OBBBA and Medicaid Updates

Recently, the One Big Beautiful Bill Act (OBBBA) became law. Among the many changes this law makes are some which will impact Medicaid in future. As the aging population grows, these funding changes will directly impact how services are delivered across the nation. Here’s a breakdown of the law as it relates to long term care Medicaid for adults over 65. The changes discussed below take effect in 2028.

Rebalancing Towards Home Care-Based Services

A major shift in funding priorities will focus on moving away from institutionalized care and directing more resources to home care-based services. This change comes in part because the federal government is changing the amount of money it gives states for care. That amount had increased during COVID, and is now decreasing back to non-pandemic levels. Home care is usually a more cost effective option for Medicaid, which can be helpful to both the state budget, and families looking for aging-in-place solutions. The problem, however, will be the same as in nursing facilities. Finding the staff to give the care.

Facility Closures on the Horizon

As OBBBA rebalances funding to home care, a significant concern looms over the future of long-term care facilities. Due to lack of sufficient funding, many of these facilities may be forced to close their doors. This comes at a time when an estimated 10,000 baby boomers are turning 65 every day, a demographic shift that will further strain the already limited resources. The growing need for care, combined with facility closures, could create a perfect storm, making access to care more difficult and urgent. Families may need to start waitlisting for facilities well ahead of the need.

Changes to Redetermination Schedules

For Medicaid recipients under 65, the redetermination process will undergo significant changes. Historically, recipients were reviewed annually to ensure eligibility. Now, individuals who are aged and disabled will face 6-month redeterminations. This move may create additional administrative burdens for states and providers, slowing the process for all.

Retroactive Care

Currently, if you apply for Medicaid while in a nursing home, there is a 90 day retroactive coverage period. This will be shortened to 60 days, which means less time to get the application processed before out of pocket expenses begin. There is still no retroactive coverage if you apply while living outside of a nursing home.

Paused Services for 2035

Finally, the minimum nursing home staffing requirements the last administration put in place will be paused until 2035. This delay will allow time for facilities to build up their staffing to the required levels, which is important because there is a shortage of caregivers. However, with a ten year timeline to do this, the question is whether some facilities will continue to operate at low staffing levels to cut costs, and put patient care at risk.

With the shift toward home care, rising facility closures, and reduced federal funding, stakeholders must navigate a delicate balance between providing adequate care and managing budget constraints. Without a clear, strategic plan, the gaps in care could widen, leading to potential crises for those who need assistance the most. As care becomes harder to find and harder to fund, the importance of having a solid care plan has never been more critical. A well-structured plan can help bridge the gap between potential crises and available resources, ensuring that individuals receive the care they need without a significant disruption.

Attorney Halley C. Allaire is principal in the law firm of Allaire Elder Law, a member of the National Academy of Elder Law Attorneys, Inc., with an office at 271 Farmington Avenue, Bristol, (860) 259-1500, or on the web at www.allaireelderlaw.com. If you have a question, send a note to Attorney Halley C. Allaire and your question may be discussed in a future column.