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

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?

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

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)

This guide was last updated on July 3, 2025.