Home › The “One Big Beautiful Bill�…

The “One Big Beautiful Bill” and Estate Planning: What You Need To Know

The American healthcare system can often feel overwhelming, particularly as it relates to Medicaid and estate planning. With recent shifts in legislation and the ongoing conversation about healthcare access, RKPT is here to simplify the discussion.

Since the passing of the “One Big Beautiful Bill”, our estate planning attorneys have received multiple questions about the exemption increase, its Medicaid implications, and how to use this legislative change to our clients’ advantage. In this blog, we’ll explore what this bill means for your Medicaid payments and how to preempt issues arising from certain types of taxes.

The following blog summarizes the critical estate planning and Medicaid implications of the One Big Beautiful Bill Act, signed into law on July 4, 2025. This guidance is intended for clients looking for a general overview of the significant changes introduced under this legislation. Please note that this information is not intended as binding legal or tax assistance.

Speak to an Estate Planning Lawyer

One Big Beautiful Bill and Medicaid: An Overview

The legislation introduces an estimated $1 trillion in funding cuts over ten years, which could reduce access to long-term care options provided through federal programs.
The One Big Beautiful Bill will raise the federal estate and gift tax exemption to $15 million per individual, enabling wealthier families to transfer more assets tax-free. The exemption is high, and will get higher with inflation. Thus, fewer families will utilize estate tax planning tools.
Beginning in 2028, there will be a $1 million cap on home equity for Medicaid long-term care eligibility, affecting how you may structure your assets for long-term care planning.

Read The Committee on Ways and Means’ summary of the One Big Beautiful Bill Act.

For information specific to your situation, contact an estate planning attorney at RKPT: (513) 721-3330.

Estate and Gift Tax: Permanent Exemption Increase

The “Big Beautiful Bill” Act permanently increases the federal estate, gift, and generation-skipping transfer (GST) tax exemption. In simple terms, this act makes it easier for people to pass down wealth to their children or other chosen heirs without paying federal estate or gift taxes.

Starting in 2026, each person can give away up to $15 million over their lifetime (or $30 million for a married couple) before the IRS charges these taxes. This amount will also increase a little every year to keep up with inflation. (Before this law, the exemption was scheduled to drop to around $7 million per person, but that “sunset” rule has now been removed. That means the higher limits will stay in place permanently, unless Congress decides to change them in the future.)

Unlike the temporary provisions of the 2017 Tax Cuts and Jobs Act, these enhanced exemption amounts are not subject to an automatic expiration; they may only be reduced by future Congressional action. For families with high net worth, this means that these additional assets can be passed down to your children without paying estate taxes.

The “One-Time Voucher” Analogy

The Act lowers how much of your estate could be taxed when you pass away, meaning more of your wealth can go directly to your heirs. One way to picture this is by thinking of the federal lifetime exemption as a one-time voucher. Every U.S. citizen or permanent resident gets a voucher they can use at any point in their life to shield the value of gifts or assets from being taxed. Whatever portion of the voucher you don’t use during your lifetime can be applied at the time of your death to reduce estate taxes.

If your estate is worth more than what’s left of your voucher, the extra amount is taxed at a 40% rate. Starting in 2026, the Act makes these coupons much bigger, letting a married couple shield up to $30 million from estate taxes altogether.

For additional information, contact an estate planning attorney at RKPT: (513) 721-3330.

Speak to an Estate Planning Lawyer

Opportunities for Proactive Estate Planning

Clients with significant wealth should look at the increased exemption amount as an opportunity to make more tax-efficient transfers while also securing their long-term wealth. The higher exemption allows families to pass down a larger portion of their estates without incurring federal transfer taxes, but the benefits are maximized when paired with other strategic tools.

Placing assets into irrevocable trusts can be especially powerful, as these transfers not only use up exemption amounts during life but also allow for any future appreciation of the assets to grow outside of the taxable estate. The combination of higher exemptions and sophisticated planning ensures that wealth is transferred as efficiently as possible while reducing your exposure to estate taxes.

Another important aspect to consider is the generation-skipping transfer (GST) tax exemption, which rises in tandem with your estate and gift tax exemptions. While this increase provides added advantages for multigenerational wealth transfers, it is not sharable between spouses; if one spouse does not use their exemption during their lifetime, it cannot be transferred to the surviving spouse. This detail has major implications for families aiming to pass on wealth to grandchildren or later generations, as it requires more careful coordination.

While the Big Beautiful Bill Act has made larger exemptions permanent, that does not mean estate planning should be put off. Thoughtful, proactive estate planning remains essential. RKPT recommends revisiting your estate and tax planning documents regularly to ensure they remain aligned with current law and positioned to take advantage of opportunities as they arise.

Estate tax is not the focus of this blog, but given the changes, please speak with an estate planning attorney by calling (513) 721-3330 if you would like to discuss how OBBB affects your estate.

Will the Big Beautiful Bill affect my estate plan?

Unless your net worth is above $7 million, these changes will not affect you. For the majority of Americans, federal estate tax exposure will be eliminated or significantly reduced under the new law. However, state-level estate and inheritance taxes remain—clients in high-tax jurisdictions should address their planning accordingly.

Medicaid Implications

The “Big Beautiful Bill” has important implications that extend beyond estate and gift taxes to Medicaid: the federal program that plays a critical role in covering long-term care costs for many Americans. Medicaid eligibility is based on strict income and asset limits. With higher federal exemptions in place, you may find new opportunities (and challenges) with respect to Medicaid eligibility and asset protection.

The Big Beautiful Bill introduces a substantial reduction in federal funding. While the Trump Administration has not yet indicated the primary source of the cuts, there is a high likelihood that it will soon become harder to qualify for Medicaid. The details are not yet known, but we highly recommend being proactive and get your planning completed before eligibility criteria changes.

We now turn to how the bill intersects with Medicaid rules, what it could mean for long-term care planning, and why proactive estate planning remains essential for every family.

Funding and Provider Restrictions

The Big Beautiful Bill Act restricts federal Medicaid funding to certain “prohibited entities” for a one-year period post-enactment. This primarily affects providers engaged in family planning and reproductive health services, specifically targeting Planned Parenthood and similar organizations. Litigation is underway, and the long-term effect of this measure is yet unknown.

For now, this simply means that you will want to be extra careful about what kind of provider you engage with, and to always check before receiving treatment to make sure that they accept Medicaid. To speak with an estate planning attorney about how this legislation may affect your Medicaid benefits, call (513) 721-3330.

Additional Eligibility and Benefit Considerations

Additionally, the Big Beautiful Bill Act adjusts eligibility requirements for Medicaid. Starting January 1, 2027, Medicaid’s retroactive coverage period for adults with incomes too high to qualify for traditional state Medicaid but too low to qualify for ACA Marketplace subsidies. (e.g., nursing home residents). The new bill shortens their period of eligibility from 90 to 60 days; providers and applicants may face an increased risk of unpaid care if applications are not submitted promptly. To speak with an elder law attorney about your situation, call (513) 721-3330.

The new legislation also introduces a uniform home equity cap. Starting January 1, 2028, a uniform $1 million home equity limit will apply nationally for long-term care Medicaid eligibility (with limited exceptions). Right now, the rules about how much home equity you can keep and still qualify for Medicaid vary by state. Some states allow more, some allow less. For 2025, home equity limits set by states must be between $730,000 and $1,097,000.

In plain English: if you apply for Medicaid to cover long-term care (like nursing home costs), the value of your home will only be protected up to $1 million in equity. If your home is worth more than that, the excess value could count against you when determining Medicaid eligibility.

Finally, the Big Beautiful Bill establishes a provider tax cap reduction. This means that states relying on provider taxes for Medicaid funding will see allowable provider tax caps phased down from 6% to 3.5%. This may impact facility reimbursement structures and state Medicaid budgets. Speak to your CPA or an estate planning attorney to learn how this provision may affect you.