On Independence Day, President Trump signed his signature spending and tax cuts legislation into law. Dubbed the “One Big Beautiful Bill Act,” the law includes significant health care reforms and restrictions to Medicaid, Medicare, and insurer practices.
Here is a summary of health care changes included in the legislation:
Medicaid work requirements: Current law doesn’t tie Medicaid eligibility to meeting work requirements. However, by December 31, 2026, Medicaid recipients ages 19-64 without dependents or disabilities must complete 80 hours per month of work, volunteering, or school/community activities. If a person is denied or disenrolled due to work requirements, they are also ineligible for subsidized Affordable Care Act (ACA) marketplace coverage. Parents of dependent children and those who are medically frail are exempt from the requirements.
Medicaid biannual eligibility checks: Medicaid expansion adults above 100 percent of the Federal Poverty Level must renew eligibility every six months (instead of annually), beginning December 31, 2026.
Mandatory cost-sharing: States must impose up to $35 per medical service for Medicaid enrollees above 100 percent of the Federal Poverty Level (with exemptions for primary care, mental health, and substance use disorder services) starting October 1, 2028.
Provider taxes and directed payments curbed: New state-provider taxes are banned, and existing ones are capped at 3.5 to 6 percent. Provider-directed payments are limited to Medicare rates (or 110 percent in non-expansion states).
Reduced retroactive coverage: Current law requires states to provide Medicaid coverage for qualified medical expenses that are incurred up to three months prior to the date an enrollee applies for coverage. The new law limits retroactive reimbursement periods to one month.
Gender-affirming care restrictions: Federal Medicaid/CHIP funding for gender-affirming treatments, including puberty blockers/hormones/surgeries, is banned for minors and most adults. The law takes effect immediately.
Planned Parenthood defunding: Suspends Medicaid payments for Planned Parenthood-type providers for one year.
Curtails health care access for immigrants: Legal immigration status holders, such as refugees, face new five-year waiting periods for Medicaid, and ACA premium tax credits are restricted to citizens and qualified residents. The provision takes effect October 1, 2027.
Cuts $1 trillion from Medicaid and SNAP: Over the next decade, the bill slashes roughly $1 trillion from Medicaid and the Supplemental Nutrition Assistance Program, potentially removing 8 to 12 million people from coverage.
Establishes a rural health fund: The law provides $50 billion in funding over five years to shore up rural hospitals and emergency care. The money is supposed to be used for payments to rural health care providers.
Limits Medicare coverage for immigrants: Restricts premium-free Medicare Part A to citizens or lawful residents. Prohibits most asylum recipients from receiving Medicare coverage.
Delayed implementation of Medicare low-income savings programs: Delays implementation of easing eligibility and enrollment in the Medicare Savings Program to October 1, 2034, except for provisions that have already taken effect.
Modest increase for physician reimbursements: Provides for a 2.5 percent physician pay increase in 2026 but removes a House proposal to tie future updates to the Medicare Economic Index.
Makes drug negotiation tweaks: Modifies the timelines for orphan drugs to exclude orphan-designation periods and multiple-rare-disease drugs from the price-negotiation pool.
Expands HSA usage: Increases eligibility of health savings accounts and allows funds to pay for direct primary care arrangements.