New Bill Could Expand Medicaid Coverage for Certain Seniors

Paying for long-term care may be an important element of your retirement plan, and proposed expansion of Medicaid coverage might make that easier. A newly introduced bill would require Medicaid programs to cover assisted living services for some low-income seniors, giving them more care options than relying on traditional nursing home care. If passed, it might give seniors more care options, which could be particularly important if many local nursing homes have waitlists.

Read on to learn about how the legislation might affect your Medicaid coverage if you should ever need long-term care.

Current Medicaid long-term care restrictions

Medicaid is a state and federal program that helps individuals with limited income cover health care costs. Under current rules, Medicaid covers nursing facility care for beneficiaries who need it, but it doesn't cover assisted living care. As a result, Medicaid appears to favor institutionalized care and doesn't give beneficiaries the option to access less restrictive care options, even if an assisted living setting might work for their needs.

How the current rules cost money

The current Medicaid rules are costing some Medicaid beneficiaries money. Low-income seniors who need care may pay for assisted living out of pocket. Once their savings run out, those individuals may have to transition to nursing homes to continue receiving Medicaid coverage.

With nursing home care costs increasing, it's possible that the rules are actually costing the Medicaid program money, too. Nursing homes are often more expensive than assisted living because of the increased level of care provided. If a beneficiary's care needs can be met by assisted living, that arrangement might cost less than nursing care. However, since the program doesn't currently cover assisted living, those individuals might rely on more expensive nursing care, even though they don't completely need that higher level of care.

What the new bill proposes

On April 30, Senator Roger Marshall, M.D. (R-KS) introduced the Assisted Living Affordability, Choice, Community, Empowerment, Savings and Support (ACCESS) Act. Rep. Max Miller (R-OH) introduced a House version of the bill. If passed, the ACCESS Act would expand Medicaid coverage to include assisted living for seniors who meet the service need thresholds that would qualify them for nursing home or hospital care.

"Medicaid spending is on an unsustainable path, and too many seniors are being pushed into higher-cost care they don't actually need," Senator Marshall said in a statement. "As a physician, I've seen the consequences of that firsthand. This bill is about giving states the ability to provide the right care in the right setting, while protecting the long-term future of Medicaid."

How the bill might expand coverage to assisted living

If approved, the bill would expand Medicaid's definition of "medical assistance" to include assisted living. In turn, states would be required to cover the care that beneficiaries receive in licensed assisted living residences. Individuals who could receive this care would have to otherwise qualify for hospital or nursing facility care under Medicaid rules.

Additionally, the bill would require cost neutrality, meaning that the program's spending for a beneficiary's assisted living services couldn't exceed what the program would have spent if that beneficiary received hospital or nursing facility care.

The focus on affordable housing

The ACCESS Act also includes a Low-Income Housing Tax Credit provision (LIHTC). The LIHTC helps finance affordable housing for low-income individuals.

The ACCESS Act would help expand affordable assisted living by improving the LIHTC, pairing it with long-term supports to help older adults age in the community.

How the bill might improve long-term care accessibility

It's possible that the bill might improve long-term care accessibility. Since only some nursing homes accept Medicaid, seniors who need long-term care are limited under current Medicaid rules. If local nursing homes that accept Medicaid don't have available space when Medicaid beneficiaries need it, they may be placed on a waitlist.

Expanding Medicaid coverage to include assisted living might give beneficiaries more care options, potentially allowing them to get into a residential care program sooner and receive the care they need.

Who might be affected by the bill

The bill might expand care options for seniors who meet Medicaid's financial criteria and who would otherwise qualify for nursing home or hospital care.

According to CDC data, approximately 1 million people in the United States lived in assisted living or similar residential care settings in 2022. Approximately 17%, or 170,000 of those individuals, were Medicaid beneficiaries. The bill has the potential to have a widespread impact on low-income seniors who rely on Medicaid coverage and who have long-term care needs.

Bottom line

The ACCESS Act is awaiting review by the Finance Committee, and the House companion bill has been sent to the House Ways and Means Committee and the Energy and Commerce Committee before any floor vote. A January 1, 2027 effective date is proposed if the legislation is enacted.

Paying for long-term care can be a challenge and requires significant planning. Even if you don't anticipate needing long-term care, it's a good idea to speak with a retirement professional and make sure you're taking the right steps to set yourself up for retirement.

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