Services (DMAS) the authority of the board when it is not in session.

Purpose: The purpose of this action is to incentivize employment for individuals receiving developmental disabilities (DD) waiver services by allowing a percentage of earned income to be disregarded when calculating the individual contribution to the cost of waiver services when earning income, which directly impacts individual welfare. This enables individuals enrolled in the DD waiver to keep more of their income without losing financial eligibility for the waiver. This does not result in new individuals being added to the DD waiver.

Rationale for Using Fast-Track Rulemaking Process: These amendments are expected to be noncontroversial because the post-eligibility special earnings allowance incentivizes employment for individuals receiving waiver services.

Substance: The amendments lower the number of hours from at least eight hours but less than 20 hours per week to at least four hours but less than 20 hours per week for waiver participants, allowing a percentage of earned income to be disregarded when calculating individual contribution to the cost of waiver services when earning income.

Issues: A primary advantage of this regulatory change to the public and Commonwealth is that it allows individuals with intellectual or developmental disabilities to obtain employment and keep a larger portion of their earnings, which improves their overall well-being. These amendments create no disadvantages to the public, the agency, the Commonwealth, or the regulated community.

Department of Planning and Budget Economic Impact Analysis:

The Department of Planning and Budget (DPB) has analyzed the economic impact of this proposed regulation in accordance with § 2.2-4007.04 of the Code of Virginia and Executive Order 19. The analysis presented represents DPB's best estimate of the potential economic impacts as of the date of this analysis.¹

Summary of the Proposed Amendments to Regulation. The Board of Medical Assistance Services (board) seeks to adjust the post-eligibility special earnings allowance for Developmental Disabilities (DD) waiver services, as mandated by the 2022 Appropriations Act. The proposed changes would simply update the regulation to reflect current practice, because the 2022 mandate has already been implemented.

Background. Individuals under the Family and Individual Supports Waiver, Community Living Waiver, and Building Independence Waiver, which are collectively known as the DD Waivers, receive payments from the Department of Medical Assistance Services (DMAS) to cover the costs of home and community-based services. 12VAC30-122-60 establishes the patient pay methodology, reduces this payment by individual total income after certain deductions have been made for personal maintenance needs, other dependents, and medical needs. These deductions include a special earnings allowance for individuals who are employed: 300% of Social Security Income (SSI) for individuals working 20 or more hours a week, and 200% for individuals working eight to 20 hours per week.² Item 304 ZZ of the 2022 Appropriations Act directed DMAS to adjust the special earnings allowance for DD waiver recipients by lowering the minimum number of hours from eight to four, thereby allowing more part-time workers to retain their income (up to 200% of SSI, which is $1,988 per month for 2026)³ and not have that amount be subtracted from their benefits.⁴ Accordingly, the board seeks to make this change in two places in 12VAC30-122-60 B 3 a applies to individuals subject to § 1924(d) of the Social Security Act (married individuals with an institutionalized spouse and a non-institutionalized spouse), and in subsection B 3 b, which applies to individuals not subject to § 1924(d) of the Social Security Act (single individuals or married individuals where both spouses are institutionalized).

Estimated Benefits and Costs. The proposed amendments would benefit readers of the regulation by ensuring that the regulation is clear and conforms to statute and current practice. The underlying mandate would benefit DD waiver recipients who are able to work part-time by allowing those who work between four to eight hours a week to avoid reductions to their benefits. Conversely, maintaining the benefit amounts for these workers removes a potential reduction in expenditure for DMAS; however, since this change was made through the Appropriations Act, any resulting fiscal impacts do not result from this regulatory change. DD waiver applications are processed through community services boards, and DMAS delegates waiver operational authority to the Department of Behavioral Health and Developmental Services (DBHDS) through an interagency agreement. DBHDS has certain employment targets for adults who are aged 18 to 64 years on DD waivers. Expanding the special earnings allowance for part-time work could also support DBHDS in meeting the employment targets.

Businesses and Other Entities Affected. DBHDS data indicates that there are approximately 20,240 individuals with a DD waiver and another 14,258 individuals on the waitlist.⁵ A DBHDS semi-annual report indicates that 1,138 individuals with DD waivers were employed as of December 2025.⁶ The Code requires DPB to assess whether an adverse impact may result from the proposed regulation.⁷ An adverse impact is indicated if there is any increase in net cost or reduction in net benefit for any entity, even if the benefits exceed the costs for all entities combined.⁸ The proposed amendments implement the provisions of the 2022 Appropriations Act and reflect current practice. Thus, an adverse impact is not indicated.

Small Businesses⁹ Affected.¹⁰ The proposed amendments would not adversely affect small businesses.

Localities¹¹ Affected.¹² The proposed amendments would neither affect any locality in particular, nor introduce costs for local governments.

Projected Impact on Employment. The proposed amendments are intended to incentivize part-time employment for individuals with DD waivers; any impact to this effect would result from the budget mandate.

Effects on the Use and Value of Private Property. The proposed amendments would not affect the use and value of private property. The proposed amendments do not affect real estate development costs.

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¹ Section 2.2-4007.04 of the Code of Virginia requires that such economic impact analyses determine the public benefits and costs of the proposed amendments. Further the analysis should include but not be limited to: (1) the projected number of businesses or other entities to whom the proposed regulatory action would apply, (2) the identity of any localities and types of businesses or other entities particularly affected, (3) the projected number of persons and employment positions to be affected, (4) the projected costs to affected businesses or entities to implement or comply with the regulation, and (5) the impact on the use and value of private property.

² Although the current regulatory text does not include the eight hour minimum, DMAS has confirmed that it was applied in practice.

³ See https://www.ssa.gov/oact/cola/SSIamts.html.

⁴This change was also made for individuals in the Commonwealth Coordinated Care Plus Program. See https://townhall.virginia.gov/L/ViewStage.cfm?stageid=9986.

⁵ See https://dbhds.virginia.gov/wp-content/uploads/2026/01/Developmental-Disability-Waivers-2026.pdf.

⁶ See page 76 of https://dbhds.virginia.gov/wp-content/uploads/2026/06/FY26-June-Semi-Annual-Report_Final.pdf.

⁷ Pursuant to § 2.2-4007.04 D: In the event this economic impact analysis reveals that the proposed regulation would have an adverse economic impact on businesses or would impose a significant adverse economic impact on a locality, business, or entity particularly affected, the Department of Planning and Budget shall advise the Joint Commission on Administrative Rules, the House Committee on Appropriations, and the Senate Committee on Finance. Statute does not define "adverse impact," state whether only Virginia entities should be considered, nor indicate whether an adverse impact results from regulatory requirements mandated by legislation.

⁸ Statute does not define "adverse impact," state whether only Virginia entities should be considered, nor indicate whether an adverse impact results from regulatory requirements mandated by legislation. As a result, DPB has adopted a definition of adverse impact that assesses changes in net costs and benefits for each affected Virginia entity that directly results from discretionary changes to the regulation.

⁹ Pursuant to § 2.2-4007.04, small business is defined as "a business entity, including its affiliates, that (i) is independently owned and operated and (ii) employs fewer than 500 full-time employees or has gross annual sales of less than $6 million."

¹⁰ If the proposed regulatory action may have an adverse effect on small businesses, § 2.2-4007.04 requires that such economic impact analyses include: (1) an identification and estimate of the number of small businesses subject to the proposed regulation, (2) the projected reporting, recordkeeping, and other administrative costs required for small businesses to comply with the proposed regulation, including the type of professional skills necessary for preparing required reports and other documents, (3) a statement of the probable effect of the proposed regulation on affected small businesses, and (4) a description of any less intrusive or less costly alternative methods of achieving the purpose of the proposed regulation. Additionally, pursuant to § 2.2-4007.1 of the Code of Virginia, if there is a finding that a proposed regulation may have an adverse impact on small business, the Joint Commission on Administrative Rules shall be notified.

¹¹ "Locality" can refer to either local governments or the locations in the Commonwealth where the activities relevant to the regulatory change are most likely to occur.

¹² Section 2.2-4007.04 defines "particularly affected" as bearing disproportionate material impact.

Agency Response to Economic Impact Analysis: The Department of Medical Assistance Services has reviewed the economic impact analysis prepared by the Department of Planning and Budget and raises no issues with this analysis.

Summary:

The Special Earnings Allowance for developmental disabilities (DD) waiver participants allows a percentage of earned income to be disregarded when calculating the individual contribution to the cost of waiver services when earning income. The amendments lower to at least four hours but less than 20 hours per week the requirement for a disregard of up to 200% Supplemental Security Income (SSI), and a disregard of up to 300% for individuals who work 20 hours or more per week.

12VAC30-122-60. Financial eligibility standards for individuals.

A. Individuals receiving services under the Family and Individual Supports (FIS) Waiver, Community Living (CL) Waiver, and Building Independence (BI) Waiver, which are collectively known as the Developmental Disabilities (DD) Waivers, shall meet the following Medicaid eligibility requirements. The Commonwealth shall apply the financial eligibility criteria contained in the State Plan for Medical Assistance for the categorically needy and in 12VAC30-30-10 and 12VAC30-40-10. The Commonwealth covers the optional categorically needy groups under 42 CFR 435.211, 42 CFR 435.217, and 42 CFR 435.230.

B. Patient pay methodology.

1. The income level used for 42 CFR 435.211, 42 CFR 435.217, and 42 CFR 435.230 shall be 300% of the current supplemental security income (SSI) payment standard for one person.

2. Under the DD Waivers, the coverage groups authorized under § 1902(a)(10)(A)(ii)(VI) of the Social Security Act shall be considered as if they the coverage groups were institutionalized for the purpose of applying institutional deeming rules. All individuals under the waivers shall meet the financial and nonfinancial Medicaid eligibility criteria and meet the institutional level-of-care criteria for an ICF/IID. The deeming rules shall be applied to waiver eligible individuals as if the individuals were residing in an ICF/IID or would require that level of care.

3. The Commonwealth shall reduce its payment for home and community-based waiver services provided to an individual who is eligible for Medicaid services under 42 CFR 435.217 by that amount of the individual's total income, including amounts disregarded in determining eligibility, that remains after allowable deductions for personal maintenance needs, other dependents, and medical needs have been made according to the guidelines in 42 CFR 435.735 and § 1915(c)(3) of the Social Security Act as amended by the Consolidated Omnibus Budget Reconciliation Act of 1986 (42 USC § 1395ww). DMAS shall reduce its payment for home and community-based waiver services by the amount that remains after the deductions listed in this subdivision:

a. For individuals to whom § 1924(d) of the Social Security Act applies and for whom the Commonwealth waives the requirement for comparability pursuant to § 1902(a)(10)(B), DMAS shall deduct the following in the respective order:

(1) The basic maintenance needs for an individual under the DD Waivers, which shall be equal to 165% of the SSI payment for one person. Due to expenses of employment, a working individual shall have an additional income allowance. For an individual employed 20 hours or more per week, earned income shall be disregarded up to a maximum of both earned and unearned income up to 300% of SSI; for an individual employed at least four but less than 20 hours per week, earned income shall be disregarded up to a maximum of both earned and unearned income up to 200% of SSI. If the individual requires a guardian or conservator who charges a fee, the fee, not to exceed an amount greater than 5.0% of the individual's total monthly income, shall be added to the maintenance needs allowance. However, in no case shall the total amount of the maintenance needs allowance (basic allowance plus earned income allowance plus guardianship fees) for the individual exceed 300% of SSI.

(2) For an individual with only a spouse at home, the community spousal income allowance determined in accordance with § 1924(d) of the Social Security Act.

(3) For an individual with a family at home, an additional amount for the maintenance needs of the family determined in accordance with § 1924(d) of the Social Security Act.

(4) Amounts for incurred expenses for medical or remedial care that are not subject to payment by a third party including Medicare and other health insurance premiums, deductibles, or coinsurance charges, and necessary medical or remedial care recognized under state law but not covered under the State Plan for Medical Assistance.

b. For individuals to whom § 1924(d) does not apply and for whom the Commonwealth waives the requirement for comparability pursuant to § 1902(a)(10)(B), DMAS shall deduct the following in the respective order:

(1) The basic maintenance needs for an individual under the DD Waivers, which is equal to 165% of the SSI payment for one person. Due to expenses of employment, a working individual shall have an additional income allowance. For an individual employed 20 hours or more per week, earned income shall be disregarded up to a maximum of both earned and unearned income up to 300% of SSI; for an individual employed at least four but less than 20 hours per week, earned income shall be disregarded up to a maximum of both earned and unearned income up to 200% of SSI. If the individual requires a guardian or conservator who charges a fee, the fee, not to exceed an amount greater than 5.0% of the individual's total monthly income, shall be added to the maintenance needs allowance. However, in no case shall the total amount of the maintenance needs allowance (basic allowance plus earned income allowance plus guardianship fees) for the individual exceed 300% of SSI.

(2) For an individual with a dependent child, an additional amount for the maintenance needs of the child, which shall be equal to the Title XIX medically needy income standard based on the number of dependent children.

(3) Amounts for incurred expenses for medical or remedial care that are not subject to payment by a third party including Medicare and other health insurance premiums, deductibles, or coinsurance charges, and necessary medical or remedial care recognized under state law but not covered under the State Plan for Medical Assistance.