The latest budget legislation package, known as the “One Big Beautiful Bill” (OBBB), stands to make significant changes across government, manufacturing, business, and healthcare sectors, including to Medicaid and Medicare starting late next year. These changes aim to reduce fraud, waste, and abuse of Medicaid and Medicare, ensuring the most vulnerable populations have access to healthcare. For millions of Americans who rely on these programs, especially those who are eligible for both, understanding these changes is crucial. This article breaks down what the legislation entails and how it could impact your healthcare coverage and costs.

As news of the OBBB spreads, concerns are growing among healthcare advocates and beneficiaries.The bill presents substantial alterations to Medicaid eligibility and funding starting in 2026, which will have a direct ripple effect on some of our most vulnerable Medicare members.

The Takeaways

• New Medicaid restrictions are coming: Starting December 31, 2026, able adults aged 19-64 will be required to work, volunteer, or participate in other qualifying activities for 80 hours a month to keep their Medicaid coverage. The law also mandates more quarterly eligibility checks and requires beneficiaries to reapply every six months.
• Access to financial assistance for Medicare may become more difficult: The legislation blocks the implementation of a streamlined enrollment process for the Medicare Savings Program (MSP), which helps low-income individuals pay for their Medicare premiums and other out-of-pocket costs.
• Dual-eligible beneficiaries face significant risks: Individuals covered by both Medicare and Medicaid could lose their eligibility for Dual-Eligible Special Needs Plans (D-SNPs) if they lose their Medicaid coverage due to the new requirements, requiring changing to a new Medicare Advantage plan or returning to Original Medicare. 
• Rural healthcare services are threatened: The bill includes substantial cuts to federal funding for states that expanded Medicaid.This reduction in funding could force many rural hospitals, which serve a high number of Medicaid patients, to limit services or potentially close, creating “healthcare deserts.”

When does the big beautiful bill go into effect?

The two houses of Congress created a single, unified version of the bill and it was signed into law July 4, 2025. Most Medicaid changes won’t go into effect until December 31, 2026. This gives the states some time to implement some of the changes to verifying eligibility and securing additional funding for Medicaid on the state-level. We are monitoring this process closely and will provide updates as they become available.

Big Beautiful Bill summary for Medicare (and Medicaid)

The core of the proposed changes lies in a significant restructuring of the Medicaid program. This includes the introduction of work requirements for many beneficiaries and substantial budget cuts to states that have expanded their Medicaid programs. It also will make some changes to Medicare administration, especially in how Medicare and Medicaid work together to cover dual-eligible beneficiaries. 

Medicaid changes: A closer look

Work requirements and more frequent eligibility verification

According to the new budget rules, a nationwide requirement for Medicaid beneficiaries age 19-64 who are not on disability to work, volunteer, or participate in other qualifying activities for 80 hours each month to maintain their coverage. Additionally, the law includes significant reductions in federal funding to states that expanded Medicaid under the Affordable Care Act (ACA).

Further, the legislation requires states to verify eligibility for Medicaid (by verifying assets, income, residency, death and incarceration status) quarterly, and requires beneficiaries to reapply to Medicaid every six months. 

The Congressional Budget Office (CBO), a non-partisan group that analyzes the financial impacts of legislation, estimates these changes could lead to 10 million fewer people on Medicaid by 2034. This includes an estimated 1.4 million individuals who are dual-eligible for both Medicare and Medicaid.

Impact on dual-eligible beneficiaries and the Medicare Savings Program (MSP)

For our members who are dual-eligible, a concerning provision in the bill is one that would block the implementation of recent guidance aimed at simplifying access to the Medicare Savings Program (MSP) and Medicaid redetermination process. The MSP is a vital resource that helps low-income Medicare beneficiaries pay for their premiums, deductibles, and other out-of-pocket costs.

By halting the new, streamlined enrollment processes, the bill would create significant administrative hurdles for those who need this assistance the most. This could result in many dual-eligible individuals losing their MSP benefits, even if they still qualify.

What to do if you lose Medicaid coverage

If you are worried about losing your Medicaid coverage due to the new eligibility requirements or additional administrative steps, you may be able to change your Medicare coverage or sign up for Medicare if you are eligible. You will have a six month period to enroll in Original Medicare and/or enroll in Medicare Advantage (MA) if you don’t have Medicare already (but meet eligibility requirements). If you already have Medicare, you have three months from being notified about your Medicaid coverage ending to switch or make changes to a Medicare Advantage or Part D plan, or leave your MA plan and return to Original Medicare. 

What does the “big beautiful bill” do for me?

For Medicare beneficiaries, particularly those with limited incomes or chronic health conditions, the downstream effects of these Medicaid changes could be substantial.

Higher out-of-pocket costs and reduced access to care

Eligibility for Special Needs Plans (SNPs)

Many of our members are enrolled in Dual-Eligible Special Needs Plans (D-SNPs), which are specifically designed to coordinate care for individuals on both Medicare and Medicaid. If a beneficiary loses their Medicaid eligibility due to the new work requirements or other changes, they would also lose their eligibility for their D-SNP. This could lead to a disruption in their care and a loss of the specialized benefits these plans provide. If you lose your D-SNP plan, you may have the opportunity to switch to another Medicare Advantage plan or switch to Original Medicare within a certain period of time, just like if you lose coverage due to carrier changes, moving, or other qualifying life events. 

Increased financial burden

The potential loss of assistance from the Medicare Savings Program is a primary concern. Without this help, beneficiaries would be responsible for paying their Medicare Part B premiums and other cost-sharing out-of-pocket. For someone living on a fixed income, these additional costs could make their healthcare unaffordable, potentially forcing them to delay or forego necessary medical care and prescriptions.

Rural healthcare

The proposed cuts to Medicaid funding have also raised concerns for funding for rural hospitals across the country. These hospitals often serve a high percentage of Medicaid patients and rely on those reimbursements to stay afloat. Without this funding, many rural providers may be forced to limit services or even close their doors. To support these needed providers, the package created a $50 billion dollar Rural Health Fund for states to allocate or spend up to their discretion for chronic disease prevention, recruiting, upgrading technology, and more. 

We are committed to keeping you informed as these changes go into effect. We understand that these changes are concerning. Please check back for updates and do not hesitate to reach out to SmartMatch with questions.

Disclaimer:

The information presented in this article is current as of its publication date. However, news, regulations, and policies, especially concerning programs like Medicare, can change frequently. While SmartMatch strives to provide timely and accurate information, we cannot guarantee that all details will remain up-to-date indefinitely. Readers are encouraged to consult official sources, such as Medicare.gov, or contact relevant agencies for the most current information before making any decisions based on the content of this article. This article is for informational purposes only and should not be considered financial or medical advice.