One Big Beautiful Bill and Nursing Homes
What the New Law Means for Your Family’s Nursing Home Care Options: What Seniors and Families Need to Know
Last Updated: July 3, 2025
Key Takeaways
- 63% of nursing home residents depend on Medicaid to pay for their care, costing over $100,000 per year
- $1 trillion in Medicaid cuts over 10 years could force nursing homes to close or stop accepting Medicaid patients
- Safety rules eliminated: New staffing requirements to keep residents safe would be delayed for 10 years
- Rising costs: Families may pay thousands more out-of-pocket if nursing homes lose Medicaid funding
- Waiting times: Finding an available nursing home bed could become much harder
- Rural areas hit hardest: Small-town nursing homes that serve mostly Medicaid patients are most at risk
What’s Happening Right Now?
The “One Big Beautiful Bill” is now law. The bill passed the House (218-214) on July 3, 2025, and the Senate (51-50) on July 1, 2025. President Trump will sign it into law on July 4, 2025. This massive bill makes big changes to how nursing homes are funded and regulated. For the 1.2 million seniors living in nursing homes today, these changes could mean the difference between getting good care and struggling to find care at all.
Final Legislative Status
Date | What Happened | Impact |
---|---|---|
May 22, 2025 | House passed original version | Included nursing home cuts |
July 1, 2025 | Senate passed with changes | Made cuts even deeper |
July 3, 2025 | House approved Senate version | Final passage |
July 4, 2025 | President Trump signs into law | Changes begin |
Understanding Nursing Home Costs and Who Pays
The Reality of Nursing Home Expenses
Nursing home care costs an average of over $100,000 per year for a semi-private room. Most families cannot afford these costs out-of-pocket, which is why Medicaid becomes so important.
Who Pays for Nursing Home Care?
Payment Source | Percentage of Residents | What This Means |
---|---|---|
Medicaid | 63% | Government pays for low-income seniors |
Private insurance | 8% | Long-term care insurance policies |
Out-of-pocket | 12% | Families pay directly |
Medicare | 17% | Only for short-term skilled care |
How People End Up on Medicaid
Most nursing home residents don’t start on Medicaid. Here’s what typically happens:
- Family pays privately at first using savings, retirement funds, or long-term care insurance
- Money runs out after months or years of $8,000-10,000 monthly costs
- Apply for Medicaid once assets are spent down to about $2,000
- Medicaid takes over paying for care while family keeps small personal allowance
Real example: Margaret used her $150,000 in savings to pay for nursing home care. After 18 months, her money was gone. Medicaid now pays for her care while she keeps $30 per month for personal items like shampoo and magazines.
How the New Law Changes Nursing Home Funding
Medicaid Cuts Hit Nursing Homes Hard
The Congressional Budget Office estimates the final version cuts $1 trillion from Medicaid and other health programs over 10 years. Since nursing homes depend heavily on Medicaid payments, these cuts directly threaten their ability to operate.
Provider Taxes Being Eliminated
Most states use a system called “provider taxes” to bring in extra federal money for nursing homes. Here’s how it works:
Current system:
- State charges nursing homes a tax
- Federal government matches this money
- Nursing homes get higher payments
- Result: More money for resident care
Under the new law:
- Provider taxes would be frozen or reduced
- Federal matching money disappears
- Nursing homes get less money
- Result: 55% of nursing homes say they’d reduce Medicaid patients, 27% might close
Retroactive Coverage Reduced
Currently, when someone applies for Medicaid while already in a nursing home, Medicaid covers costs going back 90 days. The bill reduces this to just 30 days.
What this means: Families could get stuck with an extra 60 days of nursing home bills – potentially $15,000-20,000 in unexpected costs.
Real example: John had a stroke and needed nursing home care immediately. His family applied for Medicaid, but the paperwork took 75 days to process. Under current rules, Medicaid would cover those 75 days. Under the new law, the family would owe for 45 days out-of-pocket.
Safety and Staffing Changes
Staffing Rules Delayed 10 Years
The Biden administration created new rules requiring nursing homes to have:
- 3.48 hours of nursing care per resident per day
- At least one registered nurse on duty 24/7
- Better staffing ratios to keep residents safe
The One Big Beautiful Bill delays these rules for 10 years, saving $23 billion but potentially putting residents at risk.
Why Staffing Matters
Research shows that nursing homes with fewer staff have more:
- Falls and injuries
- Pressure sores (bedsores)
- Infections
- Medication errors
- Preventable deaths
According to Harvard and University of Pennsylvania researchers, delaying the staffing rule could lead to 13,000 additional deaths per year among nursing home residents.
Current Staffing Crisis
Nursing homes already struggle to find workers because:
- Low wages: Many nursing assistants earn less than fast-food workers
- Hard work: Physically and emotionally demanding job
- High turnover: Staff constantly leaving for better-paying jobs
- COVID impact: Industry lost many workers during pandemic
Real situation: Many nursing homes operate with bare-minimum staff. One nurse assistant might care for 15-20 residents during a shift, making it impossible to give everyone proper attention.
Impact on Different Types of Nursing Homes
Rural Nursing Homes Most at Risk
Rural nursing homes face the biggest threats because:
- Higher Medicaid dependency: Often 80-90% of residents rely on Medicaid
- Fewer resources: Can’t afford to operate at a loss
- No alternatives: Often the only nursing home for miles
The Washington Post reports that nursing home executives are “bracing for cuts that could force them to scale back services” or close entirely.
Urban vs. Rural Differences
Type | Medicaid Patients | Private Patients | Risk Level |
---|---|---|---|
Rural nursing homes | 80-90% | 10-20% | Very High |
Urban nursing homes | 50-70% | 30-50% | Moderate |
Luxury facilities | 20-40% | 60-80% | Low |
Faith-Based and Nonprofit Homes
Many nonprofit and religious nursing homes that specifically serve low-income seniors could be forced to:
- Stop accepting new Medicaid patients
- Close beds or entire wings
- Merge with larger facilities
- Close completely
What This Means for Families
Finding a Nursing Home Bed
With the new law, families may face:
- Longer waiting lists: Fewer nursing homes accepting Medicaid means longer waits for beds
- Geographic barriers: May need to place loved ones farther from family
- Quality concerns: Remaining options may have lower staffing and fewer services
- Higher costs: Families may be forced into more expensive private-pay arrangements
Cost Increases for Families
Even families not currently paying for care could face new expenses:
Personal Care Items
- Monthly personal allowance might decrease
- Families pay more for clothing, toiletries, activities
Transportation
- Longer distances to visit if local nursing home closes
- Gas, hotel costs for family visits
Private Care
- Hiring private aides if nursing home understaffed
- Extra services nursing home can no longer provide
Discharge Planning Problems
When nursing homes close or reduce services, residents may be:
- Transferred suddenly to unfamiliar facilities
- Separated from spouses if only one needs nursing home care
- Moved far from family if local options disappear
- Placed inappropriately in hospitals or less suitable facilities
Real-World Examples
Case Study 1: Rural Nursing Home Crisis
Location: Small town in Kentucky Situation: Local nursing home serves 120 residents, 95% on Medicaid Under new law: Would lose $800,000 annually in Medicaid payments Likely outcome: Close within 18 months, forcing residents to move 45 minutes away
Case Study 2: Urban Family Impact
Family: Sarah caring for mother with dementia Current situation: Mother in nursing home 10 minutes from Sarah’s house, Medicaid pays If cuts happen: Nursing home might stop accepting Medicaid patients Impact: Sarah might have to pay $8,500/month or move mother to facility an hour away
Case Study 3: Staff Shortage Worsens
Facility: 150-bed nursing home already short-staffed Current staffing: 2.8 hours of nursing care per resident (below recommended) Without funding: May cut to 2.2 hours per resident Risk: More falls, infections, and safety problems for residents
Worker Impact
Nursing Home Employees at Risk
Many nursing home workers earn low wages and qualify for Medicaid themselves. Center for Medicare Advocacy notes that cuts would hurt:
- Nursing assistants: Often earn $12-15/hour
- Dietary staff: Many work part-time with no benefits
- Housekeeping: Essential workers keeping facilities clean
- Activity coordinators: Help residents stay engaged
If these workers lose their own Medicaid coverage, they may leave the industry, worsening the staffing crisis.
Immigration Concerns
About 28% of direct care workers in nursing homes are immigrants. Combined with immigration enforcement, the industry faces a “double whammy” of funding cuts and workforce reduction.
State-by-State Differences
States Hit Hardest
States with the most nursing home residents depending on Medicaid will see the biggest impacts:
Most vulnerable states:
- West Virginia: 78% of residents on Medicaid
- Mississippi: 76% of residents on Medicaid
- Louisiana: 75% of residents on Medicaid
- Arkansas: 74% of residents on Medicaid
Less vulnerable states:
- Connecticut: 58% of residents on Medicaid
- Massachusetts: 60% of residents on Medicaid
- New Jersey: 62% of residents on Medicaid
How States Might Respond
Faced with federal cuts, states could:
Option 1: Reduce payments to nursing homes
- Result: More facilities close or stop accepting Medicaid
Option 2: Reduce benefits covered
- Result: Families pay more out-of-pocket for services
Option 3: Tighten eligibility
- Result: Fewer seniors qualify for Medicaid coverage
Option 4: Use state tax money
- Result: Higher state taxes or cuts to other programs
What Families Can Do Now
Planning Steps
1. Assess Current Situation
- Is your loved one in a nursing home that accepts mostly Medicaid patients?
- How much of the facility’s income comes from Medicaid?
- Are there other nursing homes nearby?
2. Financial Planning
- Review long-term care insurance policies
- Understand Medicaid spend-down rules in your state
- Consider setting aside emergency funds for potential cost increases
3. Legal Consultation
- Meet with elder law attorney about Medicaid planning
- Review advance directives and care preferences
- Understand your rights if nursing home wants to discharge resident
4. Communication
- Talk with nursing home administrators about their plans
- Join family councils at nursing facilities
- Stay informed about implementation of the new law
Questions to Ask Nursing Homes
When choosing or evaluating a nursing home, ask:
- What percentage of your residents are on Medicaid?
- How would Medicaid cuts affect your ability to operate?
- Do you have a waiting list for Medicaid beds?
- What is your current staffing ratio?
- Have you had to close any beds due to staffing shortages?
- Do you accept Medicaid pending applications?
- What services might be reduced if funding is cut?
Industry Response
Nursing Home Associations Fighting Back
The American Health Care Association and other industry groups are urging implementation delays, warning they will:
- Force facility closures
- Eliminate jobs
- Reduce access to care
- Harm residents and families
Some Support for Changes
However, some nursing home operators support delaying the staffing mandate, arguing:
- Cost concerns: Can’t afford to hire more staff at current Medicaid rates
- Worker shortage: Not enough qualified workers available to hire
- Flexibility needed: Different facilities have different needs
Healthcare Expert Opinions
Medical Professionals Concerned
Healthcare experts warn the cuts could create a public health crisis:
- Dr. José Figueroa, Harvard researcher: Warns of “51,000 deaths per year” from Medicaid cuts overall
- Nursing associations: Predict widespread facility closures and job losses
- Geriatricians: Worry about quality of care for vulnerable seniors
Economic Analysis
Health economists note that cutting nursing home funding often costs more in the long run:
- Emergency room visits increase when nursing homes are understaffed
- Hospital readmissions rise when residents don’t get proper care
- Family caregiving costs increase when institutional care unavailable
Timeline of Changes
Implementation Schedule (Law Takes Effect July 2025)
Immediate (2025):
- Medicaid payment rates may start declining
- Provider tax reductions begin
Short-term (2026-2027):
- Some nursing homes may start limiting Medicaid admissions
- Staffing rule implementation delayed
- Retroactive coverage reduced to 30 days
Medium-term (2028-2030):
- Facility closures likely in rural areas
- Waiting lists for Medicaid beds grow longer
- Some residents may be discharged or transferred
Long-term (2030+):
- Significant reduction in available nursing home beds
- Families forced into more expensive alternatives
- Potential crisis in long-term care access
Alternatives to Nursing Home Care
If Nursing Home Options Become Limited
Families might need to consider:
Home Care Services
- Pros: Person stays at home, often less expensive
- Cons: Family provides supervision, limited medical care
- Cost: $20-30/hour for aide services
Adult Day Programs
- Pros: Daytime supervision and activities
- Cons: Family provides evening and weekend care
- Cost: $50-100/day
Assisted Living
- Pros: Less medical than nursing home, more independence
- Cons: Limited medical care, expensive
- Cost: $3,000-6,000/month
Family Caregiving
- Pros: Familiar environment, family involvement
- Cons: Physically and emotionally demanding, impacts family income
- Support: Respite care, caregiver support groups
Frequently Asked Questions
Q: Will my loved one be kicked out of their nursing home? A: No one will be “kicked out” immediately. However, if a nursing home loses too much money from Medicaid cuts, they might stop accepting new Medicaid patients or, in extreme cases, close entirely. Current residents would be given time to find alternative arrangements.
Q: How much more might families have to pay? A: This varies greatly by situation. Families might face:
- $15,000-20,000 extra for reduced retroactive coverage
- $8,000-10,000 monthly if forced to pay privately
- Higher costs for personal items and services no longer covered
Q: Will nursing homes become less safe? A: Potentially, yes. Delaying staffing requirements and reducing funding could mean fewer nurses and aides caring for residents, which research shows increases risks of falls, infections, and other safety problems.
Q: Are veterans’ nursing homes affected? A: VA nursing homes are separate from this bill and shouldn’t be directly affected. However, many veterans live in regular nursing homes and receive Medicaid, so they could be impacted.
Q: What if my state tries to make up for federal cuts? A: Some states might use their own tax money to continue current Medicaid payment levels, but this would be expensive and would require raising state taxes or cutting other programs. Most states won’t be able to fully replace federal cuts.
Q: Should I move my loved one now? A: Don’t make hasty decisions. The law takes effect gradually, and changes would happen over time. However, it’s wise to research alternatives and understand your options.
Q: Will Medicare cover more nursing home care? A: No, Medicare coverage rules aren’t changing. Medicare still only covers short-term skilled nursing care (usually under 100 days), not long-term custodial care that most nursing home residents need.
Q: What about private long-term care insurance? A: Private insurance policies won’t change, but if nursing homes close or reduce beds, your insurance might have fewer facilities to choose from, potentially forcing you into more expensive options.
Q: How can I stay informed about changes? A: Follow news about the law’s implementation, join nursing home family councils, stay in touch with your state’s Area Agency on Aging, and consider joining advocacy groups for seniors or nursing home residents.
Q: What happens to specialized care units? A: Units for dementia care, rehabilitation, or other specialized services might be eliminated first since they’re often more expensive to operate. This could force families to place loved ones in less appropriate settings.
Resources for Help and Information
Government Sources
- Centers for Medicare & Medicaid Services
- National Institute on Aging
- Administration for Community Living
- Your State Medicaid Office
Advocacy Organizations
- AARP Nursing Home Care
- National Consumer Voice for Quality Long-Term Care
- Center for Medicare Advocacy
- Long Term Care Ombudsman
Legal Help
- National Academy of Elder Law Attorneys
- Eldercare Locator (1-800-677-1116)
- Legal Aid Societies
Financial Planning
- National Association of Personal Financial Advisors
- Society of Financial Planning
- Medicaid Planning Information
Support for Families
- Family Caregiver Alliance
- National Family Caregivers Association
- Alzheimer’s Association (for dementia-related issues)
Important Disclaimer
This information is for educational purposes only and should not be considered legal, financial, or medical advice.
Program details can change: Implementation of the One Big Beautiful Bill will occur over several years, and regulatory details are still being developed. Always verify current information with relevant agencies before making important decisions.
Individual circumstances vary: The impact on nursing homes and families will depend on many factors including state policies, facility finances, and personal situations. Consult with qualified professionals including elder law attorneys, financial planners, and healthcare providers for advice specific to your situation.
Timeline uncertainty: Implementation of changes will occur over several years. Some provisions start immediately while others are phased in over time.
State variations: Medicaid is administered by states, so impacts will vary significantly depending on where you live. Contact your state Medicaid office for the most current information about your state’s policies.
No guarantees: This analysis is based on current law and expert projections, but actual outcomes may differ. Healthcare policy is complex and subject to many variables.
Given the changing implementation of this legislation, please always verify information with official government sources and consult with qualified professionals who can review your specific circumstances before making important decisions about long-term care.