September 2025 Newsletter
The “Big Beautiful Bill” and What It Means for Healthcare
Congress has passed the One Big Beautiful Bill Act—better known as the Big Beautiful Bill—a sweeping piece of legislation that makes major changes to healthcare programs, insurance rules, and tax-advantaged benefits. While supporters say the bill promotes accountability and helps stabilize costs, critics warn it could reduce coverage for millions of Americans and put financial strain on hospitals, especially in rural areas.
Here’s what you need to know.
Medicaid: Stricter Rules Ahead
Medicaid, which provides health coverage to millions of low-income Americans, is facing some of the most dramatic changes.
Work Requirements (2027): Most adults between ages 19 and 64 will need to work or participate in community activities for at least 80 hours per month to keep their Medicaid coverage. Exceptions exist for pregnant people, caregivers, and those who are medically unable to work.
Eligibility Reviews (2027): Instead of an annual check, Medicaid expansion enrollees will go through an eligibility review every six months.
Cost-Sharing (2028): Families just above the poverty line could see new copays of up to $35 per service, capped at 5% of their annual household income. For a family of four, that could mean up to $1,650 in out-of-pocket costs per year.
These changes are expected to reduce Medicaid enrollment significantly. Analysts estimate that 5–12 million people could lose coverage by 2034.
State Funding Limits
The bill also places tighter limits on how states can fund Medicaid and pay healthcare providers:
Provider Taxes: Expansion states will face a cap on provider taxes, limited to 3.5% of net patient revenue by 2032. Non-expansion states cannot create new provider taxes.
Supplemental Payments: Expansion states are barred from paying hospitals more than Medicare rates through supplemental Medicaid funds, removing a financial tool many states have relied on.
For hospitals—especially rural ones—this could mean serious financial strain. The American Hospital Association projects a $50.4 billion loss in Medicaid funding over the next decade, which could lead to service cutbacks or even hospital closures in some areas.
Rural and Long-Term Care
The bill does include some targeted support for rural and long-term care:
Rural Health Transformation Fund: A $50 billion fund (2026–2030) will support rural hospitals and clinics, helping them adapt to changing payment structures.
Nursing Homes: New federal staffing standards for nursing homes, which many facilities say would be difficult to meet, are delayed until 2034.
Medicare & Marketplace Insurance
Several provisions impact Medicare and Affordable Care Act (ACA) marketplace insurance:
Medicare Payments: Doctors who treat Medicare patients will see a one-time 2.5% payment boost in 2026.
ACA Subsidies: Eligibility for subsidies is narrowed for some immigrant groups. In addition, forgiveness for receiving too much in premium tax credits is eliminated, which could mean higher tax bills for some families.
Health Savings Accounts (HSAs) and Benefits
One of the most client-friendly parts of the bill expands flexibility for Health Savings Accounts and benefits programs.
Telehealth: High Deductible Health Plans (HDHPs) can now cover telehealth visits before the deductible without affecting HSA eligibility (applies to plan years starting after December 31, 2024).
Direct Primary Care (DPC): Direct primary care arrangements are now HSA-compatible, as long as fees are below $150/month for an individual or $300/month for a family. HSAs can also be used to pay these fees tax-free.
Marketplace Plans: Bronze and catastrophic plans bought through the ACA marketplace will now qualify as HSA-compatible, even if they don’t meet traditional requirements. This change takes effect in 2026.
Dependent Care Assistance: The tax-free limit for dependent care benefits rises from $5,000 to $7,500 per year beginning in 2026.
The Bigger Picture
The Big Beautiful Bill represents one of the most significant federal healthcare policy shifts in years.
Supporters say the bill will reduce waste, encourage personal responsibility, and make programs like Medicaid more sustainable.
Critics warn it will create barriers to coverage, increase out-of-pocket costs for low-income families, and accelerate rural hospital closures.
Either way, these changes will touch nearly every part of the healthcare system—from how families access coverage, to what employers offer, to how providers are paid.
What This Means for You
Individuals and Families: If you rely on Medicaid, you may face new work requirements, more frequent eligibility checks, and higher costs for care. Those with HSAs or dependent care benefits may see new opportunities for savings.
Employers: Plan sponsors will need to review and possibly amend benefit offerings by the end of 2025 to take advantage of new HSA and dependent care provisions.
Providers: Hospitals and clinics—especially in rural areas—should prepare for reduced funding and new restrictions, but may also benefit from the rural health transformation fund.
Bottom Line
The Big Beautiful Bill is reshaping the rules of healthcare in the U.S. Some provisions may help with flexibility and cost-saving opportunities, while others are likely to increase financial pressure on families and providers.
We will continue to monitor these developments closely and keep you updated on what steps you may need to take for your health coverage, benefits, and financial planning.