What the One Big Beautiful Bill Act Means for Elder Law Attorneys

Understanding the “One Big Beautiful Bill”: How Federal Policy Changes Affect Elder Law and Long-Term Care Planning

Key Takeaways from NAELA’s November 20, 2025 Special Presentation

On November 20, 2025, the Maryland/DC Chapter of NAELA hosted a special presentation with NAELA Tax Steering Committee members Deirdre Wheatley-Liss and Bob Brogan, offering one of the nation’s first elder-law–focused analyses of the One Big Beautiful Bill Act (OBBBA). The program delivered timely guidance for attorneys navigating estate planning, trust taxation, capital-gains strategy, and long-term care benefits under the new federal framework.

The Estate Tax Exemption: “Permanent” Doesn’t Mean Permanent

Although OBBBA sets the federal estate and gift tax exemption at $15 million per person beginning in 2026, the presenters clarified that “permanent” in federal tax law simply means there is no scheduled sunset. Congress can still change it at any time.

This makes flexibility in estate planning more important than ever, including:

• Planning with disclaimers

• Careful drafting for state-level exemptions (especially Maryland’s $5 million exemption)

• Using structures that can adapt if future administrations revise the rules

Capital-Gains and Basis Planning Takes Center Stage

Because so few families will now face federal estate tax, the speakers emphasized that capital-gains exposure and basis planning are now the primary tax issues for most clients.

Key takeaways included:

• The need to revisit older irrevocable trusts drafted under past exemption levels

• Considering whether intentional estate inclusion could secure a valuable step-up in basis

• Clarifying that grantor vs. non-grantor status is an income-tax concept, not an estate-inclusion rule

• Reviewing older credit-shelter formulas to ensure they reference the correct state-level exemption

Medicaid: What Changes for Long-Term Care Benefits

The presenters also reviewed OBBBA’s Medicaid provisions affecting long-term care (LTC) Medicaid. Several changes directly impact eligibility and administration.

1. Retroactive coverage shrinks from 90 days to 60 days

This reduces the coverage window for individuals entering nursing homes after sudden hospitalizations or unplanned transitions.

2. A new federal home-equity limit capped at $1,000,000

This is especially significant for Washington, DC, which currently offers a more generous home-equity exemption for LTC Medicaid. Under OBBBA, DC may no longer exceed the federal $1,000,000 limit. Some homeowners who qualify today may not qualify once the federal ceiling applies.

3. Restrictions on Medicaid “provider taxes”

OBBBA tightens federal rules on provider-tax financing, a mechanism states use to recycle provider payments to draw additional federal Medicaid dollars. These restrictions are expected to lead DC and Maryland to:

• Increase redeterminations

• Tighten verification and documentation requirements

• Scrutinize eligibility more closely beginning in 2026–2027

These are administrative tightening measures, not changes to core financial-eligibility formulas, but they will affect applicants and planning timelines.

Other Key Tax Changes Affecting Trusts and Real Property

• A $40,000 SALT deduction available per non-grantor trust

• Permanent 100% bonus depreciation, which lowers basis and can increase taxable gain at sale

• New considerations for trusts holding real estate

• No changes to grantor-trust statutes, but a changed planning environment that makes trust structure selection more important

Conclusion

The November 20 program highlighted how OBBBA reshapes elder-law planning across three major fronts:

• Capital-gains and basis strategy now matter more than federal estate tax

• Older trusts and credit-shelter structures should be reviewed in light of today’s exemption levels

• Long-term care Medicaid eligibility is tightening, especially in DC due to the new home-equity cap and increased administrative scrutiny

The Chapter is grateful to Deirdre Wheatley-Liss and Bob Brogan for their insights and for helping our community stay current with these important developments.