One Big Beautiful Bill Act brings sweeping changes to health coverage

The One Big Beautiful Bill Act (OBBBA) – or H.R. 1¹ – set the stage for sweeping changes to Medicaid and Marketplace health coverage. Some of the changes took effect in 2025 and 2026, while others take effect in 2027 or 2028.

In this article, we look at some of the most important provisions of the OBBBA and how they’re affecting coverage access.

1. Medicaid expansion enrollees face work requirements, more frequent renewals, and in some cases, new out-of-pocket costs

• In a nutshell: Medicaid expansion enrollees will face a work requirement and semi-annual eligibility redeterminations – and some enrollees will have to pay higher out-of-pocket costs.
• Who’s affected? Medicaid expansion enrollees, plus partial expansion enrollees in Georgia and Wisconsin, and certain low-income parents in Tennessee.
• Effective date: January 1, 2027 for work requirements (in most states) and semi-annual eligibility redeterminations; October 2028 for new out-of-pocket costs.

Work requirement: Under the OBBBA, adults covered through the ACA’s Medicaid expansion (a provision that covers adults with income up to 138% of the federal poverty level) will be subject to a work requirement starting in 2027.

Unless these enrollees qualify for an exemption, the work requirement will apply to Medicaid expansion enrollees in Washington, D.C., and the 40 states that have expanded Medicaid under the ACA, and it will also apply to adults with income up to the federal poverty level in Wisconsin and Georgia, as well as parents with income up to the federal poverty level in Tennessee.⁵

Learn more about the Medicaid work requirement, and what’s necessary for compliance.

Semi-annual eligibility redetermination: The OBBBA also requires Medicaid expansion enrollees (except for American Indians and Alaska Natives) to have their eligibility redetermined every six months starting in 2027, instead of just once per year.⁶

Learn more about Medicaid eligibility redeterminations.

New out-of-pocket costs: Starting in October 2028, Medicaid expansion enrollees with income of at least the federal poverty level will pay more in out-of-pocket costs when they receive care. The OBBBA requires states to impose cost sharing of up to $35 per service for this population, although some services are exempt and there will continue to be an aggregate spending cap equal to 5% of household income for all family members’ total premiums and out-of-pocket costs.⁷

2. Additional Medicaid changes that reduce federal spending but also reduce coverage and benefits

• In a nutshell: Retroactive Medicaid coverage will be more limited, and most states will see a reduction in federal Medicaid funding.
• Who's affected? People applying for Medicaid with unpaid medical bills for recent months, as well as anyone with Medicaid who might experience benefit cuts or reduced access to providers.
• Effective date: January 2027 for retroactive Medicaid limitations. For potential coverage reductions and provider changes, it will vary by state and could phase in over the next few years.

In addition to the significant changes for Medicaid expansion enrollees, the OBBBA includes various other Medicaid provisions that will affect access to coverage, how much federal Medicaid funding states receive, and the benefits that states provide. They include:

• Starting in January 2027, retroactive Medicaid coverage (meaning coverage of bills incurred before an individual applied for Medicaid) will be more limited. For Medicaid expansion enrollees, it will be capped at one month, and for traditional enrollees, it will be capped at two months. Most states have historically allowed up to three months of retroactive Medicaid coverage (assuming the person would have met the eligibility requirements during those months).⁸
• Starting in October 2027, new OBBBA rules will reduce federal Medicaid funding to most states.⁹ The impacts will vary by state, but could include reduced reimbursements for providers (and thus fewer providers accepting Medicaid) as well as state reductions to Medicaid coverage for optional benefits.¹⁰ (Coverage of many services is optional for Medicaid, meaning states can choose whether to cover them. These include Home and Community-Based Services,¹¹ prescription drugs, physical, occupational, and speech therapy, and dental and vision care for adults.)¹²
• In 2023 and 2024, the Biden administration finalized a two-part rule designed to simplify and streamline the application and renewal process for Medicaid (including Medicare Savings Programs that help to pay Medicare premiums and out-of-pocket costs for beneficiaries with low incomes and asset levels), the Children’s Health Insurance Program (CHIP), and Basic Health Programs.¹³ The Biden administration’s rule included provisions such as eliminating in-person eligibility interviews for people with disabilities and individuals 65 or older, changes to ensure that fewer people would lose coverage due to undeliverable mail, and a ban on lock-out periods for children disenrolled from CHIP for failure to pay premiums. The OBBBA prohibits HHS from implementing, administering, or enforcing those rules, at least through September 2034.¹⁴

What people affected by these changes can do:

• Be aware that retroactive Medicaid coverage will be more limited starting in 2027. If you think you might be eligible to enroll in Medicaid, apply as soon as possible, rather than waiting until you need medical care to submit an application.
• Pay close attention to any communications from your doctor, hospital, or Medicaid program, regarding provider access or benefit changes.
• You may need to complete additional paperwork or comply with other new rules to enroll or renew your coverage. If you’re enrolled in Medicaid (including a Medicare Savings Program) or CHIP, it’s essential to make sure that the state Medicaid agency has your correct contact information, and that you quickly respond to any administrative requests related to your eligibility or coverage renewal.

3. Some immigrants lose subsidy eligibility

• In a nutshell: Recently arrived low-income immigrants no longer qualify for subsidies to buy Marketplace health insurance. And starting in 2027, fewer immigration statuses will be subsidy-eligible.
• Who’s affected? Lawfully present immigrants in their first five years in the United States with household incomes below the federal poverty level. In 2027, most non-permanent immigration statuses will not be subsidy-eligible.
• Effective dates: January 1, 2026 (for low-income immigrants), and January 1, 2027 (for non-permanent immigration statuses)

Low-income recent immigrants: In general, Marketplace subsidies are not available to anyone with a household income under the federal poverty level (FPL).¹⁵ But there has always been an exception for recent immigrants who are lawfully present in the U.S. if they are in the five-year waiting period before they can qualify for Medicaid.¹⁶

Learn more about Marketplace subsidies.

To avoid creating a coverage gap for low-income lawfully present immigrants during their first five years in the U.S., the Affordable Care Act (ACA) included a provision to allow them to qualify for Marketplace subsidies so they could meaningfully access the Marketplace.¹⁷

But the OBBBA ended this provision, starting January 1, 2026. Immigrants with household income under the poverty level who have been in the U.S. for less than five years no longer qualify for subsidies in the Marketplace.¹⁸

According to the Congressional Budget Office, about 300,000 people were expected to lose their health coverage by 2034 as a result of the termination of subsidy eligibility for recent immigrants with income below the FPL.¹⁹

Reduction in the subsidy-eligible immigration statuses: Since 2014, a long list of immigration statuses have made people eligible to use the health insurance Marketplace and qualify for income-based subsidies.²⁰

But starting in 2027, subsidy eligibility for immigrants will be reduced to only lawful permanent residents (LPRs, also known as “green card” holders), Cuban-Haitian entrants, and people living in the U.S. under Compacts of Free Association (COFA). All other immigrants, including those with work or student visas, refugees, asylees, and people with temporary protected status (TPS) will no longer be eligible for Marketplace subsidies.²¹

According to CBO projections, approximately 900,000 to 1 million people are expected to become uninsured by 2035 as a result of the reduction in the number of immigration statuses that make a person eligible for Marketplace subsidies.²²

Learn more about immigrant health coverage eligibility rules

What people affected by the change can do: To qualify for Marketplace subsidies, immigrants who have been in the U.S. for under five years must have a household income that is at least equal to the prior year’s FPL. For 2027 coverage (in all but Alaska and Hawaii, where the FPL is higher), that’s $15,960 for a single person and $33,000 for a household of four.²³

And immigrants who aren’t LPRs, COFA migrants, or Haitian or Cuban entrants will not be able to qualify for Marketplace subsidies in 2027. Lawfully present immigrants will still be able to use the Marketplace, but without subsidies. In some cases, switching to a lower-cost Marketplace plan might be a viable solution.

4. Subsidy recipients face full repayment of excess APTC

• In a nutshell: Starting with 2026 coverage, there’s no limit on how much excess APTC a Marketplace enrollee might have to repay if their income ends up higher than expected.
• Who’s affected? Marketplace enrollees who receive advance premium tax credits (APTC) – especially those with income fluctuations.
• Takes effect: The 2026 plan year. Enrollees will start to see this on the 2026 tax returns they file in 2027.

Most Marketplace enrollees – 87% in 2026 – qualify for advance premium tax credits (APTC).²⁴ APTC is based on an applicant’s projected income for the relevant calendar year. The federal government advances the estimated premium tax credit on the applicant’s behalf, to their health insurer, throughout the year.

But the following year, that APTC has to be reconciled when the enrollee files their tax return for the year. Learn more about how APTC reconciliation works.

Before 2026, there was a cap on how much excess APTC people have to repay, as long as their household income was less than 400% of FPL. The specific amounts were indexed each year by the IRS, but the most a person would have to repay in excess APTC for 2025 was $3,250, if their household income was as high as 399% of FPL.²⁵

But the One Big Beautiful Bill Act eliminates those caps. Starting with the 2026 plan year, if your income ends up being higher than you projected, there will no longer be a limit on how much excess APTC you have to repay.²⁶ Instead, you will have to repay all of the excess, regardless of how much that is.

(To clarify, the repayment caps for 2025 ranged from $375 for a single filer whose household income was under 200% of FPL, to $3,250 for a family with a household income of 399% FPL. The details are shown in Table 5 of the IRS instructions for Form 8962, which is used to reconcile Marketplace premium tax credits.)²⁷

What people affected by the change can do: When people enroll in Marketplace coverage for 2026, it will be essential to project income as accurately as possible. The Marketplace will ask for proof of income if the projection you provide doesn’t match the information the Marketplace receives from data sources like the IRS.

It will also be a good idea to double-check your income projection mid-way through 2026, to see if you’re on track to earn roughly the amount you projected when you enrolled. If not, you can update your income in your Marketplace account, and it will adjust your subsidy in real time. This could help to avoid having to repay excess APTC when you file your 2026 tax return, which will be particularly important once there’s no longer a cap on how much excess APTC has to be repaid.

5. More Marketplace plans can be used with health savings accounts (HSAs)

• In a nutshell: Millions more people with high-deductible Marketplace plans will become eligible to contribute to health savings accounts.
• Who’s affected? Marketplace enrollees with Bronze or Catastrophic plans and consumers using direct primary care (DPC)
• Takes effect: January 2026 (for 2026 plan year)

Starting with the 2026 plan year, Marketplace enrollees with Bronze or Catastrophic plans are eligible to contribute to a health savings account (HSA). Through the end of 2025, HSA contributions could only be made by someone who has an HSA-qualified high-deductible health plan (HDHP), as defined by the IRS.²⁸ But starting with the 2026 plan year, the HDHP definition expanded to include all Marketplace Bronze and Catastrophic plans.²⁹

Prior to 2026, most Bronze plans were not HDHPs, since most Bronze plans did not meet the IRS HDHP requirements. For example, in Chicago, there were 31 Bronze Marketplace plans available in 2025, but zero HDHPs. In Houston, there were 28 Bronze Marketplace plans available, and only one HDHP (which was one of the Bronze plans).³⁰

Through the end of 2025, Catastrophic plans could never be HDHPs, since their out-of-pocket limits were too high and covered up to three primary care visits pre-deductible. But very few people enroll in Catastrophic plans,³¹ largely because Marketplace premium subsidies cannot be applied to Catastrophic plans, and people age 30 and older can only enroll in a Catastrophic plan if they obtain a hardship exemption from the Marketplace.¹⁵

But millions of people have Bronze Marketplace plans. During the open enrollment period for 2026 coverage, about 40% of all Marketplace enrollees selected Bronze plans.³²

In addition to the revised HDHP definition, H.R. 1 also relaxed the rules around HSAs and direct primary care (DPC) arrangements.³³ Starting in January 2026, having a DPC membership (in addition to an HDHP) no longer disqualifies an individual from contributing to an HSA.³⁴ In addition, the DPC membership fee is considered a qualified medical expense, meaning it can be paid for with pre-tax HSA funds.³³

Why does HSA access matter?

Contributions to an HSA are pre-tax, and investment gains or interest earned in the account are also not taxed. Withdrawals are also tax-free as long as the money is used for a qualified medical expense.³⁵

In addition, HSA contributions reduce a person’s ACA-specific modified adjusted gross income (MAGI), which can affect whether the person qualifies for Marketplace subsidies. This is particularly important for people to understand starting with the 2026 plan year, as the “subsidy cliff” returned in 2026 when federal subsidy enhancements  expired at the end of 2025.³⁶

So a person who would otherwise not qualify for a subsidy might find that by contributing to an HSA, they can bring their MAGI into the subsidy-eligible range. Marketplace enrollees should discuss this issue with a financial planner or accountant before selecting a plan. If contributing to an HSA makes financial sense for them, it will be important to select an HDHP during the open enrollment period, keeping in mind that Bronze and Catastrophic plans are now considered HDHPs.