A state-mandated pay raise for nursing home workers is shaking up the landscape for Minnesota operators. Residents could end up paying the price, considering uncertainty surrounding state funding, Medicaid dollars and the possibility of gaps in reimbursement in the years ahead.

All nursing home staff will make at least $19 an hour starting Jan. 1, while certified nursing assistants (CNAs) are set to earn at least $22.50 an hour, and trained medication aides will see $24.50 per hour, according to a report from the Detroit Lakes Tribune.

These wages are set to jump another $1.50 per hour per year in January 2027.

The median salary for nursing home workers ranges between $16 and $19.68 per hour, according to the Minnesota Department of Labor and Industry, while the median pay for CNAs is just over $20 per hour.

Operators are concerned the state-mandated increase will make it harder for organizations to maintain consistent pay scales across areas of its workforce, Christy Brinkman, senior operators director for Essentia Health – Oak Crossing, said during a public forum on the matter on Tuesday. In other words, the mandate will cause the pay gap between different levels of experience or seniority to shrink, commonly referred to as ‘compression.’

The mandate could indirectly affect pay raises for seasoned employees who should be making more than other roles, leading to sinking morale and turnover among more experienced staff, Brinkman said.

The state legislature approved $36 million in funding to help pay for the minimum wage increase; nursing homes need to apply to the state to access this funding, but the uncertainty of federal dollars and reimbursement caps in 2028 makes things less simple.

“Funding is coming in January 2026 and January 2027, but there will also be reimbursement caps in 2028,” Brinkman said, referring to funding cuts adopted by Minnesota Gov. Tim Walz and the legislature earlier this year. “We’ll be moving through a very complicated reimbursement system during that time, and it’s important that the state and policymakers understand how those caps could affect providers.”

About half of the $36 million would come from Medicaid dollars sent to the state from the federal government. While Medicaid funding to states is expected to continue since it’s a mandatory program, administrative delays and broader budget cuts, along with changes to Medicaid’s funding structure brings a lot of uncertainty, according to previous reports from NPR and other outlets.

On top of federal uncertainty and reimbursement caps, operators say they won’t know the full impact of the state mandate until rate notices come in with the SNF Prospective Payment Rule announced each year.