The future of Medicaid waivers under the ‘big beautiful bill’

Medicaid is one of the most important programs in our health care system. This joint federal and state program provides coverage to low-income adults and children. Some of these recipients may be living with disabilities themselves or taking care of children with disabilities, preventing them from being able to work.

However, the recent passing of the Trump administration’s “big beautiful bill” is forcing millions of Americans to question whether they can continue to rely on the program to help take care of themselves or their families. The bill requires work and “community engagement” requirements for adults enrolled in Medicaid expansion, cuts funding to the program by $930 billion over the next decade, and has the potential to impact coverage to millions with some estimates predicting as high as 16 million people by 2034, according to various reports.

These changes could increase waitlists, narrow eligibility and disproportionately affect recipients across the nation. But the good news is, as experts in the financial sector, we have the ability to help clients by identifying potential needs early, encouraging clients who believe they will need future coverage to apply early to get on waitlists, and even collaborate with other professionals such as elder law attorneys when it comes to implementing Medicaid-compliant strategies. But before we can get to that point, it’s important to understand how we got here, and the potential impacts these new provisions have.

As mentioned earlier, Medicaid is jointly funded by the federal and state governments. This means specific coverage and eligibility requirements are likely to look different depending on where you live. To better serve recipients, Medicaid waivers were enacted as part of the Omnibus Act of 1981, giving states the ability to offer specialized benefits beyond those typically covered by standard Medicaid. These waivers are typically used to address specific needs such as in-home care for those looking for an alternative to nursing home care. To receive a Medicaid waiver, states must apply to the federal government for approval.

One of the most common types of waivers is the home and community-based waiver also known as Section 1915. This waiver allows the state to provide home-based services to a Medicaid beneficiary, giving them the opportunity to receive long-term care services at home as an alternative to a nursing home or other care facilities. This is crucial to families and financial advisors alike because it gives them options when deciding where and how a loved one will receive care in the long-term care planning process.

To better understand how these waivers work and their impacts, it’s important to have a general understanding of the Medicaid approval process. When a potential candidate applies for benefits, there are a number of qualifications that must be met to be considered eligible for coverage. Candidates sometimes can be denied for reasons such as an incomplete application or an application that was submitted with errors, missing required documentation, the applicant did not meet the functional criteria, or was over Medicaid’s income and asset threshold. However now, with Congress’ recent passing of the “big, beautiful bill,” becoming eligible for coverage may get even tougher.

Changes in Medicaid eligibility

According to a recent report from NPR, in 40 states and the District of Columbia, some Medicaid enrollees will now be required to prove they are working, volunteering or attending school for a minimum of 80 hours a month. To qualify for an exemption, recipients must prove they’re caring for a young child. It’s a stark contrast considering all of these states have expanded Medicaid thanks to the Affordable Care Act.

Another change ensuing panic on millions of Americans, are the potential side effects that less funding will have on the quality of care in rural communities. Less money could mean fewer health services being offered and fewer medical professionals providing care. But arguably the most concerning potential side effect could be fewer hospitals providing treatment to those in need. This is happening because of eliminating the provider tax, which was relied on by nearly every state to increase Medicaid payments to hospitals, nursing homes, and other care facilities.

People receiving coverage under Obamacare plans may also face stricter obstacles to receiving Medicaid benefits. The new legislation will now require ACA marketplace policyholders to update their income, immigration status and other information each year. This is a much stricter process than the previous protocol, which allowed recipients to be automatically reenrolled. To make matters even more challenging, the legislation also shortens the annual open enrollment period by nearly a month.

These stricter requirements combined with limited services and resources mean more people seeking Medicaid coverage will be waitlisted. What was once a reprieve for many states directly dealing with these problems, the “home and community-based” waiver, is also receiving reduced funding, thus inhibiting expansion and increasing wait times, according to AmericanProgress.org.

Knowledge is crucial

While most of these provisions aren’t set to take effect for a couple of years, this knowledge is crucial in helping all of us understand the changes being made to America’s Medicaid program. If you’re lacking Medicaid coverage now or are worried about it being a reality in the near future, there are some resources that might help you in the interim.

Consider checking out nonprofit organizations or community services that provide caregiver support or financial assistance. Some nursing home or assisted living facilities will accept individuals as “Medicaid pending” residents, assuming they will be approved for Medicaid and the provider will be reimbursed retroactively. Other solutions might be looking into Miller Trusts, or qualified income trusts, which provide ways for Medicaid waiver applicants with income exceeding Medicaid’s threshold, to become income eligible. If someone was denied Medicaid eligibility because of this, using these trusts will give them the opportunity to re-apply for benefits.

Another possible option is considering long-term care insurance policies or hybrid life insurance policies that include a long-term care rider allowing the policyholder to use the death benefit to pay for long-term care expenses. Selling a current life insurance policy to receive part of the life insurance death benefit may also be possible under a viatical or life settlement.

With regard to the number of facilities actually available to those in rural areas, some communities are building homes called "Next Gen" homes that are designed with a separate, attached private suite for family members like adult children or elderly loved ones who need care. This structure increases support and flexibility for families in various situations such as those who can somewhat live independently but may require more care at certain times or in the future.

Those who are concerned about the future of Medicaid should seek guidance from professionals. Although it may be a hard conversation, speaking with family members, financial advisors, elder law and estate planning attorneys can help ease the pressure and provide various perspectives to all possible solutions. Additionally, it’s important to stay informed on the latest developments impacting Medicaid. Staying educated will help you and your clients create a plan to work through these new and future obstacles.

 

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