Medicaid Coverage for Assisted Living

Summary#

This bill would require Medicaid to cover certain services delivered in assisted living residences and let state housing agencies favor low-income housing projects that provide long‑term care supports outside institutions. The main change is to add assisted living services as a mandatory Medicaid benefit for people who qualify for nursing‑facility level care, so long as the average Medicaid cost per person in assisted living would not exceed what Medicaid would have paid in a hospital or nursing facility. The bill also lets states give priority under the low‑income housing tax credit to projects that reduce Medicaid long‑term care costs by offering services in non‑institutional settings.

• Adds a Medicaid benefit: Medicaid must cover services in an assisted living residence for people who meet a state’s income and resource rules for nursing‑facility level care, if the average Medicaid cost in assisted living is no greater than institutional care.
• Makes the benefit mandatory for state Medicaid programs (subject to the cost condition).
• Effective date for Medicaid change: January 1, 2027 (states may get extra time if state law changes are needed).
• Changes LIHTC selection rules to allow states to prefer projects that provide long‑term services and supports in non‑institutional settings; applies to allocations made after January 1, 2027.

What it means for you#

• Medicaid beneficiaries who need high levels of care

  • Some people who otherwise would enter a nursing facility could be eligible to get covered services while living in an assisted living residence.
  • To qualify, a person must meet the state’s income and resource rules for nursing‑home level Medicaid and the state must estimate that average Medicaid costs in assisted living are not higher than in an institution.

• People living in or needing assisted living

  • More assisted living residents might be able to get Medicaid to pay for services that are currently only covered in nursing homes or hospitals in some states.
  • The scope of services depends on each state’s assisted living rules.

• Assisted living providers

  • Providers could gain a new payer source (Medicaid) for eligible residents, if states set up coverage and payment systems.
  • States may require reporting or cost estimates to show assisted living is not more expensive than institutional care.

• State Medicaid programs

  • States must add the new coverage to their Medicaid plans unless they get a delay because state law changes are needed.
  • States will need to estimate and track average per‑person Medicaid costs to meet the bill’s cost condition.

• Low‑income housing developers and tenants

  • State agencies that allocate federal low‑income housing tax credits can give preference to projects that offer long‑term services and supports in community (non‑institutional) settings.
  • This may encourage mixed housing-plus-services projects for older adults.

• Taxpayers

  • The bill changes what Medicaid must cover and how housing projects can be selected, which could affect state and federal spending. Exact fiscal effects are not provided in the bill text.

Expenses#

No publicly available information.

• The bill does not include a fiscal note in the text provided.
• Possible cost areas (not estimated in the bill):
  • Changes in Medicaid spending if more services are covered in assisted living.
  • Administrative costs to set up coverage rules, estimate per‑person costs, and monitor compliance.
  • Potential changes in state budgeting if state law changes are required before implementing coverage.
  • Effects on LIHTC allocations could shift where federal tax credit dollars go, but no cost estimate is given.

Proponents' View#

• The bill appears intended to increase care options for people who need nursing‑home level care by allowing them to receive Medicaid‑covered services in assisted living instead of an institution.
• This could be seen as expanding home‑and‑community‑based options and supporting aging in place.
• The cost condition (average per‑person Medicaid cost in assisted living must not exceed institutional cost) appears designed to limit or control Medicaid spending from the change.
• Adding a LIHTC selection preference could encourage the building or renovation of housing that includes non‑institutional long‑term services and supports.

Opponents' View#

• One concern is how states will measure and enforce the requirement that average Medicaid costs in assisted living not exceed institutional costs. The bill does not explain the method or frequency for those estimates.
• The bill leaves the definition and scope of "assisted living residence" to state law, so coverage could vary widely across states.
• States may face administrative and implementation costs to change Medicaid plans and to track costs; the bill provides no funding for that work.
• There is a risk that people with high care needs could be shifted into settings that do not provide adequate clinical supports if oversight and quality rules are weak.
• Changing LIHTC selection criteria could redirect housing credits toward projects with services, possibly reducing credits for other priorities; the bill does not set standards for what counts as providing long‑term services and supports.