The One Big Beautiful Bill Act (OBBBA) was passed and signed into law on July 4, 2025. This is an extremely large and complicated law which combines a number of Trump administration priorities into one piece of legislation. While we do not intend to cover every aspect or line item of this legislation, we are providing a summary of a few key aspects of the legislation for our clients as it relates to taxes, investments and the wider economy.
Our focus here will be the provisions included in the legislation related to our country’s healthcare and food entitlements. As a partial method to create savings within the overall legislation and offset the costs of the legislation, a number of changes were made to certain entitlement programs. We’ve compiled this information using an analysis performed by Holland & Knight, LLP. Please see a summary of the OBBBA below relating to healthcare and food policy.
- Medicaid/CHIP
- Work Requirements Added – able bodied adults must spend at least 80 hours per month working or volunteering or enrolled in educational program (or combination of these); exception for those under 19 and those with certain short-term hardship events
- Noncitizen eligibility is reduced – limits certain noncitizens from enrolling in or receiving benefits
- More frequent eligibility checks – states required to quarterly review their eligibility files to remove deceased beneficiaries and providers
- More frequent eligibility determinations – requires eligibility redeterminations every 6 months
- Cut down on dual enrollment – states required to submit data so HHS can prevent dual enrollment of individuals in multiple Medicaid programs
- Eliminates federal funding to “prohibited entities” – primarily entities that provide abortions, except under certain circumstances
- Sunsets Federal Matching Assistance Percentage (FMAP) incentive to states expanding Medicaid after 1/1/26
- Increased Cost Sharing – enrollees capped at $35 for certain services and no more than 5% of enrollee's family's income, beginning 10/1/28
- Limitation on state provider taxes – reduce amount of tax an expansion state can charge
- Budget neutral demonstration projects – starting after 1/1/27 all Medicaid demonstration projects must be budget neutral
- Rural Health Transformation Program – provides $50 billion to hospitals and other providers in states that submit a rural health transformation plan meeting certain specifications by 12/31/25.
- Medicare
- Limits premium tax credits to noncitizens – certain noncitizens limited from receiving premium tax credits to reduce their costs under Medicare
- Temporary “Doc Fix” – 2.5% increase in the Physician Fee Schedule for 2026
- Orphan Drugs Exemption – more orphan drugs are exempted from Medicare price negotiations starting in 2028; also increases time they may be exempt if non-rare disease indication is added to the drug
- ACA
- Limits premium tax credits to noncitizens – limits availability through ACA marketplaces to certain noncitizens, disallows availability during the time certain noncitizens are not eligible for Medicaid and requires monthly verification of eligibility for receipt of premium tax credits
- Enhanced advanced premium tax credits to expire – allows expiration at end of 2025
- HSAs – HSAs can now be used to pay for direct primary care and telehealth now covered on pre-deductible basis for individuals in HDHPs
- SNAP/Thrifty Food Plan
- Cost-neutral changes – requires all future updates of the program to be cost-neutral and that the cost of the plan is to reflect changes in the CPI for All Urban Consumers published by BLS
- Expands Work Requirements – expands existing work requirements to include able-bodied adults age 55-65 and parents or guardians of children over age 14
- No Discretion – removes US Department of Agriculture secretary’s discretionary authority to issue work requirement waivers based on insufficient job openings to areas with an unemployment rate of more than 10%
- Limits Automatic Eligibility for SNAP Standard Utility Allowance (SUA) – to only apply to households with elderly or disabled members. For households without, it also counts state assistance as household income when calculating federal benefits eligibility
- Internet Doesn’t Count – prohibits inclusion of internet costs in calculation of excess shelter deductions, a primary mechanism for determining benefit amounts
- States on Hook for Errors – requires states to contribute a % of the cost of SNAP benefits based on their payment error rate (higher error rate = higher state contribution)
- Federal Reduction in Cost Share – reduces federal cost share of administering SNAP from 50% to 25% beginning in FY 2027
- Eliminates SNAP-Ed
- Revised Eligibility – revises eligibility to bar undocumented immigrants from utilizing the program