Congress passed H.R.1, also known as the One Big Beautiful Bill Act (OBBBA), on July 3, 2025, with President Donald Trump signing the bill the next day. This bill included sweeping changes across various policy issues, from energy to the federal budget. However, it also included healthcare-related provisions that may impact you, your employees, or your clients.
At Remodel Health, we’ve been monitoring how new federal legislation and regulations might impact the employee benefits space. In this article, we’ll provide an overview of the healthcare changes included in the OBBBA.
In this blog post, you’ll learn:
- What the One Big Beautiful Bill Act is
- What major healthcare changes H.R.1 includes
- The potential impact of OBBBA provisions (and provisions not included in the bill)
Are you looking for a cost-effective alternative to traditional group health insurance? Learn how the ICHRA might be the solution for you and your clients.
What is H.R.1, the One Big Beautiful Bill Act?
H.R. 1, also known as the One Big Beautiful Bill Act, is a budget reconciliation measure that Congress introduced in the House of Representatives on May 20, 2025. After passing both chambers of Congress, President Trump signed the bill into law on July 4, 2025. The bill reflects a broad legislative effort to reshape certain aspects of the federal government, including taxation, federal spending, and benefits.
Healthcare changes in H.R.1, the OBBBA
While the bill addresses a wide range of issues, its healthcare provisions are especially relevant for employers, employees, and benefits advisors.
While the bill originally included language that would’ve directly impacted Remodel Health by codifying and renaming the individual coverage health reimbursement arrangement (ICHRA) as the CHOICE Arrangement, the Senate removed the provision. You can learn more about what the bill would have done for ICHRA in our article on the topic.
Although ICHRA isn’t becoming CHOICE as a result of the OBBBA, many healthcare-related provisions did become law. We’ll highlight some of these changes in the sections below.
ACA individual market changes in OBBBA
The One Big Beautiful Bill Act introduced several changes to the individual health insurance market, including premium tax credits. The table below summarizes some of the provisions impacting the individual market.
| Summary of changes | OBBBA section1 source | |
|---|---|---|
| Pre-enrollment verifications for advance premium tax credits and cost-sharing reductions. | A month won’t count as a coverage month for APTC eligibility unless the exchange verifies the individual’s eligibility to enroll in a plan and receive APTC payments. Exchanges must base verification on applicant-provided or verified information, such as household income, family size, legal immigration status, current health coverage or eligibility, residence, and any other information. HHS can waive these requirements for special enrollment periods (SEPs) caused by family size changes. Pre-enrollment verification begins for plan years starting after December 31, 2027. | Section 71303 |
| Impact of community engagement requirements for Medicaid on APTC/CSR eligibility. | Individuals aged 19 to 64 and enrolled through Medicaid expansion or other Section 1115 programs are subject to new community engagement requirements (explained later in this article). For individuals who fail to meet these new rules and fall out of coverage, those months don’t count as qualifying months of minimum essential coverage (MEC). This will impact premium tax credit and CSR eligibility. | Section 71119 |
| Elimination of PTC for those using a low-income special enrollment period (SEP). | Starting January 1, 2026, individuals selecting coverage as a result of an SEP based on income won’t be eligible for a premium tax credit. Note: A separate federal regulation2 by HHS issued on June 25, 2025, eliminates all income-related SEPs through December 31, 2026. | Section 71304 |
| Individuals must file taxes and reconcile APTC for the previous year. | This section eliminates the existing limit on the amount of excess advance premium tax credits that individuals must repay based on income. All individuals must repay the full excess amount if they received more APTC than they were entitled to for tax years after December 31, 2025. | Section 71305 |
| Changes to tax credit eligibility for immigrants. | Premium tax credits are no longer available to all lawfully present immigrants. The federal government now limits PTC to “eligible aliens.” OBBBA defines “eligible aliens” as lawful permanent residents (Green Card holders), Cuban and Haitian entrants under the Refugee Education Assistance Act of 1980, and Citizens of Freely Associated States residing in the U.S. under a Compact of Free Association. This section also limits those subject to the ACA’s individual mandate to citizens and “eligible aliens.” This applies to tax years beginning after December 31, 2026. | Section 71301 |
| Individuals subject to the Medicaid five-year bar can’t collect premium tax credits. | The bill prohibits individuals from collecting PTC during periods of Medicaid ineligibility due to their immigration status. | Section 71302 |
OBBBA isn’t the only recent change in federal law that impacts the individual market. A new final rule issued by the Trump administration will shorten the annual Open Enrollment Period in all states. Starting in 2026, Open Enrollment will run from November 1 through December 15 for 2027 coverage on the federal marketplace. The final rule also shortens Open Enrollment on state-based marketplaces from November 1 to December 31.
This rule also reduces APTC by $5 for those who auto-re-enroll in fully subsidised plans without verifying their eligibility again3.
HSA changes in OBBBA
The One Big Beautiful Bill Act includes several updates designed to expand the use of health savings accounts (HSAs).
| Summary of changes | OBBBA section1 source | |
|---|---|---|
| Bronze and catastrophic plans are now HSA-eligible. | The federal government now recognizes bronze and catastrophic individual health plans as high deductible health plans (HDHPs). This allows those with bronze or catastrophic plans to contribute to a health savings account (HSA). This change takes effect on January 1, 2026. | Section 71307 |
| Direct primary care service arrangements don’t disqualify someone from contributing to an HSA. | Beginning January 1, 2026, a direct primary care service arrangement won’t be treated as a disqualifying health plan for HSA eligibility. To qualify, a DPC must only provide primary care services. These plans have a fixed periodic fee, and monthly fees can’t exceed $150 for individuals or $300 for families. If the DPC exceeds this amount, it doesn’t qualify as a DPC. The government indexes this amount for inflation. | Section 71307 |
| Direct primary care fees are HSA-eligible. | DPC fees are now an HSA-eligible medical expense starting on January 1, 2026. | Section 71307 |
These HSA changes could benefit those who enroll in a bronze or catastrophic plan with their ICHRA allowance. These plans have lower premiums but higher deductibles and out-of-pocket expenses than silver or gold plans. Now, employees with these plans can contribute to an HSA for their out-of-pocket costs while using their ICHRA allowances for their individual health insurance premiums.
Medicaid changes in OBBBA
Medicaid is a federal and state program that provides health insurance coverage to low-income individuals and families. It also supports pregnant women and those with disabilities. H.R.1 introduces significant reforms to Medicaid.
| Summary of changes | OBBBA section1 source | |
|---|---|---|
| Changes to Medicaid rules. | These sections block the implementation of the CMS final rules issued on September 21, 2023, and April 2, 2024. These final rules would have made it easier for Medicare enrollees to enroll in Medicare Savings Programs (MSPs) and streamlined the process for applying for and renewing Medicaid and CHIP. This moratorium is effective now through September 30, 2034. | Sections 71101 and 71102 |
| State-directed Medicaid payments. | This section limits how much states can pay providers through Medicaid managed care state-directed payments. The government will cap payments at 100% of Medicare rates for Medicaid expansion states and 100% of Medicare rates for non-expansion states. If there is no Medicare rate for a service, the state should use the Medicaid State Plan rate. Existing payment arrangements must begin to phase down their payments starting in 2028. | Section 71116 |
| Medicaid expansion redetermination. | Starting with eligibility reviews scheduled on or after the first quarter of 2027, states must perform mandatory six-month redeterminations for some Medicaid enrollees. Those subject to these redeterminations include those covered under Medicaid expansion, and those with a Medicaid waiver that covers the same expansion population and provides minimum essential coverage (MEC). | Section 71107 |
| Medicaid community engagement requirements. | This section requires most Medicaid expansion enrollees to meet new work or community engagement requirements to remain eligible. Anyone aged 19 through 64 with Medicaid expansion or an equivalent waiver must engage in at least 80 hours/month of employment, community service, work program participation, half-time enrollment in education, a mix of the above, or earn income equivalent to 80 hours at minimum wage. There are exemptions for pregnant and postpartum individuals, those with disabilities or serious medical conditions, and caregivers of young children or dependents with disabilities, among others. These engagement requirements must begin by Q1 of 2027, and states may start earlier if they choose. | Section 71119 |
| New cost-sharing requirements for Medicaid. | Starting October 1, 2028, states must impose cost-sharing on certain higher-income Medicaid expansion enrollees. This includes copays or fees. It also prohibits states from charging premiums or enrollment fees on these individuals beginning in 2029. | Section 71120 |
| Changes to Medicaid retroactive eligibility. | This section limits the retroactive coverage period for Medicaid and CHIP, reducing the number of months states must provide coverage before the application date. For those with Medicaid expansion, retroactive coverage is reduced from three months to one month before the application month. All other Medicaid enrollees and CHIP enrollees will have retroactive coverage limited to two months, down from three months. This law takes effect on January 1, 2027. | Section 71112 |
| Reducing duplicate enrollment under the Medicaid and CHIP programs. | This section aims to prevent individuals from being enrolled in Medicaid or CHIP in more than one state at the same time. By October 1, 2029, HHS must create a federal system that receives enrollee data and flags those enrolled in multiple states. | Section 71103 |
| Adjustments to coverage of home or community-based services (HCBS) under Medicaid. | Starting July 1, 2028, states may apply for a new type of standalone Medicaid waiver to cover home or community-based services for those who don’t meet the traditional institutional level of care requirements. | Section 71121 |
| Medicaid eligibility for immigrants. | Effective October 1, 2026, federal Medicaid funding will only be available for services provided to individuals who meet specific immigration and residency criteria. Only U.S. citizens or nationals, lawful permanent residents, Cuban or Haitian entrants, or citizens of a Compact of Free Association nation lawfully residing in the U.S. will be eligible for Medicaid. These changes mostly affect lawfully present immigrants who no longer meet the new eligibility requirements. Federal law already prohibited undocumented immigrants from enrolling in federally funded Medicaid programs except in emergencies. | Section 71109 |
So, how might these Medicaid changes impact the individual market? Some individuals may switch from Medicaid to a subsidized marketplace plan. But, with the potential loss of enhanced premium tax credits at the end of 2025, low-income individuals who are generally healthy might forgo coverage. This could increase the share of unhealthy individuals on ACA plans, increasing premiums.
Changes to Medicare in OBBBA
Much like the changes to PTC and Medicaid eligibility, H.R.1 included Medicare eligibility changes. Section 71201 creates a new rule, Section 1899C of the Social Security Act. It limits Medicare benefits to U.S. citizens or nationals, lawful permanent residents, Cuban or Haitian entrants, and citizens of Compact of Free Association nations lawfully residing in the U.S.
This takes effect 18 months after enactment, or around January 2027.
These changes affect lawfully present immigrants who no longer meet the new eligibility requirements.
One-year ban on federal funds for certain providers
The bill also included a one-year temporary ban on using federal funds to pay certain entities. This applies to Medicaid plans and those with a state Medicaid waiver.
For one year from enactment, individuals can’t use Medicaid to pay for services from a prohibited entry.
That’s any organization that meets all of the following criteria:
- It’s a 501(c)(3) nonprofit organization
- It’s an essential community provider
- It’s primarily engaged in family planning or reproductive health services
- It provides abortions except in cases of rape, incest, or life endangerment
- It received more than $800,000 in total Medicaid reimbursements in 2023
As of the writing of this article, a federal judge has blocked this provision pending legal challenges.
Potential impact of provisions OBBBA included and didn’t include on the individual market
So, what is the impact of the OBBBA? On June 27, 2025, the federal Congressional Budget Office (CBO) estimated that the provisions in H.R.1 would result in 11.8 million individuals losing health coverage during the next ten years4. This includes Medicaid, Medicare, CHIP, and individual health insurance, driven by new work requirements, eligibility restrictions, and subsidy reforms.
While OBBBA introduces new consumer tools like expanded HSA eligibility, it also omits an extension of the enhanced premium tax credits that the American Rescue Plan Act of 2021 and the Inflation Reduction Act of 2022 created. Originally, these tax credits were only available to those with annual household incomes between 100% and 400% of the federal poverty level (FPL). You also had to be ineligible for affordable coverage. The American Rescue Plan Act expanded access to PTC by allowing anyone who would have to pay more than 8.5% of their household income for a benchmark silver plan to qualify (in addition to needing to meet the affordability requirements). These enhanced credits, which made plans more affordable for millions, expire at the end of 2025.
If Congress doesn’t extend these enhanced tax credits, the CBO projects5 that 4.2 million more people will be uninsured by 2034. Many healthy individuals could leave the individual market and forgo coverage to save money. This would lead to a sicker risk pool in the individual market, driving up premium costs.
Tighter eligibility for premium tax credits and cost-sharing reductions for certain immigrants could also reduce the number of enrollees on the individual market.
In an evolving and more complex health insurance environment, employers and brokers will need to carefully evaluate their options and analyze the impact on their employees and clients. Remodel Health is here to equip employers and benefits consultants with the guidance needed to evaluate the ICHRA as an alternative benefit strategy.
Conclusion
The One Big Beautiful Bill Act includes many healthcare and employee benefit-related provisions. With millions expected to come off Medicaid and with the expiration of enhanced tax credits on the horizon, employers and brokers must take proactive steps to stay ahead. You should review your current benefits strategy to ensure it aligns with the upcoming changes.
At Remodel Health, we’re committed to helping consultants, employers, and their employees adapt to these changes. Even with rising premiums on the individual market, offering flexible solutions like the ICHRA can save organizations money and administration time. ICHRA is still an excellent long-term solution. You can contact us for a custom ICHRA analysis to determine whether the benefit is the right fit for you or your client.
Sources:
- H.R.1 – One Big Beautiful Bill Act
- Federal Register: Patient Protection and Affordable Care Act: Marketplace Integrity and Affordability
- CMS Finalizes Major Rule to Lower Individual Health Insurance Premiums for Americans
- Congressional Budget Office: Estimated Budgetary Effects of an Amendment in the Nature of a Substitute to H.R.1
- KFF: How Will the One Big Beautiful Bill Affect the ACA, Medicaid, and the Uninsured Rate?
Learn more about Remodel Health’s ICHRA+ administration solution.