Medicaid Changes for Seniors in the One Big Beautiful Bill Act

There are a few major changes for elders in the One Big Beautiful Bill Act. First, as discussed in numerous articles cited below, it appears that reductions in funding will cause home and community-based services to be limited. This could mean more seniors are forced into nursing homes because they lack support to remain home.

Second, the home equity limit in 42 U.S.C. § 1396p(f) will be capped at $1,000,000.

Current law reads as follows:

(f) Disqualification for long-term care assistance for individuals with substantial home equity

(1)

(A) Notwithstanding any other provision of this subchapter, subject to subparagraphs (B) and (C) of this paragraph and paragraph (2), in determining eligibility of an individual for medical assistance with respect to nursing facility services or other long-term care services, the individual shall not be eligible for such assistance if the individual’s equity interest in the individual’s home exceeds $500,000.

(B) A State may elect, without regard to the requirements of section 1396a(a)(1) of this title (relating to statewideness) and section 1396a(a)(10)(B) of this title (relating to comparability), to apply subparagraph (A) by substituting for “$500,000”, an amount that exceeds such amount, but does not exceed $750,000.

(C) The dollar amounts specified in this paragraph shall be increased, beginning with 2011, from year to year based on the percentage increase in the consumer price index for all urban consumers (all items; United States city average), rounded to the nearest $1,000.

(2) Paragraph (1) shall not apply with respect to an individual if—

(A) the spouse of such individual, or
(B) such individual’s child who is under age 21, or (with respect to States eligible to participate in the State program established under subchapter XVI) is blind or permanently and totally disabled, or (with respect to States which are not eligible to participate in such program) is blind or disabled as defined in section 1382c of this title, is lawfully residing in the individual’s home.

(3) Nothing in this subsection shall be construed as preventing an individual from using a reverse mortgage or home equity loan to reduce the individual’s total equity interest in the home.
(4) The Secretary shall establish a process whereby paragraph (1) is waived in the case of a demonstrated hardship.

Section 71108 of the new law re-writes subsection (f)(1) so it reads as follows:

(f) Disqualification for long-term care assistance for individuals with substantial home equity

(1)

(A) Notwithstanding any other provision of this subchapter, subject to subparagraphs (B) and (C) of this paragraph and paragraph (2), in determining eligibility of an individual for medical assistance with respect to nursing facility services or other long-term care services, the individual shall not be eligible for such assistance if the individual’s equity interest in the individual’s home exceeds $500,000.

(B) A State(i) A State may elect, without regard to the requirements of section 1396a(a)(1) of this title (relating to statewideness) and section 1396a(a)(10)(B) of this title (relating to comparability), to apply subparagraph (A), in the case of an individual’s home that is located on a lot that is zoned for agricultural use, by substituting for “$500,000” the amount specified in subparagraph (A), an amount that exceeds such amount, but does not exceed $750,000; (ii) A State may elect, without regard to the requirements of section 1902(a)(1) (relating to statewideness) and section 1902(a)(10)(B) (relating to comparability), to apply subparagraph (A), in the case of an individual’s home that is not described in clause (i), by substituting for the amount specified in such subparagraph, an amount that exceeds such amount, but does not exceed $1,000,000.

(C) The dollar amounts specified in this paragraph (other than the amount specified in subparagraph (B)(ii) (relating to certain non-agricultural homes)) shall be increased, beginning with 2011, from year to year based on the percentage increase in the consumer price index for all urban consumers (all items; United States city average), rounded to the nearest $1,000. In the case that application of the preceding sentence would result in a dollar amount (other than the amount specified in subparagraph (B)(i) (relating to certain agricultural homes)) exceeding $1,000,000, such amount shall be deemed to be equal to $1,000,000.

(2) Paragraph (1) shall not apply with respect to an individual if—

(A) the spouse of such individual, or
(B) such individual’s child who is under age 21, or (with respect to States eligible to participate in the State program established under subchapter XVI) is blind or permanently and totally disabled, or (with respect to States which are not eligible to participate in such program) is blind or disabled as defined in section 1382c of this title, is lawfully residing in the individual’s home.

(3) Nothing in this subsection shall be construed as preventing an individual from using a reverse mortgage or home equity loan to reduce the individual’s total equity interest in the home.

(4) The Secretary shall establish a process whereby paragraph (1) is waived in the case of a demonstrated hardship.

The OBBBA also includes the following clarification:

(b) CLARIFICATION.—Section 1902 of the Social Security Act (42 U.S.C. 1396a) is amended—

(1) in subsection (r)(2), by adding at the end the following new subparagraph:

‘‘(C) This paragraph shall not be construed as permitting a State to determine the eligibility of an individual for medical assistance with respect to nursing facility services or other long-term care services without application of the limit under section 1917(f)(1).’’; and

(2) in subsection (e)(14)(D)(iv)—

(A) by striking ‘‘Subparagraphs’’ and inserting ‘‘(I) IN GENERAL.—Subparagraphs’’; and (B) by adding at the end the following new subclause:
‘‘(II) APPLICATION OF HOME EQUITY INTEREST LIMIT.—Section 1917(f) shall apply for purposes of determining the eligibility of an individual for medical assistance with respect to nursing facility services or other long-term care services.’’.

(c) EFFECTIVE DATE.—The amendments made by subsection (a) shall apply beginning on January 1, 2028.

Because current law allowed these numbers to be indexed for inflation, the maximum home equity limit in many states (in 2025) is $1,097,000. The end result of OBBBA changes is that, beginning January 1, 2028, an applicant for long-term care Medicaid will not be eligible if he or she has home equity in excess of $1,000,000 unless the exceptions in 1396p(f)(2) apply.

Other Changes

Section 71107 of the OBBBA changes eligibility re-determinations from every twelve months to every six months after December 31, 2026.

Section 71112(b) reduces retroactive Medicaid from three months to one month for individuals “who are under 65 years of age, not pregnant, not entitled to, or enrolled for, benefits under part A of title XVIII, or enrolled for benefits under part B of title XVIII, and are not described in a previous subclause of this clause, and whose income (as determined under subsection (e)(14)) does not exceed 133 percent of the poverty line (as defined in section 2110(c)(5)) applicable to a family of the size involved, subject to subsection (k).” For everyone else including nursing home residents, it reduces retroactive Medicaid from three months to two months. The effective date is for any application after December 31, 2026.