On July 4, 2025, President Trump signed the law, commonly known as the “One Big Beautiful Bill Act” (OBBBA). These changes were included as offsets to various federal tax cuts and other expenditures at the OBBBA. This alert provides an overview of OBBBA's subtitle Bealth, including healthcare-related provisions in the new tax law.
Chapter 1 – Medicaid
Until September 30, 2034, we will suspend Medicare Savings Program (MSP) eligibility, Medicaid and tip eligibility and registration, and implementation of nursing home staffing rules. The Department of Health and Human Services requires that you submit your Social Security Number to a system that cuts registrations to create a system to prevent you from being in Medicaid in multiple states. The state must perform a quarterly dead status check to remove deceased individuals and providers from registration. Allows payment reductions to the state from future Medicaid payments due to false overpayments. An automated eligibility redetermination is required every six months for Medicaid recipients. Increase home equity limits to determine long-term care eligibility. Limit the eligibility of Medicaid for certain non-citizens and unlawful permanent residents. Various provisions dictating states to curb Medicaid-related costs and ban federal funding for certain family planning and abortion service providers aimed at preventing “weak spending.” State-oriented payments that can manipulate restriction provider tax and federal matching funds (intended to halt “abuseful fundraising practices”). Various provisions that require the state to implement community engagement (work) requirements as a condition for the eligibility of healthy adults between the ages of 19 and 64. Eligible individuals must complete 80 hours of work or equivalent qualification activities prior to and between initial eligibility decisions. Expand coverage for your home or community-based services.
Chapter 2 – Medicare
Limits Medicare eligibility to prevent compensation for individuals who do not meet legal existence and residency requirements. It affects certain services for older people.
Chapter 3 – Health Tax Provisions Related to ACA
Limits Premium Tax Credit (PTC) to certain legally presented individuals. PTC eligibility verification is required and special income-based registration periods are prohibited. Removes the IRS' ability to regain inappropriate prepaid PTC payments during tax adjustments. A shortage of telehealth and remote care deductions will forever establish that plans will not be prohibited from being treated as highly deductible plans. Allow individuals to use their Health Savings Account (HSA) in bronze or catastrophic plans. Direct primary care arrangements can be the allowable costs qualifying for the HSA.
Chapter 4 – Protecting rural hospitals and providers
Allocate $50 billion over five years to the state to support rural providers.
Various provisions limiting Medicaid and Medicare eligibility and state provider taxes are likely to have a negative impact on state income and may require states to pursue alternative sources of income.
See other alerts for a general overview of OBBBA regulations and the impact on manufacturing, education, non-commercial, energy, state and local taxes.
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