Budget Reconciliation Act of 2025: Medicaid and Medicare Provisions Impacting Low-Income Older Adults

Toplines

Restricts essential Medicaid funding mechanisms, forcing states to cut optional services like Medicaid Home- and Community- Based Services (HCBS)

Increases barriers to accessing Medicaid coverage for long-term care

Rescinds crucial staffing protections, endangering the lives of millions of nursing home residents

Eliminates efforts to modernize Medicaid eligibility and enrollment, cutting access to Medicare for millions of low-income seniors dually enrolled in Medicaid and Medicare and making them financially insecure

Forces states to impose burdensome red-tape, taking away health coverage from millions of low-income older adults, people with disabilities, and their caregivers

Cuts immigrants’ access to Medicaid, Medicare, and Marketplace

Section by Section

Long Term Care Eligibility, Access, and Quality

H.R. 1 Policy and Section Number	What the Legislation Does	Effective Date	Impact on Older Adults
Nursing Home Minimum Staffing Rule Moratorium Sec. 71111 Impacting 42 CFR 483.5 and 483.35	Prohibits implementing, administering, or enforcing provisions of the Nursing Home Minimum Staffing rule finalized in 2024 that requires facilities to hire and retain a minimum amount of nurse and nurse aides to ensure residents’ safety and to have a registered nurse (RN) on site 24 hours a day instead of the current 8 hours. Note the Centers for Medicare and Medicaid Services (CMS) published an interim final rule in December 2025 that will repeal the minimum staffing ratios and 24/7 RN requirement effective February 2, 2026.	Upon enactment; CMS repeal takes effect February 2, 2026	Understaffing harms residents and workers, resulting in injuries, illnesses and even deaths Repealing the rule will lead to an estimated 13,000 lives lost annually due to understaffing
Restrictions on State Medicaid Funding Mechanisms Secs. 71115 & 71116 Provider tax limits codified at 42 U.S.C. 1396b(w)(4) State Directed Payment limits codified at 42 C.F.R. 438.6(c)(2)(iii)	Prohibits all states from establishing any new provider taxes or increasing existing taxes that they use to fund their share of Medicaid costs Reduces cap on provider taxes and local government taxes in expansion states by .5% per year beginning in fiscal year 2028 to 3.5% in 2032. Applies to all provider taxes except nursing facilities and intermediate care facilities. Restricts state-directed payments (SDPs) in managed care and discourage non-expansion states from expanding Medicaid Reduces grandfathered SDPs by 10% per year until they reach the allowable Medicare-related cap. One or both policies directly impact every state but Alaska Shifts costs to states forcing them to cut Medicaid spending Limits states’ ability to bolster Medicaid to respond to emergencies and economic downturns	Upon enactment with phase down of new provider tax cap beginning in 2028	States will be forced to cut optional benefits or eligibility categories, enrollment, or provider rates Home-and Community-Based Services (HCBS) account for the majority of optional spending and are likely to be cut first, leading to longer waiting lists and more institutionalization States are also likely to cut optional services like adult dental, vision, and hearing that Medicare does not cover
Streamlining Eligibility & Enrollment Rule Moratorium Secs. 71101 & 71102 Impacting various regulations (see our Streamlining Rule issue brief)	Prohibits implementing, administering, or enforcing certain provisions of the Medicaid Streamlining Eligibility & Enrollment Regulations finalized in 2024 that modernize rules and processes for people eligible for Medicaid based on disability or being age 65+ Provisions of the rule already in effect will continue States can choose to still implement provisions that are under moratorium and some provisions are required by separate authority	Upon enactment through September 30, 2034	Makes it harder for older adults to get and maintain Medicaid coverage by allowing states to continue bureaucratic barriers such as complex income verification, paperwork, and frequent renewals that currently cause wrongful coverage losses See Medicare section of this resource for impacts on Medicare Savings Program enrollment
Home Equity Limit Exclusion Sec. 71108 Codified at 42 U.S.C. 1396p(f)(1)	Reduces and freezes the maximum allowable home equity limit at $1 million, which is lower than the 2025 maximum limit, with no adjustments for inflation Allows exemption for agricultural land Limits who can qualify for Medicaid for long-term care, cutting back eligibility on January 1, 2028, in states that use the maximum limit	January 1, 2028	Makes it harder for people needing long-term care to keep their home, which can lead to unnecessary institutionalization Disproportionately impacts low-income older adults whose only asset is a home they have lived in for decades that has increased in value Prevents families—especially in communities of color--from escaping poverty through growing intergenerational wealth
Limiting Retroactive Coverage Sec. 71112 Codified at 42 U.S.C. 1396a(a)(34)	Limits retroactive coverage to: 1 month before application for expansion enrollees 2 months before application for all other eligibility groups Makes it harder to access long-term care and increases risk of medical debt	January 1, 2027	Many older adults will not have financial protection when faced with unexpected medical emergencies or need long-term care. Medicaid applications are complex, slow to process, and often require weeks or months for approval. Unfairly penalizes those who qualify for Medicaid, but face medical or administrative obstacles, increasing their risk of medical debt and coverage gaps.
Home and Community Based Services (HCBS) 1915(c) Waiver Authority Sec. 71121 Codified at 42 U.S.C. 1396n(c)(11)	Authorizes states to provide HCBS through 1915(c) waivers to people who do not meet institutional level of care Requires states to show that the new waiver will not increase the average amount of time that people who need an institutional level of care will wait for services. Bars states using these waivers from deducting standard employment benefits such as health care and union dues from non-agency based HCBS worker payments	July 1, 2028 approval of waivers could begin	Unlikely states would be able to implement the demonstration as they will be facing massive Medicaid funding cuts States already have authority to provide coverage to people not meeting the institutional level of care under the 1915(i) state plan option Prohibiting deductions of employment benefits would weaken access to HCBS by harming the workforce
Funding to States to Support HCBS Systems Sec. 71121(b)	$100 million in federal funding for states to support systems to deliver HCBS through 1915(c) waivers or section 1115 waivers Funding is available to all states based on the proportion of the state’s population that is receiving HCBS through waivers (1915(c) or 1115) compared to all states Funds to be distributed in 2027 and available until exhausted Another $50 million is provided to CMS in fiscal year 2026 to implement Sec. 71121	Fiscal year 2027	$100 million divided across all states is minimal funding, but nonetheless important for states to utilize given the $990 billion funding cuts to Medicaid. In comparison, the American Rescue Plan Act (ARPA) provided an additional 10% federal match on HCBS spending, which increased federal funding by over $11 billion in the first year and resulted in $37 billion in increased spending over 4 years

Other Medicaid Coverage & Benefits

H.R. 1 Policy and Section Number	What the Legislation Does	Effective Date	Impact on Older Adults
Medicaid eligibility redeterminations for expansion population Sec. 71107 Codified at 42 U.S.C. 1396a(e)(14)(L)	Requires states to conduct eligibility redeterminations at least every 6 months (instead of every 12 months) for Medicaid expansion adults or an expansion-like waiver (e.g., WI and GA).	December 31, 2026	Adds burden and increases risk for termination based on paperwork and Along with work requirements, this provision will lead to many older adults ages 50 to 64 having Medicaid terminated
Medicaid eligibility for lawfully present immigrants Sec. 71109 Codified at 42 U.S.C. 1396b(v)(5)	Eliminates Medicaid eligibility for lawfully present immigrants who are not Lawful Permanent Residents (after a 5-year or longer waiting period); certain Cuban and Haitian immigrants; individuals living in the U.S. under a Compact of Free Association; or lawfully residing children and pregnant people. Removes eligibility for most humanitarian immigrants, including refugees and asylees.	October 1, 2026	Limits eligibility to same categories as Medicare and ACA tax credits, meaning many older immigrants such as refugees and asylees who are not green card holders are likely to become uninsured.
FMAP for Emergency Medicaid Sec. 71110 Codified at 42 U.S.C. 1396d(kk)	Reduces FMAP from expansion rate to traditional rate for emergency services provided to adults who are ineligible for Medicaid due to immigration status	October 1, 2026	States are still required to provide emergency services so this shifts costs to states, putting additional budgetary pressure that could lead to cuts to HCBS and other optional services older adults and people with disabilities rely on.
Mandatory Cost Sharing for expansion Sec. 71120 Codified at 42 U.S.C. 1396o(k)	Requires states to charge cost sharing to Medicaid expansion enrollees (or enrollees in an expansion-like waiver) with incomes above 100% FPL for many types of services. Allows copay amount per service to be as high as $35. Overall cost sharing for the family remains capped at 5% of household income. Exempts specific services from cost-sharing, including primary care, emergency, mental health care and substance use disorder services; and services provided by federally qualified health centers, behavioral health clinics, and rural health clinics. Prohibits premiums for this population	October 1, 2028	Older adults receiving Medicaid under expansion will be forced to pay for basic services despite making barely over the federal poverty level 63% of expansion enrollees age 50-64 lack resources to meet their daily needs, much less copays leading to delays in care
Work Requirements Sec. 71119 Codified at 42 U.S.C. 1396a(xx)	Mandates every state implement work requirements for adults ages 19 to 64 enrolled through Medicaid expansion or or an expansion-like waiver (e.g., WI and GA) Requires enrollees to prove they have 80 hours of qualifying activities or equivalent income per month for 1 to 3 months prior to enrolling and at least once every 6 months to maintain coverage Allows seasonal workers to meet requirements if average monthly income meets specified standard Requires some narrow exemptions (e.g., “medically frail or otherwise has special medical needs”; “parent, guardian, caretaker relative, or family caregiver (as defined in section 2 of the RAISE Family Caregivers Act) of a dependent child 13 years of age and under or a disabled individual”) Requires states to use data matching “where possible” to verify if an individual meets the requirement or qualifies for an exemption Deems enrollees who do not meet work requirements as Medicaid eligible and therefore ineligible for marketplace tax credits Prohibits waivers of these requirements under Sec. 1115 or another waiver authority Permits time-limited compliance exemption for states showing “good faith effort” until no later than December 31, 2028	December 31, 2026 (or earlier at state option)	Over 5 million people age 50 to 64 enrolled in Medicaid expansion are at risk of having coverage taken away. 1.8 million 50- to 64-year-olds are estimated to have Medicaid terminated (likely an underestimate because older adults are less likely to be working and have had a harder time navigating reporting requirements in states where they have been implemented) Caregivers and direct care workers are likely to have their Medicaid terminated as well, putting the older adults and people with disabilities they care for at risk of not getting the support they need Those who lose Medicaid would be likely to become uninsured because they would also be blocked from tax credits to buy marketplace coverage See Mitigating the Harms of Medicaid Work Requirements for Older Adults: Tools for State Advocates
Rural Health Transformation Program Sec. 71401 Codified at 42 U.S.C. 1397ee(h)	$50 billion for states that apply and are approved (DC and territories are ineligible). $10 billion will be awarded per year for 5 years, from 2026 to 2030. Unspent/ unobligated funds as of Oct. 1, 2032, must be returned. $25 billion will be awarded equally among all approved states. The remaining $25 will be distributed based on criteria set by the Centers for Medicare and Medicaid Services (CMS), including data on how rural a state is compared to other states, information on the state’s rural health facilities, and how aligned the states’ initiatives are with the Administration’s agenda. State applications are due November 5, 2025. CMS will make decisions on awards by December 31, 2025.	FY 2026 through 2030	This funding will not make up for the cuts to federal Medicaid and other heath care funding but is nonetheless critical for states to utilize. CMS has great discretion in how it awards this funding. Long-term care and integrated care for people dually eligible are among the factors CMS will consider in scoring applications and awarding funding.

Medicare Eligibility & Access

H.R. 1 Policy & Section #	What the Legislation Does	Effective Date	Impact on Older Adults
Medicare Savings Program Enrollment Rule Moratorium Sec. 71101 Impacting 42 C.F.R. 406.21(c); 435.4; 435.601; 435.911; 435.952	Prohibits implementation of certain provisions of the Medicaid Streamlining Eligibility & Enrollment Regulations that helps ensure people eligible for the Medicare Savings Programs (MSP) are enrolled and maintain eligibility Effectively eliminates protections from unnecessary barriers and red tape States can choose to still implement provisions that are under moratorium and some provisions are required by separate authority (see our Streamlining MSP issue brief)	Upon enactment through September 30, 2034	Dually eligible older adults and people with disabilities are at risk of losing Medicare cost-sharing assistance through the MSPs Without MSP, older adults on fixed incomes struggle with unaffordable costs and delays in care, and are unable to meet their basic needs as Medicare premiums are taken from Social Security checks Most will also lose help with prescription drug costs, which research shows will lead to avoidable deaths
Medicare Eligibility Restrictions Sec. 71201 Codified at 42 U.S.C. 1395mmm	Limits Medicare eligibility for lawfully present immigrants to 3 categories: Legal Permanent Residents, Cubans and Haitians who entered under a family reunification program, and People residing under the Compacts of Free Association (citizens of Micronesia, the Marshall Islands, and Palau) Terminates Medicare for all other currently eligible lawfully present Medicare enrollees 18 months after enactment.	Upon enactment; coverage terminated for currently enrolled January 2027	Takes Medicare coverage from many lawfully present immigrants such as people with temporary protected status (TPS) who have lived, worked, and paid Medicare and other taxes in the U.S. for decades Contributes to chilling effect that prevents older immigrants from enrolling in benefits they are eligible for
Medicare Sequestration	Increased the federal deficit by $3.4 trillion, which would have triggered mandatory cuts, known as sequestration, under the Statutory Pay-As-You-Go Act of 2010. Congress avoided the sequester by erasing the $3.4 trillion from the PAYGO scorecard in the November 2025 continuing resolution.	n/a	These cuts will not take effect as Congress voted to bypass them as they have in the past when PAYGO has been triggered.

Additional Analysis and Resources on H.R. 1

Tracking the Medicaid, Medicare and ACA Provisions in the 2025 Reconciliation Bill, KFF
New Law Enacted, Making Historic Cuts and Changes to Medicaid and Marketplaces, Manatt
Provisions on Immigrants Access to Public Benefits in the Final Reconciliation Package, Protecting Immigrant Families Coalition
Medicaid Defense - Justice in Aging