Medicare provides healthcare for 68.6 million beneficiaries. The One Big Beautiful Bill, which was signed into law by President Trump last week, promised sweeping changes to Medicare, but only one change ultimately made it into the final version.
Either way, the legislation triggers automatic cuts to Medicare and some other programs; fortunately, Social Security is excluded from these reductions. Without congressional intervention, Medicare payments are projected to be reduced by 4%, resulting in a $500 billion cut over eight years, beginning in 2026.
Here’s how Medicare was intended to change with the House and Senate bills and how it's ultimately changing under the legislation signed into law.
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1. Allow contributions to HSAs after enrollment in Medicare Part A: Not included
There were some exciting changes to Health Savings Accounts (HSAs) included in the House version of the legislation. One of the most significant changes was for individuals enrolled in Medicare Part A who are still employed.
As it stands, if you want to make contributions to an HSA, you have to delay enrolling in both Medicare and Social Security. This is because most individuals who are collecting Social Security benefits when they become eligible for Medicare at age 65 are automatically enrolled in Medicare Part A. You cannot decline Part A while collecting Social Security benefits. To make HSA contributions, you can only be enrolled in a high-deductible health plan (HDHP).
Current Law: Individuals entitled to Medicare Part A are ineligible to contribute to a health savings account (HSA) even if they are still enrolled in a private high-deductible health plan (HDHP).
House bill- proposed changes: Under the proposed law, Medicare Part A-eligible working seniors enrolled in an HDHP can still contribute to an HSA. Existing HSA contribution rules and penalties for non-qualified medical expenses that apply to those under 65 will also apply to this group.
Contribution limits increase for some based on income. Another provision allowed bigger contribution limits. Individuals who make less than $75,000 annually could contribute an additional $4,300. In the case of families, they could contribute $8,550 each year to their HSA if they earn less than $150,000. These amounts would be indexed for inflation in succeeding years. The additional amounts would be phased out for individuals making $100,000 annually and for families making $200,000 or more.
As HSA accounts could be used to reimburse you for Medicare premiums and co-pays, the opportunity to save more could help cover more of your medical expenses in retirement.
If you'd like to know more about the HSA changes included in the legislation, read Proposed Changes to HSAs in the One Big Beautiful Bill Add up for Retirement Savers.
Senate bill- proposed changes: There were no provisions in the Senate bill to change how HSAs work. There were no changes to allow those employed and enrolled in Medicare Part A to still contribute to an HSA and no increase to contribution limits.
What ended up in the signed bill: A provision like this did not end up in the bill that landed on the president's desk to sign; therefore, this did not change.
2. Allow more hospitals to register as a "rural emergency hospital": not included
Financial stress has led to 146 hospitals in rural U.S. counties to close and 81 to convert to non-acute care (meaning they stopped providing general, short-term, acute inpatient care) between 2005 and 2023. Designation as a Rural Emergency Hospital (REH) by Medicare can be a financial lifeline to keep medical facilities open in sparsely populated areas.
Current Law: Only certain hospitals that were enrolled in Medicare as of December 27, 2020, were eligible to convert to the Rural Emergency Hospital (REH) designation.
House bill- proposed changes: The law would have established a “look-back” from January 1, 2014, to December 26, 2020, and allow qualifying rural hospitals open during that time, but that have since closed, to reopen under the REH designation.
Senate bill- proposed changes: The Senate bill did not include the provisions to retroactively extend the designation as a Rural Emergency Hospital (REH) to financially assist underserved rural communities.
What ended up in the signed bill: A provision like this did not end up in the bill that landed on the president's desk to sign; therefore, this did not change.
3. Use AI to reduce and recover improper payments: not included
The elimination of fraud, waste, and abuse has been a major theme of the second Trump administration. There was a provision in the bill to use AI to reduce and recoup Medicare overpayments.
The CMS recently launched a bid to audit every Medicare Advantage plan and clear the significant backlog by 2026.
House bill- proposed changes: A new law would have allocated $25 million for the Secretary of Health and Human Services to engage AI contractors and data scientists to investigate and recover improper Medicare payments. Also, the Secretary would be required to provide Congress with progress reports on reducing these improper payments.
Senate bill- proposed changes: The Senate bill did not include the provision to use AI to reduce waste, fraud and abuse.
What ended up in the signed bill: A provision like this did not end up in the bill that landed on the president's desk to sign; therefore, this did not change.
4. Limit eligibility for Medicare: included
Admittedly, current law already excludes anyone in the U.S. from unlawfully receiving Medicare benefits. To be eligible to enroll in Medicare as a retiree, you must be 65, have worked for 10 years, and be either a U.S. citizen or have been a permanent resident of the U.S. for at least five consecutive years.
The Big Beautiful Bill explicitly outlines which non-citizens would be eligible for Medicare; the work and age requirements are unchanged.
House bill- proposed changes: : The law eliminated Medicare eligibility for illegal immigrants and only allowed eligibility for Lawful Permanent Residents, certain Cuban immigrants, and individuals living in the United States through a Compact of Free Association.
The Compacts of Free Association are agreements between the U.S. and three Pacific Island nations: Micronesia, the Marshall Islands and Palau.
Senate bill- proposed changes: The Senate bill contained a provision about eligibility for Medicare. It included most of the same provisions as the House-passed bill. However, the Senate bill made certain immigrants from Haiti eligible for Medicare; they join certain Cuban immigrants who have entered the U.S as defined in section 501(e) of the Refugee Education Assistance Act of 1980 (Public Law 96–422).
The Senate bill terminated Medicare benefits no later than 18 months from enactment of the legislation for anyone who is currently receiving benefits but no longer eligible under these changes.
What ended up in the signed bill: A provision like this was included in the bill that landed on the president's desk to sign; therefore, it is now law.
5. Changes to Medicaid: included
While Medicaid is separate from Medicare, the One Big Beautiful Bill Act does result in major cuts to this Federal government program to the tune of more than $1 trillion over the next decade.
The biggest change under the law will require some Medicaid enrollees to regularly file paperwork showing they are working, going to school, volunteering 80 or more hours a month, or qualify for an exemption, to receive Medicaid. This requirement kicks in January 2027 and is expected to end health insurance coverage for millions of Americans.
Both the House and Senate versions included provisions that called for cuts to Medicaid.
What ended up in the signed bill: Reductions in Medicaid were a big piece of the legislation and were signed into law.
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