Medicaid Coverage for Assisted Living

Summary#

This bill would require state Medicaid programs to cover services in assisted living residences for certain eligible people. It also adds a new factor to how states award Low-Income Housing Tax Credits (LIHTC), favoring projects that lower Medicaid long-term care costs by serving older adults in non-institutional settings. The broad goal is to expand assisted living options and reduce reliance on hospitals and nursing homes when a lower-cost, community setting can meet a person’s needs.

Key changes:

• Makes “services provided in an assisted living residence” a covered Medicaid service, when allowed by state law.
• Requires states to cover these assisted living services for people who meet state-set Medicaid income and asset limits referenced in the bill and who would otherwise need hospital or nursing facility level care.
• Limits coverage to cases where the average Medicaid cost per person in assisted living would be no higher than if that person were served in a hospital or nursing facility.
• Treats assisted living services as a mandatory Medicaid benefit (for the eligible group described above), not just an optional service.
• Requires state housing agencies to consider, in their LIHTC scoring, projects that cut Medicaid long-term services and supports (LTSS) costs for the elderly by providing care in non-institutional settings (for example, assisted living).
• Timing: Takes effect January 1, 2027. States that need new state legislation get extra time as outlined in the bill.

What it means for you#

• Seniors and adults who need long-term care

  • If you qualify for Medicaid under state income and asset rules referenced in the bill and you need a nursing home or hospital level of care, Medicaid would have to cover assisted living services for you when state law allows those services in assisted living.
  • You could get support in a non-institutional setting (assisted living) if the state estimates your Medicaid costs there would not exceed what Medicaid would have paid for you in a hospital or nursing home.
  • Availability and the exact services covered may vary by state, because services must be consistent with state law on assisted living.

• Families and caregivers

  • You may have a Medicaid-covered assisted living option for a loved one who meets the bill’s conditions, which could offer care closer to home and outside of an institution.

• Assisted living providers

  • More residents may be eligible for Medicaid-covered services, subject to state rules and the cost-comparison test.
  • Participation may require meeting Medicaid provider standards, documentation, and billing requirements set by the state.

• State Medicaid agencies

  • Must add assisted living services as a covered benefit for the defined eligible population, design coverage rules consistent with state law, and ensure average per-person costs do not exceed institutional alternatives.
  • Will need to estimate and monitor per-person cost comparisons and oversee provider participation.

• Housing developers and state housing finance agencies

  • LIHTC applications will be scored with a new required criterion: whether the project reduces Medicaid LTSS costs for older adults by providing services in non-institutional settings.
  • Projects that integrate housing with services for seniors could be more competitive where states give weight to this criterion.

Expenses#

No publicly available information.

• Medicaid service costs could rise or fall depending on enrollment and whether assisted living substitutes for more expensive institutional care; the bill requires average per-person costs in assisted living to be no higher than hospital or nursing facility care.
• States may face new administrative costs to set up coverage standards, contracts, rates, eligibility assessments, and cost monitoring.
• The LIHTC change does not increase the federal credit amount but may shift which projects receive credits; any Medicaid savings or costs from such projects are not estimated in the bill.

Proponents' View#

• The bill appears intended to expand access to assisted living as an alternative to nursing homes or hospitals when appropriate for a person’s needs.
• Requiring states to cover assisted living services for eligible people could reduce unnecessary institutionalization and give more choice in where people receive care.
• The per-person cost cap could protect Medicaid from higher spending by ensuring assisted living is used when it is at least cost-neutral compared to institutional care.
• Aligning the housing credit with Medicaid goals could promote developments that integrate housing and services for seniors, which could help manage long-term care costs.
• This could be seen as improving efficiency by matching people to the least restrictive, lower-cost setting that can safely meet their needs.

Opponents' View#

• One concern is that making assisted living coverage mandatory could be an unfunded requirement for states, which would have to create and manage a new benefit and provider network.
• The bill ties coverage to a cost-comparison test that can be complex to calculate and monitor; it is unclear how states should handle individuals whose care needs fluctuate.
• Because coverage must be “consistent with State law,” services could vary widely across states, leading to uneven access and confusion for families.
• The bill does not detail quality standards, staffing, or oversight for assisted living services under Medicaid, which may raise questions about care quality and resident protection.
• The LIHTC criterion—projects that reduce Medicaid LTSS costs—may be hard to measure and verify, and states may weigh it differently, making its practical effect uncertain.
• It is unclear whether the eligibility reference in the bill could exclude some low-income individuals who need assisted living but do not fit the specified income/resource category.