Understanding OBBBA's Impact: Key Changes for Seniors

Legislative changes can be overwhelming, especially for seniors managing estate planning, Medicare, Medicaid, and long-term care planning. The recently signed One Big Beautiful Bill Act (OBBBA) introduces significant changes. Let's explore what OBBBA means for Michigan seniors and their families.

New $6,000 Senior Deduction

• Applicable for tax years 2025-2028 for those age 65+, with $12,000 for qualifying couples.
• Claimable with either the standard deduction or itemized deductions.
• In addition to the regular age-65+ add-on (2025: $2,000 for singles/head of household, $1,600 per spouse for married joint filers).
• The full benefit phases out beyond $75,000 (single) and $150,000 (joint) modified adjusted gross income; eliminated at $175,000/$250,000.
• This does not make Social Security tax-free, but it may reduce taxable income and the portion of benefits taxed.

Medicare Impacts

OBBBA, which impacts Medicare planning Michigan seniors rely on, increases the federal deficit, triggering automatic Medicare spending reductions from 2026, with $500 billion expected in cuts through 2034:

• Some legally present immigrants will lose eligibility unless they are U.S. citizens, green card holders, or certain Cuban-Haitian entrants.
• Streamlined enrollment for Medicare Savings Programs and related Medicaid benefits is paused until at least September 2034.
• This could mean more paperwork and fewer seniors qualifying for help in Michigan.

Medicaid Eligibility Changes

The law affects Medicaid planning Michigan residents should be aware of:

• From 2027, ACA Medicaid Expansion beneficiaries must renew every six months, instead of annually.
• Applicants will face shorter response times for verification documents.
• Annual renewal still applies for seniors in long-term care; missing paperwork deadlines could lead to lost coverage.
• Medicaid provider payments will be capped at Medicare rates in expansion states and 110% in non-expansion states.
• This could affect Medicare Advantage reimbursements in expansion and non-expansion states, impacting Michigan residents.

Nursing Home Staffing Rule Paused

The federal staffing requirement is on hold until 2034. Although some states have their own staffing laws, this delay may slow staffing improvements. It's advisable for those engaged in nursing home planning in Michigan to inquire directly with facilities about staffing practices and care standards.

Though OBBBA provides a mix of benefits and new hurdles, understanding these changes now can help prevent surprises later. Staying informed is key to protecting your health, finances, and long-term care planning. We encourage you to connect with a professional, review your plans for estate planning and asset protection in Michigan, and ask how these changes could personally affect you. Be proactive rather than reactive.