What the "Big Beautiful Bill" Means for Your Life
Now is not a good time to be old or poor.
Photo by Ardian Pranomo for Unsplash+
With the Fourth of July behind us, the smoke is clearing from both the fireworks and the 900-plus-page “Big Beautiful Bill” that Congress passed and the President signed into law. After consulting multiple sources, I will attempt to summarize the impact of the “Big Beautiful Bill” on older Americans.
Your Temporary Tax Cut
Congratulations! If you are 65 or older and your modified adjusted gross income is less than $75,000 (individual) or $150,000 (couple filing jointly), you can deduct an extra $6,000 per person from your income and lower your taxes accordingly ($12,000 if both taxpayers are 65+). Taxpayers with higher taxable incomes receive a reduced deduction, up to $175,000 (single) or $250,000 (couple).
This bonus is good for the next four tax years and expires in 2029 (i.e., right after the 2028 presidential election, and if you think that’s a coincidence, see below). By the way, your Social Security income is still taxable, but this is designed to soften the blow.
Health Insurance
For the 5.5 million adults ages 55 to 64 who purchase health insurance through the Affordable Care Act (ACA) marketplaces, the law requires new documentation and verification of eligibility, which “will add even more red tape for enrollees and further drive down coverage,” says Nancy LeaMond, AARP Chief Advocacy and Engagement Officer. KFF, a health policy research foundation, estimates that 4 million people, including older adults, will lose their health insurance coverage by 2034 as a result. By not extending enhanced tax credits for ACA coverage, the bill will make another 4.2 million adults ineligible for ACA coverage by 2034. The Congressional Budget Office projects these provisions will leave 12 million people uninsured. Those that retain health insurance through the ACA will see significantly higher premiums.
Medicaid Coverage
The new law cuts nearly $1 trillion from Medicaid. Medicaid recipients aged 19 to 64 are required to work at least 80 hours per month (or meet other criteria, such as job training or community service) to remain eligible. An analysis by AARP finds that these requirements will impact 9 million recipients between ages 50 and 64. Although most of those are already working, or exempt because of disability or caregiving responsibility (and not, therefore, likely to supplant immigrants as agricultural labor), it adds new, more frequent reporting requirements that put coverage at risk. People in their late 50s and early 60s who are nearing retirement or working part-time may be left with no affordable coverage options, according to AARP.
The Medicaid impact is complicated because Medicaid is administered by states. With less federal funding to work with, states will be forced either to allocate more funds from their own budgets or cut services. In the past, when federal Medicaid funds have decreased, states reduced spending on home care by cutting benefits or serving fewer people. This is likely to impact older adults who depend on in-home services to age in place.
The cuts are expected to be a crushing blow to rural hospitals, which receive $12.2 billion annually in net revenue from Medicaid. The law included $50 billion in relief funding over five years to cushion the blow, but that sum will not come close to closing the gap. More than 300 rural hospitals currently are at “immediate risk” of closure.
Long-term care
The bill reduces federal funds for nursing facilities and will likely lead to reduced spending for other long-term care services. Millions of families depend on Medicaid funding to cover medical costs of assisted living and nursing home care. At the same time, the ranks of foreign-born caregivers for older adults, a significant share of that workforce, will continue shrinking with the tripled expenditures for immigration law enforcement.
Food assistance
In the new law, the Supplemental Nutrition Assistance Program (SNAP) previously known as Food Stamps will no longer be funded 100% by the federal government. States will have to pay between 5% and 15% of the cost of SNAP benefits their residents receive, as well as 75% of program administration costs (up from 50%). States are likely to restrict eligibility, limit benefits, or withdraw from the program entirely. In 2023 more than 11 million SNAP recipients were aged 50 and older, according to AARP.
The 0.1 Percent
According to a budget model by Penn Wharton, the top 0.1% of earners will average annual income increases of more than $290,000 as a result of the new law. For the top 20%, the average increase is nearly $13,000, or 3% of average income.
Timing
The Medicaid work rules do not take effect until December 2026 – one month after the mid-term elections. Most of the other program cuts will not be felt until late in 2026. This may be a coincidence, or it may be a cynical ploy to postpone the pain until after voters’ next chance to voice their approval or disapproval of the law’s impact on their lives. You decide.
Good stuff, Don.
There's another angle to this travesty that I find exasperating: The objective stated is that the administration wants to reduce government spending. (Obviously, raising the debt ceiling $5 trillion isn't a good indicator of that), but ... when the federal government stops paying for something like Medicaid or SNAP, the costs don't magically disappear, they just transfer to someone else, either the states, schools, hospital emergency rooms, and/or the individual, which may be far less cost-efficient. So, in many cases, their 'savings' are actually overall cost increases.
Between the knowing what's coming and the not knowing what's coming, some days I feel mentally exhausted and discouraged about "aging gracefully." Not ready to let the bad guys win, though.