OBBBA Could Reshape Your Long-Term Care Strategy
In July, while our nation celebrated fireworks and parades, the One Big Beautiful Bill Act (OBBBA) quietly reshaped the way many families will approach their estate plans and long-term care strategies. The OBBBA packs in hundreds of provisions, but a few stand out for anyone thinking about their financial future.
One of the biggest changes comes in 2026, when the federal estate, gift, and generation-skipping transfer tax exemptions will rise to $15 million per person ($30 million for married couples), with inflation adjustments starting the following year. This is a major jump from today’s limits and means most households won’t face federal estate taxes at all. That said, planning still matters, especially since many states have their own estate taxes with much lower thresholds, and tools like trusts remain useful for protecting privacy, managing assets, and keeping family affairs running smoothly.
The OBBBA also takes a big swing at Medicaid funding, cutting an estimated $1 trillion over the next decade. Since Medicaid pays for a large portion of long-term care in the U.S., this could have a real impact on the availability and quality of services. Starting in 2028, there will also be a $1 million cap on home equity for Medicaid long-term care eligibility. In some housing markets, that could make even modest homes a barrier to qualifying. States will have flexibility in how they respond to these cuts, so the rules, and your options, could vary dramatically depending on where you live.
If your long-term care plan leans heavily on Medicaid, this is the time to take a second look. Strategies like private long-term care insurance or irrevocable trusts might give you more stability and choice if state benefits shrink in the coming years.
And estate taxes and Medicaid aren’t the only pieces in play. The law also permanently extends the 2017 tax cuts, raises the standard deduction, adds a $6,000 deduction for taxpayers 65 and older, creates new “Trump Accounts” to help minors save, allows for a small charitable deduction even if you don’t itemize, reduces some deductions for high earners, and even adds a 1% tax on certain money transfers overseas.
In short, the OBBBA changes the landscape for taxes, estate planning, and long-term care. Reviewing your plans now, and making adjustments where needed, can help you protect what you’ve built and keep your options open for the future.
If you have questions or would like to meet with an attorney, give us a call at 605-275-5665.
Read more: Estate, Long-Term Care Plans Under the 'Big Beautiful Bill'
