Changes To Medicaid That Will Affect Seniors

Medicaid is an important vehicle for helping people get the long-term care they need. This federal and state program is, however, extremely complex to navigate. The plethora of rules, regulations, and requirements can be overwhelming for the layperson trying to understand their eligibility for benefits. Here is a brief summary of Medicaid, as well as a brief description of the changes to the Medicaid program that are included in the Budget Reconciliation Act of 2025, also known as the Big Beautiful Bill.

What is Medicaid?

Medicaid is a national/state/local health insurance system that provides healthcare benefits to people with limited income and resources who are in need of services.  It covers preventive services such as immunizations, screenings for chronic and infectious diseases such as cancer, and behavioral interventions and counseling for reducing the risk of diseases as well as managing diseases. For people who meet the eligibility requirements, it also covers long-term care services like nursing homes and home care. The federal government sets the general rules that the Medicaid program must follow, but the states run their own programs; thus, eligibility requirements may vary from state to state.

New York’s Medicaid program provides comprehensive health coverage to more than 7.5 million New Yorkers as of December 2023. Medicaid pays for a wide range of services, depending on age, financial circumstances, family situation, or living arrangements. These services are provided through a large network of health care providers that are accessed directly using a Medicaid card or through a managed care plan for those who are enrolled in managed care. Some services may have small co-payments, which can be waived if they are unaffordable for the Medicaid recipient. 

Medicaid is often confused with Medicare, a separate federal program. Medicare is federal health insurance for people 65 or older, and some people under 65 with certain disabilities or conditions. People who receive Medicare can also seek Medicaid benefits to cover Medicare premiums and services not eligible for Medicare coverage, like long-term and nursing home assistance. Because it’s a federal program, Medicare has set standards for costs and coverage. This means a person’s Medicare coverage will be the same no matter what state they live in.

Ways To Become Eligible for Medicaid

Medicaid law and eligibility rules are complex and often raise difficult questions based on unique individual circumstances. A person who is over the income and asset limits can become eligible by taking certain actions, such as transferring assets to a trust. By planning ahead with a Long Island Medicaid lawyer, you can make sure your assets are protected while receiving the medical treatment you need. An irrevocable Medicaid trust can be used to transfer expensive and highly appreciated assets, such as your home and stocks, so the value of the assets does not count against you in determining eligibility limits. The trust can be structured so that you can live in your home for the rest of your life and receive income from the property while you’re alive. 

Medicaid has a 60-month look-back period, which is meant to discourage Medicaid applicants from gifting assets, including selling them under fair market value, to meet Medicaid’s asset limit. The federal Medicaid agency reviews all asset transfers within the look-back period. This includes transfers made by an applicant’s spouse. There will be a period of ineligibility if the rule has been violated. This is because the assets could have been used to pay for the long-term care.

The look-back period begins on the date of one’s Medicaid application for long-term care. Generally speaking, it is five years. As an example, if a New York resident applies for Medicaid on January 1, 2025, their look-back period extends back to January 1, 2020. All financial transactions between these dates are subject to review.

Examples of transactions that violate the look-back period and could result in penalization include the following: 

• Money gifted to a grandson for his college graduation
• A house that was transferred to a cousin
• An art collection sold for half its value
• Payments made to a personal care aide without a personal care agreement 

Changes to Medicaid Under the Budget Reconciliation Act of 2025

The Budget Reconciliation Act of 2025, enacted by Congress in July, contains many changes to Medicaid that will negatively impact seniors. Some of these changes take effect immediately, while others will be phased in. 

In particular, the legislation:

• Increases barriers to accessing Medicaid coverage for long-term care
• Rescinds crucial staffing protections at nursing homes
• Eliminates efforts to modernize Medicaid eligibility and enrollment, cutting access to Medicare for millions of low-income seniors dually enrolled in Medicaid and Medicare 
• Forces states to regulate more stringently, possibly reducing health coverage for millions of low-income older adults, people with disabilities, and their caregivers
• Limits access to Medicare for millions of low-income seniors who are dually enrolled in Medicaid and Medicare. 
• Cuts undocumented immigrants’ access to Medicaid, Medicare, and the Marketplace

Additionally, there is a new federal work requirement, referred to in the law as a “community engagement requirement.” Some people who are deemed fit to work and receive Medicaid will need to spend at least 80 hours a month working, volunteering, or in school. 

According to the Center on Budget and Policy Priorities, the legislation will result in up to 15 million more people who are living without health insurance by 2034, and over $1 trillion in spending cuts to health care through 2034. It is the biggest cut in history.

Contact Davidow, Davidow, Siegel & Stern

If you or a loved one is struggling with long-term planning or the Medicaid system, here at  Davidow, Davidow, Siegel & Stern, we can help. We have over one hundred years of experience counseling our clients in the areas of estate planning, elder law, special needs planning, probate and estate administration, and other areas of the law. It is our heritage to provide unrivaled expertise and customer service to our clients. Contact us today.