On July 4, the president signed the One Big Beautiful Bill Act into law. And, with that stroke of a pen, the health insurance market was re-shaped in several important ways. Below, we’ll break down the provisions related to health insurance and highlight other related policy changes due to agency rulemaking or automatic budget triggers.
Make no bones about it – the law will cut Medicaid spending to the tune of about one trillion dollars over the next decade, give or take a few billions depending on the specific source you look at.
And while health insurance agents may not deal directly with the Medicaid market, it’s important to know that the non-partisan Congressional Budget Office estimates that 7.8 million Americans will lose Medicaid coverage over the next decade. And, assuming no employer coverage, they’ll have a choice to make – go uninsured, or find an individual health insurance plan. Changes to the Affordable Care Act (highlighted below) may make it harder to enroll in ACA-compliant Marketplace plans. And so, these folks may turn to non-ACA-compliant policies, such as short-term insurance or medically underwritten products.
Premiums for both sectors are likely to increase, which could present an opportunity and incentive for agents to explore the non-ACA individual market.
The tax and spending package concerning the Affordable Care Act mirrors much of what CMS issued in the Marketplace Integrity and Affordability final rule. From the administration’s point of view, writing those provisions into law means it will take an act of Congress to change them, not just a round of agency rulemaking. The chart below summarizes the key impacts.[
|
Policy area |
What the law says |
Effective date |
|
Pre-enrollment verification for eligibility of premium tax credits |
Requires that household income, immigration status, including whether there is an eligible alien, health coverage status, family size, and other information determined by Health and Human Services, be verified. Consumers can enroll in a plan, but may not receive Premium Tax Credits or Cost Sharing Reductions until eligibility is verified.
Verification requirements may be waived for SEPs due to changes in family size.
This effectively ends auto-renewals. |
Taxable years beginning after December 31, 2027 |
|
Recapture of excess premium tax credits |
Requires that all premium tax credit recipients pay the full amount of the excess, regardless of income.
The previous law capped repayment based on income related to the Federal Poverty Level. |
Taxable years beginning after December 31, 2025 |
|
Marketplace eligibility for lawfully present immigrants |
Limits eligibility to lawfully present immigrants who hold green cards, Compact of Free Association migrants living in the U.S, or certain immigrants from Cuba.
Eliminates eligibility for lawfully present individuals without green cards, asylees, and people with Temporary Protected Status.
Eliminates eligibility for all lawfully present immigrants with incomes under 100% of FPL, beginning January 1, 2026. |
January 1, 2027 |
|
Special Enrollment Periods and tax credit eligibility |
Any consumer using a non-QLE SEP is barred from receiving PTCs or CSRs.
Effectively, this is a ban on income-related SEPs. |
Plan years beginning after December 31, 2025. |
|
Premium tax credits and Medicaid eligibility |
Persons denied or disenrolled from Medicaid due to work requirements are also ineligible for subsidized Marketplace coverage. |
January 1, 2027, or earlier at a state's option |
|
Bronze and catastrophic plans are treated as an HSA-qualified high-deductible health plan |
All individual market bronze and catastrophic plans can be paired with a health savings account (HSA) |
January 1, 2026 |
Many items from the House version were left out of the final law, including specific language about income-based SEPs, additional steps for pre-enrollment verification, filing and reconciling, automatic re-enrollment of CSR-eligible consumers into bronze plans, and any mention of the Open Enrollment Period. However, many of these topics were addressed in the Marketplace final rule earlier this year.
In short, the end of automatic renewals will mean that you’ll need to remind your Marketplace consumers to actively re-enroll each year. And, they’ll need to have all the appropriate information on hand when doing so. The law itself doesn’t address the length of the Open Enrollment Period, but CMS did shorten it in the final rule, meaning you’ll have more work to do in less time.
First things first. The law will add an estimated $3.4 trillion to the nation’s deficit over the next decade. And since the legislation adds to the deficit, it triggers the Statutory Pay-As-You-Go Act of 2010. Before the final version of the bill was signed into law, the CBO ran the numbers on what automatic cuts a $2.3 trillion deficit increase would trigger. They landed on about $500 billion in cuts to Medicare over the next decade. That number may be higher once the final analysis is complete.
Assuming no further Congressional action, Medicare funding would be slashed by 4%, or $45 billion, in 2026. Additional 4% reductions – the maximum allowed by law – would occur each year over the next decade.
In a market that is already squeezed by financial pressures, and with both trust funds running closer to insolvency, this could lead to substantial impacts in both Original Medicare and the Medicare Advantage Market.
We break down the actual provisions of the law below:
|
Policy area |
What the law says |
Effective date |
|
Limiting Medicare coverage of certain individuals |
Medicare eligibility is restricted to U.S. citizens, green card holders, certain immigrants from Cuba, and people living under the Compacts of Free Association.
Eligibility for asylees, refugees, and those with temporary protected status is eliminated. |
Restrictions go into effect immediately; Medicare benefits for those no longer eligible will be terminated within 18 months |
|
Eligibility and Enrollment Final Rule |
A final rule that cuts barriers to enrollment in Medicare Savings Programs is delayed, except for the auto-enrollment of some SSI recipients as Qualified Medicare Beneficiaries (QMB). |
The final rule will now be implemented on October 1, 2034 |
|
Physician Fee Schedule Conversion Factor Adjustment |
A temporary one-year increase of the Physician Fee Schedule Conversion Factor, which increases provider payments |
January 1, 2026 through January 1, 2027 |
The final law does not include a proposed provision on orphan drugs, Pharmacy Benefit Manager regulation, expansion of rural emergency hospital eligibility, allowing continued contributions to HSAs after enrolling in Medicare Part A, or regulating artificial intelligence. It does, however, prohibit the government from enforcing a Biden-era rule on nursing home staffing levels.
The impacts to the Medicare market are not as significant. However, people in your book of business may, for the first time, lose their Medicare eligibility. And, since they will also be ineligible for subsidized Marketplace coverage, non-ACA-compliant coverage could also be an option for this population.
The House had proposed many provisions to expand HSA eligibility, increase contribution limits, and allow spouses to contribute, even if they have an FSA. None of those provisions made it into the final law. Here’s what did.
|
Policy area |
What the law says |
Effective date |
|
Individual market bronze and catastrophic plans are treated as HSA-qualified HDHPs |
All individual market bronze and catastrophic plans can be paired with a health savings account |
January 1, 2026 |
|
Direct Primary Care Arrangements |
Direct Primary Care arrangements will not be considered health plans, so long as monthly fees are below $150/month for individuals or $300/month for families.
Allows HSA funds to pay for the Direct Primary Care arrangements described above |
January 1, 2026 |
|
Telehealth and other remote services |
HDHPs can cover telehealth and other remote services before the deductible and still qualify as HSA-eligible HDHPs |
Plan years beginning after December 31, 2024 |
The permanent extension of the telehealth benefits will be welcomed by those who use it. And, the ability to use HSA funds for Direct Primary Care may be enticing to some enrollees, though we should point out that that spending may not count toward their HDHP’s deductibles or out-of-pocket maximum.
And, making all individual bronze plans HSA-eligible may help those consumers offset their deductibles as they save for medical expenses.
There’s a lot that didn’t make the cut. The final law didn’t do as much to broaden HSA contributions and contribution sources as some might have hoped. There’s absolutely no language dealing with Individual Coverage Health Reimbursement Arrangements (ICHRAs), or their potential rebrand as CHOICE accounts. And, there are a number of ACA-related provisions that didn’t make it into the law, but will still be enforced via CMS rulemaking.
The long and short of it is that you’ll see fewer people eligible for Medicaid. But, with tightening eligibility requirements on the Marketplace going into effect both now (via rule making) and in a few years (via this law, it may be harder for them to secure subsidized Marketplace coverage. This is your sign to explore reputable, unsubsidized, non-ACA-compliant plans in your area. That might be just the tool you need to help those who are out of other options for coverage.
We’ll also need to pay attention to the automatic Medicare cuts. Should those cuts go into effect, we could see some pretty rapid realignment in the Medicare market as a whole.
Whatever comes next, we’ll be here to help you get through it.