What Does the One Big Beautiful Bill Mean for Medicaid Recipients? Part 1

2 months ago in this blog I wrote about a bill that the House of Representatives passed which contained tax cuts and changes to Medicaid.  That bill then went to the Senate and if approved would then be presented to the President for his signature. 2 months later with the typical back and forth negotiations a final bill was passed, what has been named the One Big Beautiful Bill (OBBB).

So, clients and prospective clients are now asking , “what does this mean for Medicaid or more specifically what does it mean for the Medicaid benefits that provide long term care?”  Let’s first examine what is in the bill as it pertains to Medicaid.

Because Medicaid is not one single program but actually a series of different programs under a Medicaid “umbrella”, not all changes in OBBB apply uniformly to each program.  For example, as with the House bill that was first passed in April, new work requirements are contained in the final bill that was passed.  Certain Medicaid beneficiaries will have a work requirement of 80 hours per month in order to keep their benefits.

Some groups are exempted from this work requirement.  Those exempted include anyone over 65 and individuals who are medically frail and unable to work.  That means anyone who is receiving Medicaid long term care benefits either in a facility or at home.  These Medicaid beneficiaries typically are elderly (over 65) or if not, are severely disabled and cannot work.  This new work requirements will go into effect beginning January 1, 2027.

Another change affects re-enrollments and redeterminations.  As we know with our long term care clients, Medicaid conducts annual redeterminations.  As I have written about in the past 3 weeks in this blog, these “redets” have become more scrutinizing and stricter in terms of penalizing recipients for failing to follow the rules after being approved.  In some cases this might be allowing assets to exceed the $2000 asset limit (even if only by a few dollars) or not using a qualified income trust (QIT) correctly.

The new law will require states to conduct redeterminations twice a year instead of once a year.   This additional bureaucratic process could cause many people to be tripped up by the added paperwork and thus lose the benefits they had.  They would then have to reapply.  It does not appear, however, that this new requirement will apply to long term care Medicaid recipients.  This provision of the law is also set to take effect January 1, 2027.

There are other provisions in OBBB that affect the funding of Medicaid.  Remember that while Medicaid is administered at the state level, each state gets a contribution of federal funds to be added to whatever state monies they make available in their budgets for Medicaid.  While not directly targeted towards any particular Medicaid program, changes in overall funding could obviously affect Medicaid benefits.

We’ll cover that topic next week.