Takeaways
- A 2025 federal budget law could affect people who depend on both Medicare and Medicaid by cutting Medicaid funding and adding new administrative barriers.
- Dually eligible older adults could feel the impact first, because Medicaid often covers home care, dental, vision, and hearing services that Medicare doesn’t — and those benefits are often the easiest for states to scale back.
A sweeping federal budget law is quietly threatening the health coverage of some of America’s most vulnerable older adults. Here’s what’s changing, whom it will affect, and what you can do.
If you rely on both Medicare and Medicaid to cover health care costs, you are known as “dually eligible.” Congress passed a law in 2025 that could increase your costs, reduce benefits, or create new administrative hurdles.
The Budget Reconciliation Act of 2025, also called H.R. 1 or the One Big Beautiful Bill Act, made deep changes to both programs.
The biggest risks for people who are dually eligible fall into three areas:
- State budget pressure that can lead to cuts in Medicaid services many seniors depend on
- More complicated enrollment and renewal processes that can push eligible people off coverage
- Major eligibility restrictions for certain populations
Who Will Be Affected
About 12 million people are dually eligible. Around 65 percent of them are age 65 or older, and about 35 percent are under 65 and qualify based on disability.
To understand why this matters, it helps to know how the programs work together. Medicare is the federal health insurance program that covers many doctor visits, hospital stays, and prescription drugs for people 65 and older and people with certain disabilities. But Medicare doesn’t cover everything. For example, it generally doesn’t cover dental care, vision care, hearing aids, or ongoing help at home, such as assistance with bathing, meal preparation, or transportation.
For low-income seniors, Medicaid fills those gaps. If Medicaid coverage is reduced or lost, many older adults may face thousands of dollars in out-of-pocket costs or go without care.
The Biggest Threat: $990 Billion in Cuts
H.R. 1 is projected to reduce Medicaid spending by about $990 billion over the next decade. A major driver of the reduction is limiting certain taxes that states use to help fund their share of Medicaid. While the size and timing of the cuts will vary by state, states that face budget shortfalls typically look first at cutting benefits that are optional under federal law.
That is especially concerning for people who are dually eligible because many of those “optional” Medicaid benefits are exactly the services Medicare doesn’t cover, including:
- home care through home and community-based services (HCBS)
- dental care
- vision care
- hearing services
HCBS are particularly vulnerable because they represent a large share of optional Medicaid spending. In past economic downturns, states nationwide cut or restricted these services. With unusually high federal cuts looming, widespread reductions are again possible.
Example: Dorothy, a 78-year-old widow in rural Ohio lives on $1,400 a month in Social Security. Medicare covers her doctor visits and hospital care. Medicaid helps pay for a home health aide who assists her with bathing, dressing, and preparing meals.
If her state reduces home care services to close a budget gap, Dorothy could face a stark choice: move to a nursing home, rely on family members who live far away, or try to go without help, even if it is not safe.
Red Tape Could Push Eligible People Off Coverage
Another provision of H.R. 1 affects how people apply for and keep Medicaid. For years, federal regulators had been working on streamlining rules aimed at making Medicaid applications and renewals less confusing, especially for low-income Medicare enrollees who may also qualify for Medicaid or a Medicare Savings Program.
H.R. 1 delays implementation of key streamlining rules until fiscal year 2035.
If states keep cumbersome processes in place, millions of eligible older adults and people with disabilities may continue to face enrollment barriers and improper terminations.
Medicare Savings Programs are particularly important. They can help pay Medicare premiums, deductibles, and co-pays for low-income seniors. For someone on a fixed income, that support can mean the difference between affording their medication or skipping it.
Example: Roberto, a 71-year-old retiree in California, qualifies for a Medicare Savings Program that pays his monthly Medicare Part B premium. If renewal rules stay complex and paperwork-heavy, Roberto may face repeated documentation requests and frequent renewals. Each new renewal is another chance for an administrative error to interrupt his premium help, even if he remains eligible.
If that assistance disappears for even a few months, he may be unable to afford his Medicare coverage.
Immigrant Seniors Face the Most Severe Consequences
H.R. 1 also restricts eligibility for federally supported Medicaid coverage to a narrow set of immigration categories.
Beginning October 1, 2026, federal Medicaid funding for full benefits will generally be limited to three groups of lawfully present noncitizens:
- Lawful permanent residents (green card holders)
- Cuban/Haitian family reunification program entrants
- Citizens of the Freely Associated States (Marshall Islands, Palau, and Micronesia)
For older adults who are lawfully present but do not fall into one of these categories, the change could be devastating. Some states may choose to use state-only funds to continue coverage, but many older adults will lose Medicaid. Separate changes to Medicare eligibility adopted in 2025 mean that some people who do not meet the new immigration categories may have their Medicare coverage terminated by January 2027.
For older immigrants who have both Medicare and Medicaid, losing Medicaid and then Medicare in close succession could mean losing access to medications, preventive care, and ongoing treatment – and facing medical debt when they do seek care.
Example: Maria, 68, is a refugee from El Salvador who has lived in the U.S. legally for 20 years. She worked for years and paid Medicare through payroll taxes. She has diabetes and high blood pressure and relies on Medicaid to supplement her Medicare coverage.
Under H.R. 1, she could lose Medicaid starting in October 2026 and then Medicare by January 2027. Because the law also eliminates eligibility for Affordable Care Act Marketplace coverage for people affected by the immigration changes, Maria may have few realistic options for affordable replacement coverage.
New Rules That Could Take a Toll Indirectly
H.R. 1 adds work requirements and more frequent eligibility checks for some adults enrolled in Medicaid expansion.
These requirements do not apply to people who are dually eligible. However, when states implement complicated new systems, mistakes happen. Some dually eligible people may receive incorrect notices telling them to prove work activity or submit documents they don’t actually owe.
Caregivers could also be affected. If a caregiver is subject to work requirements and loses coverage due to paperwork barriers, the disruption can ripple back to an older adult who depends on that caregiver.
Billing confusing may also worsen. Because providers serve many different types of patients, some may mistakenly bill dually eligible people for cost-sharing they do not owe.
A Shrinking Window for Retroactive Coverage
Today, Medicaid can generally cover up to three months of eligible medical bills before the application date (as long as the person was eligible during that time). Starting in 2027, H.R. 1 shortens retroactive coverage for many Medicaid applicants. For most nonexpansion groups, coverage can go back only two months before the application date.
That shorter window could leave some people with unexpected medical debt, especially after emergencies or during long-term care Medicaid applications that require extensive documentation.
The Home Equity Risk
When someone applies for long-term care Medicaid (in a nursing home or at home), states assess how much home equity the person has. Starting January 1, 2028, H.R. 1 caps the maximum home equity exclusion at $1 million and no longer allows it to rise with inflation.
Twelve states currently have limits above this cap. In those states, some older adults could face Medicaid ineligibility unless they take protective steps like selling their home. Over time, inflation could cause many more households to exceed this limit.
What You Can Do
The situation is serious, but individuals and families can take practical steps now:
- Know your status and protections. If you or a loved one has both Medicare and Medicaid, you are not subject to Medicaid expansion work requirements. If you get a notice that seems wrong, seek help from a benefits counselor or legal aid organization.
- Save every notice. Watch for mail from Medicare, Medicaid, Social Security, Medicare Advantage and Part D plans, and your state Medicaid agency. Mistakes and missed deadlines can be costly.
- Apply for benefits as soon as you think you may qualify. With a shorter retroactive coverage window starting in 2027, delays can translate into unpaid medical bills.
- Challenge incorrect bills. If you have both Medicare and Medicaid and a provider charges you cost-sharing you don’t owe, ask for a correction and dispute the charge. Organizations like Justice in Aging can help you find assistance.
- Get expert help. Area Agencies on Aging, State Health Insurance Assistance Programs (SHIP), legal aid organizations, and elder law attorneys can help you navigate coverage questions, appeal improper terminations, and respond to notices. You can also contact Medicare at 1-800-MEDICARE.
The Bottom Line
H.R. 1 was promoted in part as a way to protect Medicaid for those who truly need it. But for the roughly 12 million people who rely on both Medicare and Medicaid, the law creates immediate risks.
Those risks include state-level cuts to services Medicare does not cover, paperwork barriers that could terminate benefits people are still entitled to, and for some seniors, the potential loss of both Medicare and Medicaid.
With key implementation dates beginning in 2026, the time to prepare and seek help is now.