The headlines have faded, but big Medicare changes are coming.
Just before the July 4th holiday, Congress passed the “One Big Beautiful Bill” after months of debate and discussion. The bill is wide-reaching and makes changes to several major federal programs, including Medicare. Now that the dust has settled, it’s time to take a closer look at what this bill actually does to America’s Medicare and Medicaid programs. Here’s what you need to know.
Large Cuts to Medicare/Medicaid Over the Next Decade
The One Big Beautiful Bill Act (OBBBA) cuts up to $1 trillion dollars from Medicaid/SNAP and $500 billion from Medicare over the next decade. The CBO estimates that up to 10 million people will lose some coverage or lose health insurance entirely because of cuts to services and increased red-tape requirements.
Medicare could face big cuts due to a federal budget rule called PAYGO. This law requires automatic cuts if new legislation adds to the national deficit, unless Congress intervenes to exempt it. If nothing is done, Medicare could see major funding cuts of $45 billion per year, starting in 2026. That means:
- Fewer doctors may accept Medicare because of lower provider payments.
- Medicare Advantage plans could cut back on extras like dental, vision, and hearing.
- Access to care may shrink, especially in rural or underserved areas.
Changes to Medicaid eligibility and new work requirements will reduce the number of people on Medicaid, resulting in less money spent on those programs.
New Medicaid Work Requirements
Perhaps the biggest and most controversial change to Medicaid eligibility is the new work requirement. Starting in 2026, the law adds work requirements for those aged 19 to 64 who qualified for Medicaid under state expansions. To stay covered, recipients will need to prove they’re working, looking for work, volunteering in community service, or enrolled in job training for at least 80 hours per month.
Some people will be exempt, including those with disabilities, primary caregivers, pregnant individuals, students, and those experiencing homelessness — but the list of exemptions is narrow, and new eligibility and verification rules will add administrative burdens.
Implementation Timeline: States are required to implement these new rules and tracking systems by early 2027, but they’re allowed to opt in as early as 2026, which means the rollout could be confusing and uneven depending on where you live. Some states may also require applicants to meet the work requirement for 3 months prior to applying, adding delays to getting coverage.
Verification Changes: Instead of verifying your eligibility once a year, the law now requires re-verification every 6 months. That’s a lot more paperwork for both recipients and program administrators, and this extra documentation could cause eligible people to lose coverage simply because they missed a form, didn’t submit proof on time, or couldn’t navigate the system.
Increased Out-of-Pocket Costs
Another major change in the new law is the introduction of increased cost-sharing for Medicaid beneficiaries with incomes above 100% of the federal poverty line (which is $15,060 in 2025). While Medicaid has traditionally limited co-pays and out-of-pocket expenses, the new rules give states more power to charge up to $35 per visit for certain services like doctor visits, prescription drugs, hospital stays and more.
While the cost-sharing rule isn’t slated to start until October 2028, this shift could come as a surprise to many low-income working Americans who rely on Medicaid but aren’t used to paying much when they see a doctor.
Changes to How Medicaid is Funded by States
Lastly, a behind-the-scenes change to how the federal government shares Medicaid costs with states could put more strain on how states fund their Medicaid programs. The new law limits how much the federal government will match state spending, especially for people covered under Medicaid expansion. This means states may have to cut services, lower hospital payments, and tighten eligibility.
Rural hospitals, which depend on Medicare and Medicaid for up to 40% of their revenue, are particularly at risk. While Congress added $50 billion in temporary relief to stave off hospital closures, experts say it’s not enough. The law also restricts the use of provider taxes (fees hospitals pay to support Medicaid) which could lead to even deeper cuts and closures. All of this will leave entire communities with fewer places to turn when they need care.
What Comes Next
While the “One Big Beautiful Bill” brings major changes to Medicare and Medicaid, most of its effects won’t be felt overnight, which means there’s still time to understand your options.
“There’s no doubt these changes will be disruptive, especially for seniors and low-income individuals who rely on this care. But we do have time to understand what’s coming, ask the right questions, and help people prepare. Our focus at Benafica is making sure no one is left behind in the transition.”
— Gina LaBounty, Director of Medicare, Benafica
If you’re in Minnesota or Wisconsin, Benafica can help you understand changes and how they may affect your Medicare or Medicaid eligibility or coverage. We’ll be here to help you make sense of it all.
Additional Resources:
Wikipedia One Big Beautiful Bill Breakdown
KFF 2025 Budget Bill Changes Breakdown
KFF 2025 Budget Bill Implementation Deadlines
How the One Big Beautiful Bill Targets Medicare and Medicaid