The One Big Beautiful Bill Act (H.R. 1), signed into law on July 4, 2025, cuts approximately $625 billion from the Medicaid program over the next 10 years. The Congressional Budget Office estimates these changes will cause 7.8 million people to lose Medicaid coverage through new work requirements, more frequent eligibility checks, reduced federal matching funds, and provider tax reforms. If you currently receive Medicaid or think you might qualify, use our free benefits screener to check your options right now.
What Is the One Big Beautiful Bill Act?
The One Big Beautiful Bill Act is a federal budget reconciliation law passed by Congress and signed by President Trump on July 4, 2025. Officially designated H.R. 1, it combines tax cuts, border security funding, defense spending, and significant changes to social safety net programs including Medicaid, CHIP, and ACA marketplace coverage. The Medicaid provisions alone account for roughly $625 billion in federal spending reductions over the 2025 to 2034 budget window.
How Much Is Being Cut from Medicaid?
The CBO projects $625 billion in Medicaid savings over 10 years. Here is how those cuts break down by major provision:
| Provision | Estimated 10-Year Savings | Effective Date |
|---|---|---|
| Provider tax reform (hold harmless caps) | $191 billion | FY 2028 to FY 2034 |
| Work/community engagement requirements | Included in coverage loss estimate | December 2026 |
| Six-month eligibility redeterminations | Included in coverage loss estimate | December 2026 |
| Reduced FMAP for expansion incentives | Varies by state | December 2026 |
| Retroactive coverage limits | Varies | Upon enactment |
| Immigration eligibility restrictions | Varies | Upon enactment |
| State-directed payment caps | Varies | Phased in |
| Total estimated Medicaid reduction | ~$625 billion | 2025 to 2034 |
How Many People Will Lose Medicaid Coverage?
The CBO estimates 7.8 million people will become uninsured as a direct result of these Medicaid changes. Combined with ACA marketplace coverage losses, the total number of newly uninsured Americans could reach 16.9 million according to ASTHO analysis. The populations most affected include:
- Low-income adults in Medicaid expansion states
- Young adults ages 19 to 34 (3 in 10 are vulnerable to losing coverage per the Urban Institute)
- People with disabilities who do not qualify for federal disability benefits (approximately 2.6 million)
- Lawfully present immigrants with restricted eligibility
- Rural residents (an estimated $155 billion reduction in rural Medicaid spending)
What Are the New Medicaid Work Requirements?
Starting in December 2026, states must add "community engagement" requirements to their Medicaid plans. All non-exempt enrollees must complete at least 80 hours per month of qualifying activities and verify their status every 6 months.
Qualifying Activities (80 Hours Per Month)
| Activity Type | Examples |
|---|---|
| Employment | Full-time, part-time, or seasonal work |
| Education | College, vocational training, GED programs |
| Volunteer work | Community service at qualifying organizations |
| Job training | Workforce development programs, apprenticeships |
| Caregiving | May count depending on state implementation |
Who Is Exempt from Work Requirements?
| Exempt Group | Details |
|---|---|
| Parents/caretakers | Children age 13 or younger in the household |
| Disabled veterans | Any veteran with a service-connected disability |
| Medically frail individuals | Blind, disabled, intellectual/developmental disabilities |
| Substance use disorder | Individuals in active SUD treatment |
| Disabling mental disorders | As determined by state criteria |
| Serious medical conditions | Complex or chronic conditions |
| Short-term hardship | States may grant temporary exceptions for extenuating circumstances |
When Arkansas tested a similar work requirement before this law, thousands of people lost coverage due to paperwork problems and reporting errors rather than actual failure to work. Advocates warn the same pattern could repeat nationwide.
What Changes to Eligibility Redeterminations Take Effect in 2026?
Effective December 2026, states must conduct eligibility redeterminations for Medicaid expansion enrollees every 6 months instead of every 12 months. States must also perform more frequent address checks and other eligibility verifications. This doubles the administrative burden on both enrollees and state agencies.
What Are the New Cost Sharing Requirements?
Beginning in October 2028, states must impose cost sharing on Medicaid expansion enrollees with incomes above the federal poverty level:
| Cost Sharing Detail | Amount |
|---|---|
| Maximum per service | Up to $35 |
| Annual cap | 5% of individual income |
| Exempt services | Primary care, mental health, SUD treatment, family planning, emergency care, institutional long-term care |
How Do the Provider Tax Reforms Affect Medicaid Funding?
The Act restricts how states use provider taxes to finance their share of Medicaid costs. The "hold harmless" safe harbor threshold decreases on a schedule:
| Fiscal Year | Maximum Hold Harmless Threshold |
|---|---|
| FY 2028 | 6% |
| FY 2029 to FY 2033 | Gradually decreasing |
| FY 2034 | 3.5% |
| New provider taxes | 0% (no hold harmless allowed) |
The CBO estimates this provision alone saves the federal government $191 billion over 10 years. For states, this means finding alternative ways to fund their Medicaid match or reducing program spending.
What Happens to Retroactive Medicaid Coverage?
The Act reduces retroactive coverage periods:
| Enrollee Type | Previous Retroactive Coverage | New Retroactive Coverage |
|---|---|---|
| Traditional Medicaid | 3 months | 2 months |
| Medicaid expansion | 3 months | 1 month |
This means if you become eligible for Medicaid, fewer of your past medical bills will be covered retroactively.
How Are Immigrants Affected by the Medicaid Changes?
The Act restricts Medicaid eligibility for lawfully present individuals. The newly narrowed definition of "qualified immigrant" is limited to:
- Lawfully permitted residents
- Cuban and Haitian entrants (as defined in the Refugee Education Assistance Act of 1980)
- Citizens of Freely Associated States (COFA migrants) lawfully residing in the U.S.
- Lawfully residing children and pregnant adults in states covering them under ICHIA
The Act also reduces the Federal Medical Assistance Percentage (FMAP) for emergency Medicaid for individuals who would qualify for expansion but for their immigration status.
What New Funding Does the Act Provide?
While the Act primarily cuts Medicaid spending, it does include some new investments:
| Program | Funding | Duration |
|---|---|---|
| Rural Health Transformation Program | $50 billion | 5 years starting FY 2026 |
| Home and Community-Based Services waiver | New 3-year standalone waiver | Beginning July 2028 |
| CMS implementation funding | Millions allocated | FY 2026 |
However, the KFF estimates that overall Medicaid spending in rural areas will still decrease by $155 billion despite the $50 billion rural health investment.
Current Medicaid Income Limits by Household Size (2026)
These are the general federal poverty level guidelines used for Medicaid eligibility. Actual income limits vary by state and eligibility category.
| Household Size | 100% FPL (Annual) | 138% FPL (Expansion Threshold) |
|---|---|---|
| 1 | $15,650 | $21,597 |
| 2 | $21,150 | $29,187 |
| 3 | $26,650 | $36,777 |
| 4 | $32,150 | $44,367 |
| 5 | $37,650 | $51,957 |
| 6 | $43,150 | $59,547 |
Not sure where you stand? Check your eligibility for Medicaid and 10 other programs with our free screener.
How to Protect Your Medicaid Coverage: Step by Step
If you are currently enrolled in Medicaid or worried about losing coverage, take these steps now:
- Verify your contact information with your state Medicaid agency. Make sure your address, phone number, and email are current so you receive redetermination notices.
- Respond to all mail from your state Medicaid office within the stated deadlines. Missing a redetermination notice is the most common reason people lose coverage.
- Document your work or qualifying activities if you are a non-exempt adult. Keep pay stubs, school enrollment records, or volunteer hour logs.
- Understand your exemption status. If you are a caretaker, veteran, or have a qualifying medical condition, make sure your state has this information on file.
- Check your eligibility for other programs. If you lose Medicaid, you may qualify for ACA marketplace subsidies, CHIP for children, or other assistance. Use our free screener to check all your options.
- Apply for Medicaid if you are not yet enrolled. If you currently lack coverage and your income is below 138% FPL in an expansion state, apply before the new restrictions take full effect.
- Contact your state Medicaid office or a local navigator for free help understanding the changes and completing paperwork.
Frequently Asked Questions
When do Medicaid work requirements start?
Medicaid community engagement (work) requirements take effect in December 2026. States must implement systems to track and verify 80 hours per month of qualifying activities for non-exempt enrollees.
Will I lose Medicaid if I do not work?
If you are a non-exempt adult enrolled through Medicaid expansion and you do not complete 80 hours per month of qualifying activities (work, education, volunteering, or job training), you risk losing coverage. However, many exemptions exist for parents of young children, veterans, people with disabilities, and those with serious medical conditions.
How often will I need to verify my Medicaid eligibility?
Starting December 2026, Medicaid expansion enrollees will need to go through eligibility redetermination every 6 months, down from every 12 months. Traditional Medicaid enrollees continue on a 12-month cycle.
Does this affect children on Medicaid or CHIP?
The work requirements apply to adults, not children. However, if a parent loses Medicaid coverage due to noncompliance, children in the household could experience disruptions in their own coverage or face barriers to care.
What if I live in a state that did not expand Medicaid?
Non-expansion states are less directly affected by the expansion-specific provisions (work requirements, six-month redeterminations, cost sharing). However, provider tax reforms and other changes affect all states. Check your state-specific eligibility using our free screener.
Can I get ACA marketplace coverage if I lose Medicaid?
Yes. If you lose Medicaid, you qualify for a Special Enrollment Period on the ACA marketplace. Depending on your income, you may be eligible for premium tax credits and cost-sharing reductions that significantly lower the cost of marketplace coverage.
How do the automatic Medicare cuts relate to Medicaid?
The One Big Beautiful Bill adds an estimated $2.3 trillion to the national debt over 10 years. Under existing budget rules (PAYGO), this could trigger automatic spending cuts (sequestration) of up to $500 billion from Medicare between 2026 and 2034 unless Congress takes separate action to waive them. These Medicare cuts are separate from but related to the same legislation.
What Should You Do Next?
The Medicaid landscape is changing significantly. Whether you are currently enrolled, considering applying, or worried about losing coverage, the most important step is understanding your options. Use our free benefits screener to check your eligibility for Medicaid and over 10 other federal and state assistance programs in under 2 minutes.
