I know that there is a lot of emotion going on around the new legislation that was passed last week, so I thought I would take the perilously dangerous step of letting folks know some of the facts on the Medicaid changes, no matter which side of the political spectrum you are on.
The program currently costs more than $900 billion a year, more than two-thirds of which is paid by the federal government.
The cost of Medicaid has grown rapidly, more than 130% in 10 years, and is paid for by each taxpayer.
Semi-Annual Eligibility Verification
This takes effect in October 2027
Medicaid is intended for low-income people, so annual income certification is currently required. This will now be done every six months and includes providing proof of citizenship.
Community Engagement Requirements
This takes effect after January 2027
In order to maintain eligibility, some Medicaid enrollees would be required to spend 20 hours per week in employment, educational activities, training, or community service.
Adults who are disabled or are responsible for caring for children or other dependents are not affected.
Cost-Sharing
This will take effect in October 2028
Primary care, mental health and substance abuse treatment, and emergency care provided in a hospital emergency department are exempt from this requirement.
The bill requires states to set cost-sharing amounts to be paid by some Medicaid recipients. The cost will be determined by the State but cannot exceed $35. It applies only to patients covered under the Medicaid expansion who earn between 100 percent and 138 percent of the federal poverty level.
Currently, prescription drugs have a mandatory cost share of $1 to $4 and remains there.
Reduction of Medicaid Provider Taxes
Currently, 49 states have a legal maneuver that double dips without providing additional services to Medicaid beneficiaries. This will be reduced and will be phased in incrementally from 2028 through 2032. This results in federal taxpayers having to pay $1.67 for every dollar provided in the states.
This system allows the states to increase their Medicaid revenue at the expense of the federal government.
The bill reduces the maximum tax states can levy on Medicaid providers from 6 percent to 3.5 percent in states that expanded Medicaid under the Affordable Care Act. Ten states that didn’t expand their programs will see no changes.
Rural Hospital Fund
States have grown used to the revenue from the provider tax, which allows them to increase reimbursement to some providers, including in rural areas.
In order to not have a negative effect on rural hospitals, the bill provides for a stabilization fund for these hospitals of $50 billion. The funds are allotted at $10 billion per year from 2026 through 2030.
If you would like to discuss your financial plans going forward, feel free to contact me and we can set up a time to meet or talk – either in person or via Zoom.
Kind regards,
Dave
Tel:714-813-1703
dcoen@sageviewadvisory / [email protected]
You can see more about my role as a Financial Advisor with SageView Advisory HERE
Tel:714-813-1703
dcoen@sageviewadvisory / [email protected]
This material is designed to provide accurate and authoritative information on the subjects covered. It is not, however, intended to provide specific legal, tax, or other professional advice. For specific personal assistance, the services of an appropriate professional should be sought. A diversified portfolio does not assure a profit or protect against loss in a declining market.