If your family gets services through a Kentucky Medicaid waiver, the 4% provider rate cut that was set to hit on August 1 is off. Governor Andy Beshear announced on July 22 that the state will spend $255 million from an unexpected budget surplus to hold reimbursement rates where they are, and the Cabinet for Health and Family Services is sending providers new notices replacing the ones it mailed on June 8.

That is a real reprieve for every agency and self-directed employer who bills these waivers, and it is also money the state received once and cannot count on receiving again.

What the Cut Would Have Done

The June 8 letter told providers to expect 4% less for every service they bill starting August 1. Four waivers were in the line of fire: the Home and Community Based waiver for seniors and adults with physical disabilities, the Michelle P. Waiver for people with intellectual and developmental disabilities, the Model II Waiver for people who need ventilator support, and Supports for Community Living.

A rate cut is not a service cut on paper, which is why it can slide past a family reading the notice, but in practice the two run together. Agencies that already struggle to hire direct support professionals at current wages respond to a 4% reduction by cutting hours, dropping self-directed clients, or closing a location. Kentucky spent close to $1.9 billion on these waiver services in 2025, and every dollar of that flows through providers who set wages based on what the state pays them.

Roughly 19,000 Kentuckians were on waiver waiting lists as of July 13, with about 1,000 open slots between them. Providers who shrink their capacity make that math worse for everyone behind them in line.

Where the Money Came From, and When It Runs Out

Kentucky closed the fiscal year with a $476 million surplus after projecting a $156 million deficit, plus more than $350 million in corporate income tax payments the state had not forecast. Beshear directed $255 million of that toward the rate cut, along with money to cover the cost of existing Michelle P. Waiver slots, $4 million for senior meals, and more than $400 million into the Budget Reserve Trust Fund.

Here is the part families should write on the calendar: the protection covers the current fiscal year, which ends June 30, 2027. A one-time corporate tax payment does not repeat itself. Unless the General Assembly appropriates recurring money for Medicaid in the 2027 session, the same 4% arrives again next summer, and state officials have said the reductions projected for 2028 are larger than the ones just avoided.

Cabinet Secretary Dr. Steven Stack said as much when the reversal was announced, noting that the governor's action stalls the problem while the legislature still has to solve it. Advocates who rallied at the Capitol Annex on July 17 said something similar from the other direction, that families should not have to fight the same fight every budget cycle.

Four Things to Do in the Next Two Weeks

Confirm your provider got the new notice. Some agencies started planning for the August 1 reduction back in June. Call your case manager or agency director, ask whether they have received the revised rate notice, and ask directly whether any staffing or scheduling changes they announced are now cancelled. A provider that already gave notice to a direct support professional may not have reversed it.

Get any service reduction in a written notice. If your hours, respite days, or day program schedule change after August 1, that is a service change and it requires a formal Medicaid notice with appeal rights and a deadline. A phone call from an agency saying they cannot staff your hours is not a notice. Ask for one in writing, then read our guide on what to do when your Medicaid plan cuts services to cover a budget gap.

Check your place on the waiting list. Michelle P. Waiver placement runs by the date a completed application was received, so an application sitting incomplete is an application not accruing time. Medicaid eligibility comes first through kynect or the Department for Community Based Services at (855) 306-8959, and waiver questions go to the Department for Behavioral Health, Developmental and Intellectual Disabilities at (502) 564-7700 or DDID.Info@ky.gov. Our walkthrough of how Medicaid waiver waiting lists work covers what to ask for and what documentation moves an application forward.

Put the 2027 session on your calendar now. The legislative subcommittee formed to study waiver waiting lists is where the recurring funding question lands, and testimony from families carried weight in July. Kentucky's experience is not unusual, and families in other states watching state budget writers absorb federal Medicaid reductions are seeing the same pattern of one-year patches.

The families who showed up in Frankfort on July 17 changed a number in a state budget five days later. That is a short feedback loop for state government, and it works again next spring for anyone willing to make the drive or send the email.