H.R. 1, also known as the "Big Beautiful Bill," introduces sweeping policy changes across federal spending, publicly funded healthcare and support services, and administrative oversight. Among its most consequential provisions are revisions to Medicaid and Medicare eligibility and payment rules—changes that have immediate implications for nonprofit organizations serving low-income and vulnerable populations.

​​​

What the Bill Really Means for Medicaid and Medicare Recipients

Embedded in Title VII of the bill are structural changes that tighten eligibility, increase documentation requirements, and constrain access to services. While framed as accountability and fraud prevention measures, the outcome is clear: fewer people will qualify, and nonprofits will shoulder more of the burden.

​

Section 71107 mandates eligibility redeterminations every six months for Medicaid expansion enrollees, beginning December 31, 2026. This is a significant shift from the current annual review process. For other Medicaid recipients, states may continue to follow the 12-month review cycle or opt into biannual evaluations. Either way, the administrative complexity increases—and so does the risk of disenrollment due to paperwork lapses.

​

Section 71108 freezes the home equity cap for Medicaid long-term care eligibility at $1,000,000. Previously, this cap was indexed to inflation and had reached $1,097,000 in states like New York and California. The new fixed cap disqualifies seniors whose home values have appreciated—especially in urban areas—even if they have little else in assets or income.

​

Medicare also faces cuts. Section 71201 narrows reimbursement structures for certain services, and Section 71203 rolls back access to drug discounts for orphan drugs—critical therapies often used by nonprofit providers serving people with rare diseases or chronic disabilities.

​​​

A Hypothetical Case: When Home Equity Disqualifies Care

Imagine a 78-year-old retiree living in the Bronx who purchased a modest home several decades ago. That same property, due to appreciation in the local market, is now worth just over $1.05 million—a value that slightly exceeds the new fixed $1,000,000 home equity cap for Medicaid long-term care eligibility under H.R. 1.

​

The individual owns the home outright, lives on $1,400 per month in Social Security, and has no significant savings. Medicaid currently helps cover essential long-term services—such as home health aides, transportation to medical appointments, and prescriptions—that Medicare alone does not fully support.

​

Under prior rules, states like New York followed the inflation-adjusted federal maximum (set at $1,097,000 in 2024), which meant this person would have qualified. But with the home equity cap now frozen, they become ineligible—even though their net worth is tied up in illiquid real estate.

​

Without access to Medicaid, the retiree must either liquidate the home or go without needed care. For the nonprofit organization providing those services, this results in lost reimbursement revenue and potential gaps in care for others with similar profiles.

​

What This Means for Real Estate-Backed Nonprofits

Many nonprofits that provide supportive housing or long-term care operate in buildings financed through HUD programs like Section 202 or tax credit structures tied to Medicaid reimbursements. When eligibility drops and reimbursements decline, it affects not just operations but loan covenants, capital reserves, and compliance ratios. A 10% drop in Medicaid revenue could turn a stable facility into a distressed asset—triggering concerns for both lenders and community stakeholders.

​

In high-cost states, these changes will hit hardest. Properties in New York, California, and even parts of Pennsylvania have home values exceeding the new eligibility threshold. Seniors who were previously eligible will be disqualified, and providers will see reduced occupancy, unreimbursed care, or operational losses.

​​​

​Other Ways Nonprofits Will Be Affected

• SNAP & TANF Cuts: New documentation rules may lead to families being disqualified from nutrition or cash benefits. Food banks and family services will face growing demand without increased support.

• Drug Access Restrictions: Orphan drug discount rollbacks will raise costs for clinics serving patients with rare conditions, particularly those with complex care plans.

• Work Requirement Expansion: More restrictive benefit rules may disqualify part-time or low-wage nonprofit workers from Medicaid or SNAP, increasing staff turnover and HR costs.

• State Funding Delays: States facing implementation mandates may redirect funds from local nonprofits or delay disbursements due to administrative bottlenecks.

​​

​Navigating the Policy Shift: Steps Nonprofits Can Take Now​

• Model Your Reimbursement Risk

  Project revenue reductions under 10–30% Medicaid/Medicare cut scenarios. Stress test your financials and liquidity

• Review Your Client Mix

  Understand how many clients may lose eligibility under new thresholds or documentation rules. Redirect outreach or add navigation services where needed.

• Strengthen Administrative Capacity

  Build compliance and documentation teams to meet higher audit thresholds. Consider process automation or shared services models.

• Engage at the State Level

  Advocate during state implementation. Participate in working groups, waivers, and public comment processes.

• Reevaluate Real Estate Exposure

  Consider whether properties reliant on public reimbursement are still financially viable. Refinance, downsize, or shift to asset-light models if necessary.

• Diversify Revenue Streams

  Build philanthropic relationships, expand earned income, and pursue multi-year grants that offer flexibility.

• Leverage Investment Portfolios for Liquidity

  Nonprofits with reserve funds or endowments should consider liquidity strategies to maintain operations during reimbursement delays or denials.

​

Final Thoughts:

Nonprofits operate in the real world, where financial stability, regulatory obligations, and community needs intersect every day. The policy shifts introduced by the Big Beautiful Bill will place pressure on each of these areas, challenging even the most well-managed organizations to adapt quickly.

​

Whether you run a community clinic, own a HUD 202 building, or rely on Medicaid reimbursements to keep programs running, the financial model just got tighter. What used to be a stable revenue stream may now come with more red tape, slower payments, and fewer eligible clients.

​

But this isn’t the end of the road. It’s a pivot point.

 

Organizations that stay viable will be those that treat this moment not just as a policy shift—but as an operational challenge. That means reassessing payer mix, shoring up unrestricted revenue, rethinking real estate commitments, and leaning into state-level advocacy. It may also mean investing in compliance infrastructure and diversifying income beyond public sources.

 

The path forward won’t be easy—but it’s still navigable. The nonprofits that will lead through this moment are the ones that understand their margins, know their mission, and aren’t afraid to adapt.