The future of Medicaid has been a major topic following the passage of the Trump administration’s “Big Beautiful Bill.” While the new law includes various changes to federal spending, one of the most significant impacts is the funding cuts to Medicaid. These reductions have raised concerns among families who rely on the program. Many fear they could lose access to essential benefits for healthcare or long-term care.
As these changes take effect, it’s important for Medicaid recipients and financial advisors to stay informed about how coverage might be affected. This includes clients or other family members who live in nursing homes or have special needs.
Stricter Eligibility Requirements
The new law cuts more than $600 billion dollars in federal funding and could add new eligibility requirements for recipients. Under the “community engagement requirements,” able-bodied adults without dependents must work, seek education, or provide service for at least 80 hours per month.
Individuals who are medically frail (those who are blind or have physical, intellectual, or developmental disabilities; substance use disorders; or complex medical conditions) are exempt from these requirements. So are disabled veterans, and people who are entitled to receive Medicare Part A and are enrolled in Medicare Part B.
Most recipients of long-term-care Medicaid will be exempt from the work requirement due to their medical conditions, but it will be on the family to prove that their loved one falls under the exemption. However, individuals enrolled in Medicaid for health insurance may not be exempt.
For example, a 60-year-old who loses their job and health benefits may be ineligible for supplemental insurance if they don’t apply for Medicaid within one month of job loss and fail to meet ongoing work requirements. This could leave them without health coverage until they either find a new job or become eligible for Medicare.
For parents of disabled children, this situation can mean having to prove their child’s condition qualifies for an exemption — or fighting to have it recognized. During that process, the child will not be covered by Medicaid.
Retroactive Coverage is Slashed
As an elder law attorney, I spend a lot of time helping clients file for Medicaid coverage. Not only do these funding cuts affect my clients, they also impact the way I do my job, particularly when it comes to helping clients file for coverage. Under the Trump administration’s Big Beautiful Bill, the three-month retroactive coverage period has now been cut to one month.
When I file a client’s Medicaid application, I often file two applications: One requests coverage for the current month and each month in the future. The second requests coverage for the three previous months of unpaid long-term-care bills. In order for applicants to qualify for retroactive coverage, they must be “asset-qualified’ during those months.”
Essentially, this means the individual seeking coverage be qualified for coverage but did not get around to filing the application for a few months. In the past, those three months may have been covered, but now those three months have been reduced to one. Families will have to take a more proactive approach when considering obtaining coverage, and most will have to begin the process of getting their ducks in a row before their loved one requires long term care.
Not only is this reduction in coverage potentially harmful to the client, it hurts the long-term care facility that treating them. If a resident or their family is unable to pay for those two now-uncovered months of facility bills, and Medicaid denies coverage, the facility takes the largest hit it may not receive compensation for services performed until the patient passes away — if ever.
Nursing Homes Also at Risk
Other Medicaid programs, like PACE and MI Choice Waiver in Michigan, are at risk, too. These programs are designed to keep people out of long-term care facilities and instead make it easier for them to live at home, But Under the Big Beautiful Bill, these programs will receive less funding. This, in turn, reduces in-home care options for individuals unable to privately pay.
According to a recent report from Aging.com, the daily rate for most home care agencies can range from $200-$350 per day, depending on the cost-of-living rates where you live. A guy who works in my office and does in-home care staffing said the cost of 24/7 care is about $700/day or $30/hour. Most families cannot afford that and will have to choose between keeping their loved ones at home, likely receiving less care, or placing them in a long-term care facility.
With more loved ones heading to facilities as the population ages, the demand for long-term care Medicaid facilities may increase. At the same time, supply is likely to decrease due to Medicaid cuts. I would not be surprised to see this cause the price of long-term care to increase.
More Frequent Filing Required
Another change made to the Medicaid program required beneficiaries receiving long-term care coverage to file redetermination documents more often. Instead of filing annually on the anniversary of when coverage began, recipients must now file for redetermination every six months. This change will cause family members to feel as if they are in a perpetual state of applying for benefits, and a constant state of fear that coverage will be denied. It also may result in eligible individuals losing coverage if their verification documents are not submitted correctly.
As previously mentioned, the reduction in funding will limit resources for nursing homes. To potentially complicate matters further, the legislation delays the implementation of new federal nursing-home staffing standards. It also prohibits the Department of Health and Human Services from enforcing facilities to follow these standards until 2034. In the meantime, the reduction in funding could strain state budgets, which could result in staffing shortages down the road.
How to Assist Clients
With affordable coverage at stake for so many, now is the time to help your clients start planning for their future. If they are worried about losing coverage, or fear they may not qualify when they need it, now’s the time to research alternative coverage options. Check to see what programs are offered in their state, especially if they are pregnant, disabled or elderly. It’s also important to remind clients to save as much as they can on their own.
Also encourage clients who are still working to continue contributing to their 401(k) or IRA, and to max out those yearly contributions if they can. If clients are 59 ½ ior older, help them determine how much they should withdraw each year from your account to reduce the total amount of taxes paid on the overall account.
Times are tough and these new rules have the potential to make life even more challenging. If your clients are concerned about losing coverage, help them do their research and meet them. Your goal should be to help guide them through these changes, lessoning their financial stress and anxiety.
Kelsey Simasko is an attorney at Simasko Law, a Detroit-area firm specializing in eldercare law.
