Proposed federal regulations aimed at lowering health care costs would preserve a clear boundary in coverage: long-term nursing home custodial care is not an essential health benefit.
The Centers for Medicare & Medicaid Services (CMS) this week released its proposed Notice of Benefit and Payment Parameters for 2027. In the rule, the agency reaffirmed that long-term, or custodial, care is not included in the essential health benefits that Affordable Care Act marketplace plans must cover. That policy already exists and would remain unchanged under the proposal.
As a result, health plans sold through ACA exchanges would continue to exclude extended nursing home stays when the care is custodial rather than medical. Short-term skilled nursing and rehabilitation services tied to clinical treatment remain covered.
CMS is accepting public comments on the proposal.
Flexibility and Oversight
Beyond the long-term care clarification, the rule would eliminate certain standardized plan requirements, giving insurers more flexibility. At the same time, CMS said it would strengthen eligibility verification and impose tighter standards on agents and brokers to curb deceptive marketing practices.
The agency also suggested that limiting federal subsidies for some state-mandated benefits could help slow premium growth.
Cost Pressures Ahead
While custodial care is not classified as an essential health benefit, states can choose to require coverage outside that framework. In those cases, states — not insurers — would bear the added costs.
That flexibility may face strain as broader Medicaid funding changes take effect. Separately, congressional Republicans have proposed significant reductions in federal Medicaid spending over the next decade, a move that could indirectly affect reimbursement rates for skilled nursing facilities if enacted.
Medicaid remains the primary payer for nursing home care, accounting for 62.2% of reimbursement in 2024, according to a December cost comparison report from CliftonLarsonAllen (CLA).
