The One Big Beautiful Bill Act (OBBBA), passed in July 2025, makes several important changes to Medicaid that affect older adults and families planning for long-term care. While many headlines have focused on tax changes, the law also reshapes how Medicaid determines eligibility and how it funds care for seniors.
If you or a loved one may need Medicaid to help pay for nursing home or in-home care, here’s what you need to know.
1. New Home Equity Limit for Long-Term Care Medicaid
Under the OBBBA, applicants with more than $1 million in home equity are no longer eligible for Medicaid long-term-care benefits.
- This means that even if your income is modest, owning a high-value home can disqualify you from Medicaid coverage for nursing home or home-care services.
- The law does not adjust this limit for inflation, so the $1 million figure will stay fixed over time.
- Seniors who want to preserve their home while planning for future care may wish to review strategies such as Medicaid Asset Protection Trusts well in advance.
2. Shorter Retroactive Coverage
Before the OBBBA, Medicaid could cover medical expenses for up to three months before an application was submitted. That period is now reduced to one month.
- In practice, being approved for retroactive coverage was extremely challenging, so this change will not have a huge effect.
- In any event, because long term care needs can arise quickly, families should plan ahead so that they are prepared when a need arises.
3. More Frequent Eligibility Reviews
The new law requires states to perform eligibility checks more often—for some groups, every six months instead of annually.
- Seniors must respond promptly to requests for paperwork or verification, such as proof of income, assets, or address.
- Missing a deadline could result in suspension or loss of coverage, even for eligible individuals.
- Those with mobility, memory, or health challenges should consider designating a trusted family member or legal representative to help with documentation.
4. Tighter Funding Rules for Nursing Homes and Senior Care Providers
The OBBBA places new limits on how states can use “provider taxes” to fund Medicaid. These taxes help states draw down federal matching dollars for nursing homes and other senior-care programs.
- As a result, some states—including New York—may face budget pressure that could affect reimbursement rates or the availability of certain long-term-care programs.
- Seniors relying on Medicaid-funded nursing homes or home-care services may see changes in program availability or eligibility thresholds over time.
5. Incorporate Flexibility into Your Plan
Because of the uncertainty of future Medicaid funding, services that are currently provided could be cut or limited. Medicaid eligibility rules could also become stricter.
You may be wondering if Medicaid planning is still a good option under the new rules. The key to a smart Medicaid strategy is flexibility. Medicaid planning requires placing assets in the care of a friend or family member. Make sure that those assets could be available to you in the event that Medicaid is not an option or if it doesn’t provide sufficient services. At The Village Law Firm, we take a comprehensive approach that consider all these factors in recommending a plan.
New York State currently has more lenient rules than other states for qualifying for Medicaid. With budgetary pressures looming, New York may impose stricter eligibility rules in coming years. If you think you’d benefit from Medicaid, it’s best to act now so that you can qualify under the current rules. Steps you can take now include:
- Reviewing your home ownership structure and whether equity might affect future eligibility.
- Keeping financial and legal records up to date for easier verification.
- Considering Medicaid-planning trusts or other tools that protect assets while preserving eligibility.
- Talking with an elder-law attorney to understand how the new $1 million home-equity cap and other rules apply in New York.
Final Thoughts
The OBBBA represents the biggest Medicaid update in years. For seniors and families in New York City, these changes could have a major impact on long-term-care planning.
If you or a loved one may need Medicaid in the coming years, now is the time to review your plan and ensure your assets and care options are protected under the new law. We are here to help you navigate this. You can schedule a call to discuss your options and get support here.
