Enrollment in Medicare Advantage has grown rapidly in recent years, with more than half of all eligible Medicare beneficiaries now receiving their coverage from a private plan. Although the pace of enrollment increases slowed in 2025, the total number of Medicare Advantage enrollees still increased and the share of Medicare beneficiaries who obtain their Medicare benefits from a private plan is expected to continue to grow over the next decade. This trend has implications for beneficiaries and health care providers, including hospitals, because Medicare Advantage differs from traditional Medicare in many ways.

For hospitals and beneficiaries, one key distinction is that virtually all Medicare Advantage enrollees are in a plan that requires prior authorization for inpatient hospital stays (96%), post-acute skilled nursing facility stays (99%) and home health care (91%). Prior authorization is intended to reduce unnecessary care and lower costs, but it also imposes administrative burdens on providers, and sometimes leads to delays and barriers to care. Medicare Advantage plans also typically establish provider networks and impose higher out-of-pocket costs for out-of-network care. In light of the reported uptick in utilization among some Medicare Advantage enrollees, insurers looking to protect profits and guard against losses may seek to cut costs in ways that could impact hospitals, such as by tightening networks to direct patients to providers with lower costs. As Medicare Advantage enrollment grows, decisions made by insurers (related to networks, payment rates, prior authorization, and denials) along with decisions made by hospitals (whether to be in a Medicare Advantage network) can be expected to affect a larger share of the Medicare population.

Recently, hospitals and other providers—including in rural areas—have raised concerns about the impact of Medicare Advantage on their finances. Some hospitals have terminated contracts over payment rates, delays in payment, more restrictive coverage determinations, and denials. One issue that has drawn scrutiny from these groups has been plans’ practice of shifting hospitalized patients to “observation status,” which often means lower payments to hospitals and higher costs for patients. Additionally, one study estimated that Medicare Advantage denials of inpatient services reduced provider revenue by approximately 7%.

This data note examines the growth of Medicare Advantage as a share of hospital inpatient days between 2015 and 2023 based on cost reports submitted by hospitals to the Centers for Medicare and Medicaid Services (CMS).

Key Takeaways

• Medicare Advantage represents a growing share of total hospital inpatient days. Medicare Advantage grew from 13% to 25% of total inpatient hospital days between 2015 and 2023, and as of 2023, half (50%) of all Medicare inpatient hospital days were attributed to Medicare Advantage enrollees.
• Nearly four in ten hospitals had more inpatient days from Medicare Advantage enrollees than traditional Medicare enrollees in 2023. The share of hospitals with more Medicare Advantage than traditional Medicare inpatient days grew from 4% in 2015 to 38% in 2023.
• Medicare Advantage inpatient shares have grown fastest in rural areas. The share of inpatient hospital days attributed to Medicare Advantage enrollees more than doubled in rural counties adjacent to metropolitan areas between 2015 and 2023 and nearly tripled in rural counties not adjacent to metropolitan areas.
• Medicare Advantage inpatient shares ranged from 2% to 33% across states in 2023. Medicare Advantage inpatient shares were lowest in Alaska (2%) and Wyoming (6%) and highest in Ohio (32%) and Michigan (33%).
• Within counties, the share of inpatient days attributed to Medicare Advantage enrollees also varied widely across hospitals in 2023. For example, in Allegheny County, PA (where Medicare Advantage penetration is relatively high), inpatient days attributed to Medicare Advantage enrollees ranged from 14% to 59% across hospitals. Similarly, in Cook County, Illinois (where Medicare Advantage penetration is relatively low), the Medicare Advantage inpatient share ranged from 2% to 38% across hospitals.

Medicare Advantage steadily increased as a share of inpatient days between 2015 and 2023, while the share attributed to traditional Medicare decreased.

The share of total inpatient days attributed to Medicare Advantage enrollees grew from 13% in 2015 to 25% in 2023 among general short-term hospitals in the U.S (see Figure 1). During this same period, the share of inpatient days attributed to traditional Medicare declined from 36% to 25%. As of 2023, half of all Medicare inpatient days were attributed to Medicare Advantage patients. The rise in the share of inpatient days attributed to Medicare Advantage enrollees coincided with an increase in Medicare Advantage enrollment as a share of all eligible Medicare beneficiaries from 32% in 2015 to 51% in 2023.

The share of hospitals with more inpatient days from Medicare Advantage than traditional Medicare increased from 4% in 2015 to 38% in 2023.

The increase in Medicare Advantage enrollment has contributed to a shift in patient mix across hospitals, affecting some more than others. The share of hospitals with more Medicare Advantage than traditional Medicare inpatient days increased from just 4% in 2015 to 38% in 2023 (Figure 2). Hospitals with a greater share of patients from Medicare Advantage than traditional Medicare may be more reliant on revenue from these plans and more affected by various plan rules and decisions, such as prior authorization requirements, denials of claims, observation stay designations, and network restrictions.

Among rural hospitals, the share of inpatient days for Medicare Advantage enrollees more than doubled between 2015 and 2023.

Medicare inpatient shares more than doubled (from 11% in 2015 to 26% in 2023) in rural counties that are adjacent to metropolitan areas and nearly tripled (from 7% in 2015 to 19% in 2023) in rural counties that are not adjacent to metropolitan areas (referred to here as the “most rural” counties). Medicare inpatient shares were lower in adjacent rural areas versus urban areas in 2015 (11% versus 13%) but were higher in 2023 (26% versus 25%). Although Medicare inpatient shares grew fastest in the most rural areas, they also were lower in these areas in any given year than in other areas (e.g., 19% in 2023 versus 26% in adjacent rural areas and 25% in urban areas). The majority of Medicare beneficiaries in the most rural counties receive their coverage through traditional Medicare, unlike in rural counties adjacent to metropolitan areas and urban counties, where most beneficiaries are enrolled in Medicare Advantage plans.

Some rural hospitals have raised concerns about the growth of Medicare Advantage, pointing to payment rates that are lower than rates paid by traditional Medicare and payment delays and denials. Rural hospitals often face unique financial challenges, which could make it harder to adjust to the expansion of Medicare Advantage than other hospitals. As Medicare Advantage enrollment continues to climb, and as Medicare Advantage enrollees comprise a larger share of patients, rural hospitals may face new challenges.

Medicare Advantage inpatient shares ranged from 2% to 33% across states in 2023.

State-level Medicare Advantage inpatient shares tracked with Medicare Advantage enrollment. Medicare Advantage inpatient shares were lowest in Alaska (2%), and Wyoming (6%), which were also the two states with the lowest Medicare Advantage penetration in 2023 (2% and 11%, respectively). Meanwhile, Medicare Advantage inpatient shares were among the highest in states like Michigan (33%) and Hawaii (29%) where penetration was at least 60% of all Medicare beneficiaries. State-level Medicare Advantage penetration is influenced by a range of factors, including insurance market dynamics, beneficiary characteristics, and the share of the state’s population living in urban or rural areas. 

Medicare Advantage comprised a higher share of inpatient days in counties with higher Medicare Advantage penetration in 2023.

Across the country, the share of Medicare beneficiaries enrolled in Medicare Advantage varies widely. As might be expected, counties with higher Medicare Advantage penetration also had higher Medicare Advantage inpatient shares than counties with lower Medicare Advantage penetration. Among counties in the top quartile of Medicare Advantage penetration, Medicare Advantage comprised 28% of inpatient days in 2023 (Figure 4), substantially greater than the 18% share among the bottom quartile of counties.

The share of inpatient days attributed to Medicare Advantage enrollees varied widely across hospitals within counties in 2023.

Although the share of inpatient days attributed to Medicare Advantage tracked county-level Medicare Advantage penetration, there was large variation within counties. The figure below illustrates the range in Medicare Advantage inpatient shares for a set of counties that have several hospitals and are geographically dispersed in each quartile of Medicare Advantage penetration. For example, in Allegheny County, PA, a high-penetration county where 73% of eligible Medicare beneficiaries were enrolled in a Medicare Advantage plan in 2023, Medicare Advantage enrollees accounted for just 14% of all inpatient days in one hospital but more than half (59%) in others. Even in counties with lower than average penetration, there was substantial variation in the share of inpatient days attributed to Medicare Advantage. For instance, in Cook County, Illinois, where 42% of beneficiaries were enrolled in a Medicare Advantage plan, the Medicare Advantage inpatient share ranged from 2% to 38% across hospitals.

Differences in Medicare Advantage inpatient shares across hospitals within the same county may be due to a number of factors, including whether a given hospital is in Medicare Advantage networks, the extent to which a given hospital tends to serve people with Medicare based on the types of services and procedures it provides, and beneficiary preferences that might be based on convenience or perceived quality. As noted above, hospitals with a relatively large number of patients from Medicare Advantage may be more affected by prior authorization requirements, denials of claims, observation stay designations, and network restrictions of these plans. As Medicare Advantage enrollment continues to rise, the decisions made by Medicare Advantage plans related to reimbursement, coverage, and networks could have revenue implications for hospitals and other health care providers that can be expected to vary across counties and within local markets.

This analysis draws on a number of data sources. Data on inpatient days came from annual cost report data that Medicare-certified hospitals are required to submit to the Healthcare Cost Report Information System (HCRIS). Most hospital characteristics came from RAND Hospital Data, which is a cleaned and processed version of cost report data. To our knowledge, the accuracy of traditional Medicare and Medicare Advantage days listed in hospital cost reports has not been evaluated. Hospitals report combined days for Medicare Advantage and cost plan enrollees. Cost plans account for a negligible share of Medicare enrollment, so we refer to the combination as “Medicare Advantage days” throughout.

County-level Medicare Advantage penetration was calculated from Medicare enrollment data.  Enrollment data is only provided for plan-county combinations that have at least 11 beneficiaries, and some counties do not have plans that meet this threshold. We assumed these counties had 0% Medicare Advantage penetration. Urban Influence Code (UIC) classifications were used to designate hospitals as being in urban areas, rural areas adjacent to a metropolitan area, and rural areas not adjacent. Urban was defined as metropolitan and rural as nonmetropolitan.

This analysis updates previous KFF work with some methodological updates. The analysis uses a revised approach for calculating Medicare Advantage and traditional Medicare inpatient shares that aligns with the definition of these shares used as part of CMS’s formula for calculating graduate medical education payments. This approach differs from our prior analysis in a few ways, such as by including days from inpatient psychiatric and rehabilitation facilities that are components of sample hospitals. At the national level, Medicare Advantage inpatient shares are one percentage point higher in some years when using the revised measure as compared to prior work. This analysis also includes a new definition of “rural areas” (i.e., nonmetropolitan areas) and divides rural areas into those that are and are not adjacent to metropolitan areas, in line with recent KFF work. 

We restricted this analysis to general short-term hospitals and excluded hospitals in U.S territories. Cost reports reflect varying reporting periods that often do not align with a calendar year. We assigned cost reports to calendar years based on the year that the cost report ended in. We only examined cost reports that covered 365 or 366 days (referred to as “full-year cost reports”). These restrictions left 4,368 cost reports in 2023. We also excluded observations missing Medicare Advantage or traditional Medicare inpatient days and, in rare cases, dropped implausible or difficult to interpret data (e.g., where combined Medicare Advantage and traditional Medicare inpatient days exceeded total inpatient days). This left 3,797 cost reports in 2023.

Thirteen percent of the 4,368 cost reports described above were missing data for Medicare Advantage inpatient days in 2023 (compared to less than 1% for traditional Medicare days). The 13 percent of hospitals that were missing Medicare Advantage data were more likely to be small or rural and accounted for less than 2 percent of all inpatient days. None of the reports in our sample reported zero Medicare Advantage inpatient days. It is unclear whether and when missing values represent zero days. We suspect that Medicare Advantage may represent a relatively small share of inpatient days on average among hospitals with missing data, in part because hospitals with relatively few Medicare Advantage days have a smaller incentive to track and report these days when required for additional reimbursement under traditional Medicare (e.g., for medical education adjustments).

We conducted sensitivity analyses to explore the implications of missing Medicare Advantage data. First, we ran analyses excluding groups of hospitals that were most likely to be missing data, such as hospitals with fewer than 25 beds. Second, we ran analyses that assumed that hospitals with missing data had zero Medicare Advantage inpatient days, which would be the lower bound of the possible Medicare Advantage shares at these hospitals. Third, we ran our analysis of overall and rural hospital Medicare Advantage share trends using hospitals that had Medicare Advantage data for all years (2015 through 2023). Different approaches increased or decreased average Medicare Advantage shares. For example, non-adjacent rural hospitals had slightly lower shares when replacing missing values with zeroes and slightly higher shares when excluding small hospitals. However, Medicare Advantage inpatient shares overall and by geography and state were generally similar when using these approaches (e.g., differed by two percentage points or less when treating missing values as zeroes). Further, our main findings that there were large increases in Medicare Advantage inpatient shares across hospitals in non-adjacent rural, adjacent rural, and urban areas alike and that shares were higher in counties with greater Medicare Advantage penetration was true across all of our sensitivity analyses.

Close to 70 million people ages 65 and older and younger people with long-term disabilities receive their health insurance coverage through the federal Medicare program. While overall satisfaction with the program is high, paying for health care services can prove challenging for Medicare beneficiaries. In 2023, more than one-third (36%) of beneficiaries said they had delayed or gone without a visit to the doctor’s office, vision services, hearing services, prescription drugs or dental care in the past year because of the cost. Medicare households also spend a larger share of their total budgets on health care than non-Medicare households, and are more likely to need expensive long-term services and supports over an extended period of time, which are not covered by Medicare.

The cost of health care may become even more burdensome for Medicare beneficiaries in the coming years. A recent KFF analysis found that 7 million Medicare beneficiaries spent more than 10% of their annual income on Part B premiums alone in 2024, a number that may grow over the next decade if Part B premiums grow faster than income. Part B premiums are projected to nearly double between 2024 and 2034, from $2,100 per year to more than $4,000 per year. While people with relatively low incomes and limited financial resources can qualify for financial assistance with Medicare premiums and cost sharing through the Medicare Savings Programs, many beneficiaries with modest incomes do not qualify for this assistance, because their income or savings exceed the maximum amount. Other eligible beneficiaries may not receive these benefits because they don’t know about them or find the application process too challenging. In addition, provisions in the GOP’s recently enacted tax cut and spending law are expected to make it more difficult for eligible low-income Medicare beneficiaries to enroll in these programs, which is estimated to reduce the number of people receiving this coverage by 1.3 million beneficiaries.

To understand the financial resources available to people with Medicare that can be used to cover their health care costs, this brief examines the income, assets, and home equity of Medicare beneficiaries, overall and by age, race and ethnicity, and gender, using data derived from the Dynamic Simulation of Income Model (DYNASIM) for 2024. Due to data limitations, estimates for beneficiaries in some racial and ethnic groups, including Asian, American Indian and Alaska Native, and Native Hawaiian or Other Pacific Islander beneficiaries, as well as beneficiaries who identify as two or more races, are unavailable (see Methods for additional details on the model).

This analysis highlights that a large share of Medicare beneficiaries live on relatively low incomes and have modest financial resources to draw upon if they need to cover costly medical care or long-term services and supports, with notable differences by age, race and ethnicity, and gender. For example:

• One in four Medicare beneficiaries – 16.5 million people with Medicare – lived on incomes below $24,600 per person in 2024. Half (32.9 million) of all Medicare beneficiaries lived on incomes below $43,200 per person. At the upper end of the income spectrum, the top 5% (3.3 million) of Medicare beneficiaries lived on incomes above $169,700 per person.
• One in four Medicare beneficiaries had savings below $18,950 per person in 2024, while half had savings below $110,100 per person. At the higher end of the savings distribution, the top 5% of Medicare beneficiaries had savings above $1.7 million per person.
• One in four Medicare beneficiaries had no home equity at all in 2024, while half of all Medicare beneficiaries had home equity below $128,200 per person. The top 5% of Medicare beneficiaries had home equity above $886,800 per person.
• Per person estimates of income and savings varied by characteristic and were generally lower for beneficiaries ages 85 and older than for beneficiaries ages 65 to 84, lower for women than men, and lower for Black and Hispanic beneficiaries than White beneficiaries. Income and savings were also lower for beneficiaries under 65 with long-term disabilities than those ages 65 and older.
• Nearly half of all Black and Hispanic beneficiaries had no home equity, and roughly one in five Black and Hispanic beneficiaries had no savings or were in debt, compared to one in five White beneficiaries with no home equity, and fewer than one in ten White beneficiaries with no savings or in debt.

Income among Medicare Beneficiaries

In 2024, one in four Medicare beneficiaries, or 16.5 million people with Medicare, lived on incomes below $24,600 per person. Half of all Medicare beneficiaries, or 32.9 million people with Medicare, had incomes below $43,200 per person (Figure 1). At the higher end of the income distribution, the top five percent of Medicare beneficiaries (3.3 million) had incomes above $169,700 per person, including the top one percent (0.7 million) whose incomes exceeded $376,450 per person.

Per person estimates of income varied by age, race and ethnicity, and gender, though nearly all beneficiaries across groups had at least some per capita income in 2024, in large part due to Social Security (Figure 2, Appendix Table 1).

Age: Median per capita income was substantially lower among Medicare beneficiaries ages 85 and older ($37,000) than among those ages 65 to 74 ($47,300) or 75 to 84 ($45,650, Figure 2). This pattern reflects the lower likelihood of having income from earnings at older ages (for example, 49% of beneficiaries ages 65-74 and 20% of beneficiaries ages 75-84 had income from earnings in 2024, compared to just 1% of beneficiaries ages 85 and older). Medicare beneficiaries under age 65, who qualify for Medicare because of a long-term disability, had the lowest median per capita income of any age group (Figure 2). One in four beneficiaries under age 65 lived on incomes below $15,800 per person, which was just above the federal poverty threshold of $15,060 for a single person in 2024.

Race/Ethnicity: At the median and among those in the bottom 25% of the income distribution, per capita income was lower among Black and Hispanic beneficiaries than among White beneficiaries (Figure 2). One quarter of Black beneficiaries lived on incomes below $20,150 per person, and one quarter of Hispanic beneficiaries lived on incomes below $14,150 per person, compared to $27,550 per person among White beneficiaries, reflecting wider racial and ethnic disparities in job opportunities and earnings during their working years, lower access to pension and other retirement benefits, and fewer years of education. Older Black and Hispanic beneficiaries are also more likely than older White beneficiaries to report difficulties paying for health care expenses, given the larger share who live with lower incomes.

Gender: Per capita income was lower among women than men, both at the median ($42,350 vs. $44,150) and among beneficiaries in the bottom 25% of the income distribution ($23,900 vs. $25,500, Figure 2). On average, women have lower wages than men during their working years, even when working in similar roles, and often take on a larger share of unpaid family caregiving, resulting in lower lifetime earnings and lower Social Security benefits once they retire. These gender differences persisted across age groups among those age 65 or older (Appendix Table 2). For example, median income among women ages 85 and older was just $34,300 per person, compared to $40,750 per person among men of the same age.

Marital Status: Both at the median and among those in the bottom 25% of the income distribution, per capita income was higher among beneficiaries who were married, compared to those who were widowed, divorced or single. One quarter of married beneficiaries lived on incomes below $28,550 per person, compared to $25,250 among widowed beneficiaries, $22,150 among divorced beneficiaries, and $15,600 among single beneficiaries (Appendix Table 1). Spouses (or ex-spouses for marriages longer than ten years) can opt to receive half of their spouse’s Social Security benefit in lieu of the benefit based on their own earnings, which may offer greater flexibility to beneficiaries who are or have been married.

Education: Both at the median and among beneficiaries in the bottom 25% of the income distribution, per capita income rose with educational attainment. One quarter of beneficiaries with less than a high school education lived on incomes below $13,350 per person, compared to $41,250 among beneficiaries with a college degree (Appendix Table 1).

Savings among Medicare Beneficiaries

One in four Medicare beneficiaries (16.5 million) had savings below $18,950 per person in 2024, while half (32.9 million) had savings below $110,100 per person (Figure 3). One in ten (6.6 million) had no savings or were in debt. Among the wealthiest Medicare beneficiaries, the top five percent (3.3 million) had savings exceeding $1.7 million per person, including the top one percent (0.7 million) whose savings exceeded $4.3 million per person.

Per person estimates of savings, as well as the share of beneficiaries without savings or with debt, varied by age, race and ethnicity, and gender (Figure 4, Appendix Table 1).

Age: Both at the median and among those in the bottom 25% of the savings distribution, per capita savings declined with age among Medicare beneficiaries ages 65 and older (Figure 4). One quarter of beneficiaries ages 85 and older had savings below $4,250 per person (vs. $31,950 among beneficiaries ages 65-74), and half had savings below $47,950 per person (vs. $148,150 among beneficiaries ages 65-74). By way of comparison, the median annual cost of care nationwide in 2023 was $116,800 for a private room in a nursing home, and $64,200 for an assisted living facility.

Among beneficiaries with disabilities under the age of 65, one quarter had savings below $5,250 per person (vs. $22,600 among seniors), and half had savings below $38,600 per person (vs. $124,550 among seniors, Figure 4). Roughly 15% of beneficiaries under age 65 (vs. 9% of seniors) had no savings or were in debt (Appendix Table 1). Relatively low income and savings may present a particular challenge to Medicare beneficiaries under age 65, who are over three times more likely than older beneficiaries to report a problem paying a medical bill in the past 12 months, and nearly twice as likely to report delaying or forgoing a health care service, such as doctor visits or prescription drugs, due to their cost.

Race/Ethnicity: Median per capita savings were higher among White beneficiaries than among Black and Hispanic beneficiaries. Likewise, among beneficiaries in the bottom 25% of the savings distribution, per capita savings among White beneficiaries ($37,300) were more than 30 times higher than among Black beneficiaries ($1,100) and more than 25 times higher than among Hispanic beneficiaries ($1,400, Figure 4). More than one in five Black and Hispanic beneficiaries (20% and 19%, respectively) had no savings or were in debt, compared to just 6% of White beneficiaries (Appendix Table 1). Racial and ethnic disparities in per capita savings are generally larger than disparities in income, and persist even among beneficiaries with similar levels of education, suggesting wider inequities in financial security and intergenerational wealth.

Gender: Per capita savings were lower among women than men, both at the median ($96,150 vs. $128,050) and among beneficiaries in the bottom 25% of the savings distribution ($15,400 vs. $24,200), and a larger share of women than men had no savings or were in debt (11% vs. 8%, Appendix Table 1). Average life expectancy at age 65 is somewhat higher for women than men, and those with less wealth accumulation may be at greater risk of running out of retirement savings as they age. As with income, gender differences in savings persisted across age groups among those 65 and older (Appendix Table 2).

Marital Status: Married beneficiaries had median per capita savings ($173,500) that were more than twice as high as among beneficiaries who were widowed ($82,300) or divorced ($71,700) and nearly six times higher than among beneficiaries who were single ($29,250, Appendix Table 1). A similar pattern was true among beneficiaries in the bottom 25% of the savings distribution. Likewise, a smaller share of married beneficiaries (5%) had no savings or were in debt, compared to beneficiaries who were widowed (11%), divorced (14%), or single (21%).

Education: Beneficiaries with a college degree had median per capita savings ($332,200) that were more than five times higher than beneficiaries with only a high school degree ($65,150) and more than 30 times higher than beneficiaries with less than a high school education ($10,650, Appendix Table 1). A similar pattern was true among beneficiaries in the bottom 25% of the savings distribution. Just 4% of beneficiaries with a college degree had no savings or were in debt, compared to 11% of beneficiaries with only a high school degree and 25% of beneficiaries with less than a high school education.

Home Equity among Medicare Beneficiaries

Half of all Medicare beneficiaries (32.9 million people) had less than $128,200 per person in home equity in 2024, while more than one quarter (26% or 17.1 million) had no home equity at all. At the higher end of the distribution, the top five percent of Medicare beneficiaries (3.3 million people) had more than $886,800 per person in home equity, including the top one percent (0.7 million) who had more than $1.5 million per person (Figure 5).

Per person estimates of home equity, as well as rates of homeownership, varied by age, race and ethnicity, and gender (Figure 6, Appendix Table 1).

Age: Median per capita home equity rose with age, from $134,450 among those ages 65-74 to $179,700 among those ages 85 and older, likely reflecting the larger share of homeowners who had reduced or paid off mortgage debt in older age groups. Unlike other financial assets, which may decrease as seniors leave the workforce and spend their accumulated savings, homes typically store and accumulate equity over time. Median per capita home equity was lowest among beneficiaries under the age of 65 ($13,850 vs. $145,200 among seniors), and one in two (48%) had no home equity at all (vs. 23% of seniors) (Figure 6).

Race/Ethnicity: As with income and savings, median per capita home equity was higher among White beneficiaries ($161,450) than among Black ($28,700) or Hispanic ($39,150) beneficiaries (Figure 6). This was due in part to differences in rates of homeownership, with close to half of Black (44%) and Hispanic (42%) Medicare beneficiaries having no home equity at all, compared to one in five (20%) White beneficiaries.

Gender: Median per capita home equity was somewhat higher among women than men ($136,100 vs. $119,100, Figure 6). While rates of homeownership were comparable (75% vs. 73%), differences in life expectancy mean that a larger share of women survive to older ages, allowing more time to accumulate home equity and, in the case of widowed beneficiaries, to own the full share of their homes.

Marital Status: The majority of married and widowed beneficiaries were homeowners, with median per capita home equity of $151,500 and $221,350, respectively. Just 13% of married beneficiaries and 20% of widowed beneficiaries had no home equity at all. By contrast, many divorced beneficiaries and most single beneficiaries were not homeowners. Median per capita home equity among divorced beneficiaries was $54,600 (41% were not homeowners). Single beneficiaries had the lowest rates of homeownership – 64% had no home equity – with median per capita home equity of $0 (Appendix Table 1).

Education: As with income and savings, homeownership and median per capita home equity both rose with educational attainment. Among beneficiaries with a college degree, median per capita home equity was $236,950, while 16% had no home equity. Among beneficiaries with less than a high school education, median per capita home equity was more than 25 times lower ($8,650) and nearly half (48%) were not homeowners (Appendix Table 1).

Income and asset levels in 2024 are based on the Urban Institute’s Dynamic Simulation of Income Model (DYNASIM4). DYNASIM4 is a dynamic microsimulation model that projects the population and analyzes the long-term distributional consequences of retirement and aging issues. The model starts with a representative sample of individuals and families and ages the data year by year, simulating demographic and economic events including all key components of retirement income. The model integrates many important trends and differences among groups in life course processes, including birth, death, schooling, leaving home, first marriage, remarriage, divorce, disability, work, retirement, and earnings.

Estimates of income take into account Social Security payments, pensions, and other income sources, such as income from assets (e.g., stocks and bonds), rental income, capital gains, partnership and S-corp income, and retirement account (IRA) withdrawals. Estimates of savings take into account retirement account holdings (such as IRAs or 401Ks) and other financial assets such as savings accounts, stocks, and bonds. DYNASIM stock and bond returns use historic data through 2023, based on the Stocks, Bonds, Bills and Inflation (SBBI) 2020 Yearbook and Federal Reserve Economic Data (FRED). Estimates of home equity reflect total home value minus home debt (e.g., mortgages) and are adjusted based on the Case-Shiller US National Home Price Index through 2023. Total household income, savings, and home equity are split equally between spouses in order to estimate per capita values for married beneficiaries. Roughly half of all people with Medicare are unmarried (e.g., single, widowed, or divorced), according to a KFF analysis of the Medicare Current Beneficiary Survey 2021. All dollar amounts are presented in 2024 dollars on a per capita basis. Estimates presented here excluded people who died during the year.

Estimates of per capita income in this analysis include a few income sources (capital gains, partnership and S-corp income) that were not included in KFF’s previously published analysis using Dynasim. This means that newer per capita income estimates are not directly comparable to older estimates in KFF’s previously published analysis.

On July 3, the House passed the same version of the budget reconciliation bill that the Senate passed on July 1. On July 4, President Trump signed the bill, previously known as the “One Big Beautiful Bill Act,” into law. This summary describes the health care provisions in four categories: Medicaid, the Affordable Care Act, Medicare and Health Savings Accounts (HSAs). Included are the Congressional Budget Office (CBO) estimates for the impact of each provision (note coverage estimates for each provision will not sum to the law’s total coverage estimate). The CBO has stated the law will reduce federal spending on health care by over $1 trillion and lead to a 10 million increase in the country’s uninsured population.

An implementation timeline of the health provisions is available along with more background and a side-by-side comparison of the House and Senate passed bills.

• Medicaid
• Affordable Care Act
• Medicare
• Health Savings Accounts

Eligibility and Cost Sharing Policies

Section 71119: Work Requirements

Background

Prior to passage of the federal budget reconciliation law, Medicaid eligibility could not be conditioned on meeting a work or reporting requirement without obtaining a Medicaid Section 1115 waiver. During the first Trump administration, 13 states received approval to implement work requirements through Section 1115 waivers. Work requirement waiver approvals were either rescinded by the Biden administration or withdrawn by states, and Georgia is the only state with a Medicaid work requirement waiver currently in place. Since the beginning of Trump’s second term, some states have shown renewed interest in pursuing work requirement policies through 1115 waivers.

Description

• Requires states to condition Medicaid eligibility for individuals ages 19-64 applying for coverage or enrolled through the ACA expansion group (or a waiver) on working or participating in qualifying activities for at least 80 hours per month or attending school at least half-time.
• Mandates that states exempt certain adults, including parents with children ages 13 and under, those who are medically frail, and those who are participating in a substance use disorder treatment program, from the requirements.
• Requires states to verify that individuals applying for coverage meet the requirements for 1 and up to a maximum of 3 consecutive months preceding the month of application and that individuals who are enrolled meet the requirements for 1 or more months between the most recent eligibility redeterminations (at least twice per year).
• Requires states to use data matching “where possible” to verify whether an individual meets the requirement or qualifies for an exemption.
• Specifies that if a person is denied or disenrolled due to work requirements, they are also ineligible for subsidized Marketplace coverage.
• Prohibits these provisions from being waived, including under Section 1115 authority.
• Allows the Secretary to exempt states from compliance with the new requirements until no later than December 31, 2028, if the state is demonstrating a good faith effort to comply and submits progress in compliance or other barriers to compliance.
• Provides $200 million in funding to states for systems development for FY 2026 and an additional $200 million to HHS to support implementation (for FY 2026).

Effective Date: Not later than December 31, 2026, or earlier at state option.

Budgetary and Coverage Impact

CBO estimates this provision will reduce federal Medicaid spending by $326 billion over 10 years and will increase the number of people who are uninsured by 5.3 million in 2034.

KFF Resources

• A Closer Look at the Medicaid Work Requirement Provisions in the “Big Beautiful Bill”
• Implementing Work Requirements on a National Scale: What We Know from State Waiver Experience
• Implications of Medicaid Work and Reporting Requirements for Adults with Mental Health or Substance Use Disorders
• Medicaid Work Requirements: Implications for Low Income Women’s Coverage
• Understanding the Intersection of Medicaid and Work: An Update
• Different Data Source, But Same Results: Most Adults Subject to Medicaid Work Requirements Are Working or Face Barriers to Work
• 5 Key Facts About Medicaid Work Requirements

• An Overview of Medicaid Work Requirements: What Happened Under the Trump and Biden Administrations?
• Section 1115 Waiver Tracker Work Requirements

Section 71107: More Frequent Eligibility Determinations

Background

Under the Affordable Care Act (ACA), states are required to renew eligibility every 12 months for Medicaid enrollees whose eligibility is based on modified adjusted gross income (MAGI), including children, pregnant individuals, parents, and expansion adults. For enrollees whose eligibility is based on age 65+ or disability, states must renew eligibility at least every 12 months . States are required to review eligibility within the 12-month period if they receive information about a change in a beneficiary’s circumstances that may affect eligibility.

Description

• Requires states to conduct eligibility redeterminations every 6 months for Medicaid expansion adults.
• Provides $75 million in implementation funding for FY 2026.

Effective Date: For renewals scheduled on or after December 31, 2026.

Budgetary and Coverage Impact

CBO estimates this provision will reduce federal Medicaid spending by $63 billion over 10 years years and will increase the number of people who are uninsured by 700,000 in 2034.

KFF Resources

• Medicaid and CHIP Eligibility, Enrollment, and Renewal Policies as States Resume Routine Operations Following the Unwinding of the Pandemic-Era Continuous Enrollment Provision
• Recent Medicaid/CHIP Enrollment Declines and Barriers to Maintaining Coverage

Section 71103: Verifying Enrollee Address and Other Information

Background

The Eligibility and Enrollment final rule issued in April 2024 requires states to leverage reliable data sources to update enrollee address information, effective June 2025.

Description

• Requires states to update enrollee address information using reliable data sources, including the National Change of Address Database and managed care entities.
• Requires the Secretary to establish a system to share information with states for purposes of preventing individuals from being simultaneously enrolled in two states and requires states to submit monthly enrollee SSNs and other information to the system.

Effective Date: January 1, 2027 for states to obtain contact information; October 1, 2029 to establish system to prevent enrollment in two states simultaneously.

Budgetary and Coverage Impact

CBO estimates this provision will reduce federal Medicaid spending by $17 billion over 10 years. This provision is not expected to impact the number of people who are uninsured.

KFF Resources

• Medicaid and CHIP Eligibility, Enrollment, and Renewal Policies as States Resume Routine Operations Following the Unwinding of the Pandemic-Era Continuous Enrollment Provision

Section 71104: Ensuring Deceased Individuals Do Not Remain Enrolled

Description

• Requires states to review the Master Death File at least quarterly to determine if any enrolled individuals are deceased.

Effective Date: January 1, 2027.

Budgetary and Coverage Impact

CBO estimates this provision will not affect federal Medicaid spending over 10 years. This provision is not expected to impact the number of people who are uninsured.

KFF Resources

• Medicaid and CHIP Eligibility, Enrollment, and Renewal Policies as States Resume Routine Operations Following the Unwinding of the Pandemic-Era Continuous Enrollment Provision

Section 71102: Eligibility and Enrollment Final Rule

Background

In April 2024, CMS issued a final rule to streamline application and enrollment processes in Medicaid, align renewal policies for all Medicaid enrollees, facilitate transitions between Medicaid, CHIP, and subsidized Marketplace coverage, and eliminate certain barriers in CHIP. Implementation deadlines for states vary across provisions, but many provisions in the rule are already in effect, and for others, states are already in compliance.

Description

• Prohibits the Secretary from implementing, administering, or enforcing certain provisions that have not yet taken effect in an April 2024 CMS final rule until October 1, 2034.

Effective Date: Upon enactment.

Budgetary and Coverage Impact

CBO estimates this provision will reduce federal Medicaid spending by $56 billion over 10 years and will increase the number of people who are uninsured by 400,000 in 2034.

KFF Resources

• Medicaid Changes in House and Senate Reconciliation Bills Would Increase Costs for 1.3 Million Low-Income Medicare Beneficiaries
• 5 Things to Know: A Look at the Proposed Medicaid Eligibility & Enrollment Rule
• What Does the Medicaid Eligibility Rule Mean for Low-Income Medicare Beneficiaries and the Medicare Savings Programs (MSPs)?
• Potential Effects of the Proposed Medicaid Eligibility Rule for Newly Enrolled Medicare-Medicaid Enrollees

Section 71101: Medicare Savings Program Final Rule

Background

In September 2023, CMS issued a final rule to reduce barriers to enrollment in Medicare Savings Programs (MSPs), which provide Medicaid coverage of Medicare premiums and cost sharing for low-income Medicare beneficiaries. Implementation deadlines for states vary across provisions in the rule, but many provisions are already in effect, and for others, states are already in compliance.

Description

• Prohibits the Secretary from implementing, administering, or enforcing certain provisions in a September 2023 final rule that have not yet taken effect until October 1, 2034.

Effective Date: Upon enactment.

Budgetary and Coverage Impact

CBO estimates this provision will reduce federal Medicaid spending by $66 billion over 10 years. This provision is not expected to impact the number of people who are uninsured.

KFF Resources

• Medicaid Changes in House and Senate Reconciliation Bills Would Increase Costs for 1.3 Million Low-Income Medicare Beneficiaries
• 5 Things to Know: A Look at the Proposed Medicaid Eligibility & Enrollment Rule
• What Does the Medicaid Eligibility Rule Mean for Low-Income Medicare Beneficiaries and the Medicare Savings Programs (MSPs)?
• Potential Effects of the Proposed Medicaid Eligibility Rule for Newly Enrolled Medicare-Medicaid Enrollees

Section 71109: Restricting Immigrant Eligibility for Medicaid and CHIP

Background

In addition to meeting other eligibility requirements, lawfully present immigrants must have a “qualified” immigration status to be eligible for Medicaid or CHIP. Qualified immigrants include: lawful permanent residents (LPRs); refugees; individuals granted parole for at least one year; individuals granted asylum or related relief; certain abused spouses and children; certain victims of trafficking; Cuban and Haitian entrants; and citizens of the Freely Associated States (COFA migrants) residing in states and territories. Many lawfully present immigrants must wait five years after obtaining qualified status before they may enroll in Medicaid; states may waive the five-year wait for children and pregnant individuals (referred to as the ICHIA option). Some states have state-only funded coverage programs for undocumented immigrants.

Description

• Restricts the definition of qualified immigrants for purposes of Medicaid or CHIP eligibility to Lawful Permanent Residents (“green card” holders), certain Cuban and Haitian immigrants, citizens of the Freely Associated States (COFA migrants) lawfully residing in the US, and lawfully residing children and pregnant adults in states that cover them under the ICHIA option.
• Provides $15 million in implementation funding for FY 2026.

Effective Date: October 1, 2026.

Budgetary and Coverage Impact

CBO estimates this provision will reduce federal Medicaid spending by $6 billion over 10 years and will increase the number of people who are uninsured by 100,000 in 2034.

KFF Resources

• 5 Key Facts About Immigrants and Medicaid

Section 71112: Retroactive Coverage

Background

Under current law, states are required to provide Medicaid coverage for qualified medical expenses incurred up to 90 days prior to the date of application for coverage.

Description

• Limits retroactive coverage to one month prior to application for coverage for individuals enrolled through the Medicaid expansion and two months prior to application for coverage for traditional enrollees.
• Provides $15 million in implementation funding for FY 2026.

Effective Date: January 1, 2027.

Budgetary and Coverage Impact

CBO estimates this provision will reduce federal Medicaid spending by $4 billion over 10 years and will increase the number of people who are uninsured by 100,000 in 2034.

Section 71120: New Cost Sharing Requirements for Certain Expansion Individuals

Background

States have the option to charge premiums and cost-sharing for Medicaid enrollees within limits, and certain populations and services (emergency, family planning, pregnancy and preventive) are exempt from cost-sharing. Cost-sharing is generally limited to nominal amounts but may be higher for those with income above 100% of the federal poverty level (FPL). Out-of-pocket costs cannot exceed 5% of family income. States may allow providers to deny services to enrollees for nonpayment of copayments.

Description

• Requires states to impose cost sharing of up to $35 per service on expansion adults with incomes 100-138% FPL; maintains existing exemptions of certain services from cost sharing and exempts primary care, mental health, and substance use disorder services and services provided by federally qualified health centers, behavioral health clinics, and rural health clinics from cost sharing; limits cost sharing for prescription drugs to nominal amounts.
• Maintains the 5% of family income cap on out-of-pocket costs.
• Permits states to allow providers to deny services for failure to pay cost sharing but does not prevent providers from reducing or waiving cost sharing.
• Eliminates enrollment fees or premiums for expansion adults.

Effective Date: October 1, 2028.

Budgetary and Coverage Impact

CBO estimates this provision will reduce federal Medicaid spending by $7 billion over 10 years. This provision is not expected to impact coverage.

KFF Resources

• Cost Sharing Requirements Could Have Implications for Medicaid Expansion Enrollees With Higher Health Care Needs
• Understanding the Impact of Medicaid Premiums & Cost-Sharing: Updated Evidence from the Literature and Section 1115 Waivers

Financing

Section 71115: Provider Taxes

Background

States are permitted to finance the non-federal share of Medicaid spending through multiple sources, including state general funds, health care related taxes (or “provider taxes”), and local government funds. Federal rules specify provider taxes must be broad-based and uniform (i.e., states can’t limit provider taxes to only Medicaid providers) and may not hold providers “harmless” (i.e., guarantee providers receive their money back). The hold harmless requirement does not apply when tax revenues comprise 6% or less of providers’ net patient revenues from treating patients (referred to as the “safe harbor” limit).

Description

• Prohibits all states from establishing any new provider taxes or from increasing the rates of existing taxes.
• Reduces the safe harbor limit for states that have adopted the ACA expansion by 0.5% annually starting in fiscal year 2028 until the safe harbor limit reaches 3.5% in FY 2032.
• Applies the new safe harbor limit in expansion states to state and local government taxes on all providers except nursing facilities and intermediate care facilities.
• Provides $20 million in implementation funding for FY 2026.

Effective Date: Upon enactment for prohibition of new or increased taxes; October 1, 2027 for reduction in safe harbor limit.

Budgetary and Coverage Impact

CBO estimates this provision will reduce federal Medicaid spending by $191 billion over 10 years and will increase the number of people who are uninsured by 1.1 million in 2034.

KFF Resources

• Which States Might have to Reduce Provider Taxes Under the Senate Reconciliation Bill?
• 5 Key Facts About Medicaid and Provider Taxes
• Medicaid Budget Survey 2024-2025 – Provider Rates and Taxes

Section 71117: Requirements for Provider Tax Uniformity Waivers

Background

States are permitted to finance the non-federal share of Medicaid spending through multiple sources, including state general funds, health care related taxes (or “provider taxes”), and local government funds. Federal rules specify provider taxes must be broad-based and uniform (i.e., states can’t limit provider taxes to only Medicaid providers) and may not hold providers “harmless” (i.e., guarantee providers receive their money back).

Description

• Revises the conditions under which states may receive a waiver of the requirement that taxes be broad-based and uniform so that some currently permissible taxes, such as those on managed care plans, will no longer be permissible in future years.
• Provision overlaps with a proposed rule released May 12, 2025.

Effective Date: Upon enactment; HHS Secretary may provide a transition period of up to three years.

Budgetary and Coverage Impact

CBO estimates this provision will reduce federal Medicaid spending by $35 billion over 10 years and will increase the number of people who are uninsured by 100,000 in 2034.

KFF Resources

• Which States Might have to Reduce Provider Taxes Under the Senate Reconciliation Bill?
• 5 Key Facts About Medicaid and Provider Taxes
• Medicaid Budget Survey 2024-2025 – Provider Rates and Taxes

Section 71116: State Directed Payments

Background

States are generally not permitted to direct how managed care organizations (MCOs) pay their providers. However, subject to CMS approval, states may use “state directed payments” (SDPs) to require MCOs to pay providers certain rates, make uniform rate increases (that are like fee-for-service supplemental payments), or to use certain payment methods.

A 2024 rule on access to care in Medicaid managed care codified that the upper limit for SDPs is the average commercial rate for hospitals and nursing facilities, which is generally higher than the Medicare payment ceiling used for other Medicaid fee-for-service supplemental payments.

Description

• Directs HHS to revise Medicaid regulations for state directed payment to cap the total payment rate for inpatient hospital and nursing facility services at 100% of the total published Medicare payment rate for expansion states and at 110% of the total published Medicare payment rate for non-expansion states.
• Prevents payments approved after May 1, 2025 in excess of the new limits from taking effect unless they are for rural hospitals.
• Reduces existing payments that are above the allowable Medicare-related payment limit by 10 percentage points each year until they reach the new lower limit.
• Specifies that in the absence of published Medicare payment rates, the limit is set at the Medicaid fee-for-service payment rate.

Effective Date: Upon enactment for lower limit on new state directed payments; January 1, 2028 for reduction in existing state directed payments above new allowable Medicare-related limit.

Budgetary and Coverage Impact

CBO estimates this provision will reduce federal Medicaid spending by $149 billion over 10 years. This provision is not expected to impact coverage.

KFF Resources

• Reconciliation Language Could Lead To Cuts in Medicaid State-Directed Payments to Hospitals and Nursing Facilities
• 10 Things to Know About Medicaid Managed Care
• 5 Key Facts about Medicaid and Hospitals
• Medicaid Budget Survey FY 2024-2025, Provider Rates and Taxes

Section 71118: Section 1115 Demonstration Waiver Budget Neutrality

Background

Under long-standing policy and practice, Section 1115 demonstration waivers must be “budget neutral” to the federal government over the course of the waiver. Federal costs under an 1115 waiver may not exceed what they would have been for that state without the waiver. Typically, budget neutrality calculations are determined on a per enrollee basis—so, per enrollee spending over the course of the waiver (usually 5 years) cannot exceed the projected per enrollee spending calculated in the “without-waiver baseline.”

Budget neutrality calculations and the use of “savings” when expenditures decrease on account of the waiver are negotiated between states and CMS and the Office of Management and Budget.

Description

• Specifies the Chief Actuary for CMS must certify 1115 waivers are not expected to result in an increase in federal expenditures compared to federal expenditures without the waiver.
• Provides $5 million in implementation funding for each of FY 2026 and FY 2027.

Effective Date: January 1, 2027.

Budgetary and Coverage Impact

CBO estimates this provision will reduce federal Medicaid spending by $3 billion over 10 years. This provision is not expected to impact coverage.

KFF Resources

• Medicaid Section 1115 Waivers: The Basics

Section 71106: Payment Reduction for Certain Erroneous Medicaid Payments

Background

Federal law directs CMS to recoup federal funds for erroneous payments made for ineligible individuals and overpayments for eligible individuals if the state’s eligibility “error rate” exceeds 3%. CMS may waive the recoupment if the Medicaid agency has taken steps to demonstrate a “good faith” effort to get below the 3% allowable threshold.

Description

• Requires HHS to reduce federal financial participation to states for identified improper payment errors related to payments made for ineligible individuals and overpayments made for eligible individuals.
• Expands the definition of improper payments to include payments where insufficient information is available to confirm eligibility.

Effective Date: October 1, 2029.

Budgetary and Coverage Impact

CBO estimates this provision will reduce federal Medicaid spending by $8 billion over 10 years and will increase the number of people who are uninsured by 100,000 in 2034.

KFF Resources

• 5 Key Facts About Medicaid Program Integrity – Fraud, Waste, Abuse and Improper Payments

Medicaid Expansion

Section 71114: Eliminating Temporary Financial Incentive for Medicaid Expansion

Background

The Affordable Care Act expands Medicaid eligibility to non-elderly adults with incomes up to 138% FPL based on modified adjusted gross income and provides 90% federal financing for the expansion population. The Supreme Court effectively made expansion an option for states. The American Rescue Plan Act (ARPA) added a temporary financial incentive for states that newly adopt expansion. Currently, 41 states, including DC, have implemented the Medicaid expansion.

Description

• Eliminates the temporary incentive for states that newly adopt the Medicaid expansion.

Effective Date: January 1, 2026.

Budgetary and Coverage Impact

CBO estimates this provision will reduce federal Medicaid spending by $14 billion over 10 years and will increase the number of people who are uninsured by 100,000 in 2034.

KFF Resources

• 5 Key Facts About Medicaid Expansion
• New Incentive for States to Adopt the ACA Medicaid Expansion: Implications for State Spending
• Eliminating the Medicaid Expansion Federal Match Rate: State-by-State Estimates
• Medicaid Expansion Tracker

Section 71110: Federal Medical Assistance Percentage (FMAP) for Emergency Medicaid

Background

Emergency Medicaid reimburses hospitals for the costs of emergency care provided to immigrants who would qualify for Medicaid except for their immigration status, which hospitals are required to provide under federal law. States receive federal matching payments based on the federal medical assistance percentage (FMAP), which is computed using a formula that takes into account states’ per capita income, for traditional populations; they receive a 90% federal match rate for individuals enrolled in the Medicaid expansion.

Description

• Limits federal matching payments for Emergency Medicaid for individuals who would otherwise be eligible for expansion coverage except for their immigration status to the state’s regular FMAP.
• Provides $1 million in implementation funding for FY 2026.

Effective Date: October 1, 2026.

Budgetary and Coverage Impact

CBO estimates this provision will reduce federal Medicaid spending by $28 billion over 10 years. This provision is not expected to impact coverage.

KFF Resources

• Key Facts on Health Coverage of Immigrants

Long-term Care

Section 71111: Nursing Home Staffing Final Rule

Background

A 2024 Biden-administration final rule requires long-term care facilities (LTC) to meet minimum staffing levels (including a 24/7 RN on-site and a minimum of 3.48 total nurse staffing hours per resident day), requires state Medicaid agencies to report the share of Medicaid payments for institutional LTC that are spent on worker compensation, and provides funding for people to enter careers in nursing homes.

Description

• Prohibits the Secretary of Health and Human Services from implementing, administering, or enforcing the minimum staffing levels required by the final rule until October 1, 2034.

Effective Date: Upon enactment.

Budgetary and Coverage Impact

CBO estimates this provision will reduce federal Medicaid spending by $23 billion over 10 years. This provision is not expected to impact coverage.

KFF Resources

• Texas Judge Overturns Controversial Nursing Facility Staffing Rule
• A Closer Look at the Final Nursing Facility Rule and Which Facilities Might Meet New Staffing Requirements
• 10 Things About Long-Term Services and Supports (LTSS)

Section 71108: Home Equity Limits

Background

Most Medicaid enrollees who qualify for Medicaid because they need long-term care (LTC) are subject to limits on their home equity. In 2025, federal rules specified that states’ limits on home equity must be between $730,000 and $1,097,000, and those amounts are updated each year for inflation.

Description

• Reduces the maximum home equity limits to $1,000,000 regardless of inflation.
• Allows states to apply different requirements for homes that are located on farms.

Effective Date: January 1, 2028.

Budgetary and Coverage Impact

CBO estimates this provision will reduce federal Medicaid spending by $195 million over 10 years. This provision is not expected to impact the number of people who are uninsured.

KFF Resources

• Medicaid Eligibility Levels for Older Adults and People with Disabilities (Non-MAGI) in 2025

Section 71121: New Home and Community Based Services (HCBS)

Background

States are required to cover nursing facility care under Medicaid, but nearly all home care (HCBS) is optional. Nearly all states provide home care through “1915(c) waivers,” which limit services to people who require an institutional level of care. Because those services are optional, states may limit the amount of care people receive and the number of people receiving services. Most states have waiting lists because the number of people seeking services exceeds the amount of care available.

Description

• Allows states to establish 1915(c) HCBS waivers for people who do not need an institutional level of care.
• Requires state waiver submissions to demonstrate that new waivers will not increase the average amount of time that people who need an institutional level of care will wait for services.
• Includes $50 million in FY 2026 and $100 million in FY 2027 for implementation.

Effective Date: July 1, 2028 for new waiver approvals.

Budgetary and Coverage Impact

CBO estimates this provision will increase federal Medicaid spending by $7 billion over 10 years. This provision is not expected to impact the number of people who are uninsured.

KFF Resources

• What is Medicaid Home Care (HCBS)?
• A Look at Waiting Lists for Medicaid Home- and Community-Based Services from 2016 to 2024

Access

Section 71401: Rural Health Transformation Program

Description

• Establishes a rural health transformation program that will provide $50 billion in grants to states between fiscal years 2026 and 2030, to be used for payments to rural health care providers and for other purposes.
• Distributes 50% of payments equally across states with approved applications; the remaining funds will be distributed by CMS based at least in part on states’ rural populations that live in metropolitan statistical areas, the percent of rural health facilities nationwide that are located in a state, and the situation of hospitals that serve a disproportionate number of low-income patients with special needs.
• Uses of funds include promoting care interventions, paying for health care services, expanding the rural health workforce, and providing technical or operational assistance aimed at system transformation.
• Provides CMS with $200 million in implementation funding for FY 2025.

Effective Date: Upon enactment but funding is first available in fiscal year 2026. CMS to determine state application deadline, which will be no later than December 31, 2025.

Budgetary and Coverage Impact

CBO estimates this provision will increase federal spending by $47 billion over 10 years. This provision is not expected to impact coverage.

KFF Resources

• A Closer Look at the $50 Billion Rural Health Fund in the New Reconciliation Law
• How Might Federal Medicaid Cuts in the Senate-Passed Reconciliation Bill Affect Rural Areas?
• 5 Key Facts About Medicaid Coverage for People Living in Rural Areas
• 10 Things to Know About Rural Hospitals

Section 71113: Prohibiting Federal Medicaid Payments to Certain Providers

Background

States must generally allow beneficiaries to obtain Medicaid services from any provider that is qualified and willing to furnish services. Managed care organizations (MCOs) may restrict enrollees to providers in the MCO’s network, except that such plans cannot restrict free choice of family planning providers.

Description

• Prohibits federal Medicaid funds to be paid to providers that meet the following criteria on October 1, 2025: are nonprofit organizations, essential community providers primarily engaged in family planning services or reproductive services, provide for abortions outside of the Hyde exceptions and received $800,000 or more in payments from Medicaid in 2023; this would affect Planned Parenthood and other Medicaid essential community providers.
• Provides $1 million in implementation funding for FY 2026.

Effective Date: Upon enactment for 1 year; implementation is currently blocked for some providers due to ongoing litigation.

Budgetary and Coverage Impact

CBO estimates this provision will increase federal spending by $53 million over 10 years. This provision is not expected to impact coverage.

KFF Resources

• Planned Parenthood Remains in Limbo as Court Reviews Their Request to Block Federal Medicaid Funding Ban
• What’s at Stake in the Supreme Court Case Medina v. Planned Parenthood South Atlantic?
• The Impact of Medicaid and Title X on Planned Parenthood
• Recent Policy Proposals Could Weaken the Reproductive Health Safety Net as More People Become Uninusred

Section 71105: Medicaid Provider Screening Requirements

Background

Provider screening and enrollment is required for all providers in Medicaid fee-for-service or managed care networks. Additionally, the ACA requires states to terminate provider participation in Medicaid if the provider was terminated under Medicare or another state program. CMS has multiple tools to assist states with provider screening and enrollment compliance, including leveraging Medicare data.

Description

• Requires states to conduct checks at provider enrollment or reenrollment and on a quarterly basis of the Social Security Administration’s Death Master File to determine whether providers enrolled in Medicaid are deceased.

Effective Date: January 1, 2028.

Budgetary and Coverage Impact

CBO estimates this provision will not affect federal Medicaid spending over 10 years. This provision is not expected to impact coverage.

KFF Resources

• 5 Key Facts About Medicaid Program Integrity – Fraud, Waste, Abuse and Improper Payments

Sec. 71303: Pre-Enrollment Verification of Eligibility for Premium Tax Credit

Background

Currently, new enrollees are granted conditional eligibility if there is a mismatch in the information they provided and that in federal databases. Enrollees can retain coverage and tax credits for up to 90 days while submitting verification documents. Returning enrollees who take no action during open enrollment are auto-renewed into the same or similar plan. Nearly half of Marketplace enrollees in 2025 auto-renewed.

Description

• Requires verification of household income, health coverage status or eligibility for coverage, place of residence, family size, status as an eligible alien, and any other information that the Secretary of Health and Human Services deems necessary are verified before coverage.
• Exchanges can use any third-party sources and any available data for verification.
• Consumers can still enroll in a plan but cannot receive premium tax credits or cost-sharing reductions (CSRs) until after they verify their eligibility.
• This provision effectively ends auto-renewals.
• Restricts premium tax credit eligibility for enrollees who fail to file and reconcile their premium tax credits for one year.
• Restricts premium tax credit eligibility for enrollees who fail to file and reconcile their premium tax credits for one year.

Effective date: Taxable years beginning after December 31, 2027.

Budgetary and Coverage Impact

Decreases budgetary spending by $36.9 billion and increases revenue by $4.4 billion through 2034 and will increase the number of people who are uninsured by 700,000 in 2034.

KFF Resources

• FAQs: Health Insurance Marketplace and the ACA
• State Health Facts: Affordable Care Act
• Signing Up for Marketplace Coverage Remains a Challenge for Many Consumers

Sec. 71305: Recapture of Excess Premium Tax Credits

Background

Currently, if an enrollee receives excess premium tax credits because their estimated income was lower than their actual income, they must repay the excess. However, for most enrollees, there is a repayment cap that varies based on household income. For enrollees with household incomes at least 400% of the federal poverty level (FPL), there is no limit. They must repay the entirety of their excess tax credit. Other repayment limits vary from $375 for a single person with an income that is 100% FPL up to 200% FPL to $3,250 for families with an income between 300%-400% FPL for tax year 2025.

Description

• Requires that all premium tax credit recipients repay the full amount of any excess, no matter their income.

Effective date: taxable years beginning after December 31, 2025.

Budgetary and Coverage Impact

Decreases budgetary spending by $17.3 billion and increases revenue by $2.3 billion through 2034 and will increase the number of people who are uninsured by 100,000 in 2034.

KFF Resources

• Explaining Health Care Reform: Questions About Health Insurance Subsidies

Sec. 71301: ACA Marketplace Coverage Eligibility for Lawfully Present Immigrants

Background

Currently, U.S. citizens and lawfully present immigrants are eligible to enroll in ACA Marketplace coverage and receive premium subsidies and cost-sharing reductions.

Description

• Limit eligibility for subsidized ACA Marketplace coverage to lawfully present immigrants who are lawful permanent residents (LPRs or “green card” holders), Compact of Free Association (COFA) migrants residing in the U.S., or Cuban and Haitian entrants as defined in section 501(e) of the Refugee Education Assistance Act of 1980, eliminating eligibility for many lawfully present immigrants including refugees, asylees, and people with Temporary Protected Status.

Effective date: Taxable years beginning after December 31, 2026.

Budgetary and Coverage Impact

Decreases budgetary spending by $69.8 billion and increases revenue by $4.8 billion through 2034 and will increase the number of people who are uninsured by 900,000 in 2034.

KFF Resources

• FAQs: Health Insurance Marketplace and the ACA
• Potential Impacts of 2025 Budget Reconciliation on Health Coverage for Immigrant Families

Sec. 71302: Premium Tax Credit Eligibility for Lawfully Present Immigrants Ineligible for Medicaid

Background

Currently, lawfully present immigrants with incomes under 100% of the federal poverty level (FPL) who do not qualify for Medicaid coverage due to their immigration status also are eligible for ACA Marketplace coverage.

Description

• Prohibits lawfully present immigrants ineligible for Medicaid due to immigrant status from receiving tax credits if making below 100% of poverty.

Effective Date: taxable years beginning after December 31, 2025.

Budgetary and Coverage Impact

Decreases budgetary spending by $49.5 billion and increases revenue by $176 million through 2034 and will increase the number of people who are uninsured by 300,000 in 2034.

KFF Resources

• FAQs: Health Insurance Marketplace and the ACA
• Potential Impacts of 2025 Budget Reconciliation on Health Coverage for Immigrant Families

Sec. 71304: Special Enrollment Periods (SEPs) and Tax Credit Eligibility

Background

In addition to qualifying life events (QLEs) that enable eligibility for an SEP, people in states that use Federally-Facilitated Marketplaces (FFM) and make no more than 150% of the federal poverty level can apply for a year-round SEP to sign up for coverage. Some state-based exchanges also offer SEPs that are based on the relationship of people’s income to the poverty line. Any person who enrolls in a plan via an SEP is eligible for both premium tax credits and cost-sharing reductions (CSRs). In 2025, enrollees with an income of less than 150% of the federal poverty line made up the largest share of all Marketplace enrollees (47%).

Description

• Bars any consumer who enrolls in a plan via a non-qualifying life event (QLE) SEP from receiving either premium tax credits or CSRs.

Effective date: Plan years beginning after December 31, 2025.

Budgetary and Coverage Impact

Decreases budgetary spending by $39.5 billion and increases revenue by $1.3 billion through 2034 and will increase the number of people who are uninsured by 400,000 in 2034.

KFF Resources

• FAQs: Health Insurance Marketplace and the ACA
• State Health Facts: Affordable Care Act
• Explaining Health Care Reform: Questions About Health Insurance Subsidies

Expiration of Enhanced Premium Tax Credits

Background

The enhanced premium tax credits were first made available as part of the American Rescue Plan Act in 2021 and later extended through the end of 2025 as part of the Inflation Reduction Act. The ARPA and IRA’s enhanced health insurance tax credits both increase the amount of financial help available to those already eligible for assistance under the ACA and also newly expand subsidies to middle-income people (with incomes over four times the poverty level), many of whom were previously priced out of coverage. These enhanced tax credits, combined with increased funding for outreach and marketing have led to record-high enrollment in the ACA Marketplaces.

Description

• There was no extension of the enhanced tax credits in the law. The Republican-led Senate opted to use a “current law” baseline for Congressional Budget Office scoring of the budget impact. Therefore, the expiration of the enhanced tax credits was not scored as a new policy change and has no impact in the law’s official budget and coverage estimates.
• The number of uninsured people will rise by 4.2 million through 2034, and gross benchmark premiums will increase by 7.9% through 2034 without an extension. Permanent extension would increase the budget deficit by $335 billion through 2034.

Effective date: January 1, 2026 (unless extended by Congress).

KFF Resources

• How Much More Would People Pay in Premiums if the ACA’s Enhanced Subsidies Expired?
• Inflation Reduction Act Health Insurance Subsidies: What is Their Impact and What Would Happen if They Expire?
• Five Things to Know about the Renewal of Extra Affordable Care Act Subsidies in the Inflation Reduction Act
• Early indications of the impact of the enhanced premium tax credit expiration on 2026 Marketplace premiums
• KFF Health Tracking Poll: ACA Enhanced Subsidies

Eligibility Policies

Section 71201: Limiting Medicare Coverage of Certain Individuals

Background

Prior to passage of the law, residents of the United States, including citizens, permanent residents, and other immigrants that are lawfully present in the country, were eligible for premium-free Medicare Part A if they or their spouses have worked in a job for at least 40 quarters where they paid Medicare payroll taxes and are at least 65 years old. People under age 65 with a qualifying disability, end-stage renal disease (ESRD), and amyotrophic lateral sclerosis (ALS) are also generally eligible. Legal immigrants age 65 or older who do not have this work history could purchase Medicare Part A after residing legally in the U.S. for five years continuously.

Description

• Restricts Medicare eligibility to U.S. citizens, green card holders, Cuban-Haitian entrants, and people residing under the Compacts of Free Association, eliminating Medicare eligibility for people not included in these groups, such as those with temporary protected status and refugees and asylees.
• Terminates Medicare coverage no later than 18 months from enactment for anyone who is currently covered but no longer eligible under these changes.

Effective Date: Upon enactment.

Budgetary and Coverage Impact

CBO estimates this provision will reduce Medicare spending by $5.1 billion over 10 years and will increase the number of people who are uninsured by 100,000 in 2034.

KFF Resources

• Key Facts on Health Coverage of Immigrants
• Medicare Open Enrollment FAQ: Can immigrants enroll in Medicare?

Section 71101: Moratorium on Implementation of Rule Relating to Eligibility and Enrollment in Medicare Savings Programs

Background

In September 2023, CMS issued a final rule to reduce barriers to enrollment in Medicare Savings Programs (MSPs), which provides Medicaid coverage of Medicare premiums and cost sharing for low-income Medicare beneficiaries. Implementation deadlines for states vary across provisions in the rule, but some provisions are already in effect, and for others, states are already in compliance.

Description

• Prohibits the Secretary from implementing, administering, or enforcing certain provisions in a September 2023 CMS final rule that have not yet taken effect until October 1, 2034.

Effective Date: Upon enactment.

Budgetary and Coverage Impact

CBO estimates the moratorium on this rule will reduce federal Medicaid spending by $66 billion over 10 years due to lower enrollment in the Medicare Savings Programs than if all the provisions of the rule were implemented and enforced. CBO has not provided an updated estimate of how many fewer dual-eligible individuals will be enrolled in Medicaid.

KFF Resources

• Medicaid Changes in House and Senate Reconciliation Bills Would Increase Costs for 1.3 Million Low-Income Medicare Beneficiaries
• 5 Things to Know: A Look at the Proposed Medicaid Eligibility & Enrollment Rule
• What Does the Medicaid Eligibility Rule Mean for Low-Income Medicare Beneficiaries and the Medicare Savings Programs (MSPs)?
• Potential Effects of the Proposed Medicaid Eligibility Rule for Newly Enrolled Medicare-Medicaid Enrollees

Physician Payment

Section 71202: Temporary Payment Increase Under the Medicare Physician Fee Schedule

Background

Medicare payment rates to physicians and other clinicians under the Physician Fee Schedule are determined in part by a scaling factor, known as the conversion factor, which is updated each year. Under current law, conversion factor updates are based on statutory factors and other budgetary requirements. Beginning in 2026, the Physician Fee Schedule conversion factor was scheduled to increase by 0.25% each year for most Medicare providers.

Description

• Provides a temporary one-year increase of 2.5% to the Physician Fee Schedule conversion factor for all services furnished between January 1, 2026 and January 1, 2027.

Effective Date: January 1, 2026.

Budgetary and Coverage Impact

The CBO estimates that this change will increase Medicare spending by $1.9 billion in 2026 and 2027. This provision is not expected to impact coverage.

KFF Resources

• What to Know About How Medicare Pays Physicians

Prescription Drugs

Section 71203: Expanding and clarifying the exclusion for orphan drugs under the Drug Price Negotiation Program

Background

Under the Medicare Drug Price Negotiation Program, drugs qualify for price negotiation if they are single source brand-name drugs or biological products without therapeutically equivalent generic or biosimilar alternatives, and are at least 7 years (for small-molecule drugs) or 11 years (for biologics) past the FDA approval or licensure date, as of the date that the list of drugs selected for negotiation is published. Under the Inflation Reduction Act of 2022, the law that established the drug price negotiation program, drugs designated for only one rare disease or condition and approved for an indication (or indications) only for that disease or condition were exempt from negotiation. This is known as the orphan drug exclusion.

Description

• Modifies the orphan drug exclusion of the Medicare drug price negotiation program to exclude drugs from negotiation that are designated for one or more rare diseases or conditions and where the only approved indication or indications are for one or more rare diseases or conditions, rather than only one rare disease or condition.
• Excludes the period of time that drugs are on the market with only one or more orphan indications from the 7-year or 11-year waiting period that determines a drug’s eligibility for selection for price negotiation.

Effective Date: applies for drug price selection beginning in February 2026 for negotiated prices available on or after January 1, 2028.

Budgetary and Coverage Impact

The CBO estimates that this change will increase Medicare spending by $4.9 billion over 10 years. This provision is not expected to impact coverage.

KFF Resources

• FAQs about the Inflation Reduction Act’s Medicare Drug Price Negotiation Program

Long-term Care

Section 71111: Moratorium on Implementation of Nursing Home Staffing Final Rule

Background

A 2024 Biden administration final rule requires long-term care facilities (LTC) to meet minimum staffing levels (including a 24/7 RN on-site and a minimum of 3.48 total nurse staffing hours per resident day), requires state Medicaid agencies to report the share of Medicaid payments for institutional LTC that are spent on worker compensation, and provides funding for people to enter careers in nursing homes.

On April 7, 2025, the US District Court for Northern Texas ruled to overturn the minimum staffing requirements, and it is expected that the Administration will not appeal that decision.

Description

• Prohibits the Secretary of Health and Human Services from implementing, administering, or enforcing the minimum staffing levels required by the final rule until October 1, 2034.

Effective Date: Upon enactment.

Budgetary and Coverage Impact

The CBO estimates the moratorium of this rule will reduce federal spending by $23 billion over 10 years. This provision is not expected to impact coverage.

KFF Resources

• Texas Judge Overturns Controversial Nursing Facility Staffing Rule
• A Closer Look at the Final Nursing Facility Rule and Which Facilities Might Meet New Staffing Requirements
• 10 Things About Long-Term Services and Supports (LTSS)

Section 71306. Permanent Extension of Safe Harbor for Absence of Deductible for Telehealth Services

Background

Health savings accounts (HSAs) are tax-advantaged savings accounts that enrollees in certain high-deductible health plans (HDHPs) can use to pay for qualified medical expenses. Enrollees must pay all medical costs, except for certain preventive services and insulin products, out-of-pocket until they reach the deductible. Individuals cannot have other health coverage in order to be eligible for an HDHP with an HSA. In response to the COVID pandemic, federal law permitted HSA-eligible HDHPs to cover telehealth and other remote services before the deductible until the end of 2024.

Description

• Permanently allows HDHPs with an HSA to cover telehealth and other remote services before the enrollee meets the deductible.
• Individuals that have other coverage for telehealth and other remote care services will still be eligible for an HDHP with an HSA.

Effective date: Plan years beginning after December 31, 2024.

Budgetary and Coverage Impact

The CBO and JCT estimate a decrease in revenue of $4.3 billion through 2034. This provision is not expected to impact the number of people who are uninsured.

KFF Resources

• Expansions to Health Savings Accounts in House Budget Reconciliation: Unpacking the Provisions and Costs to Taxpayers 
• Health Savings Accounts and High Deductible Health Plans: Are They An Option for Low-Income Families?
• 2024 KFF Employer Health Benefits Survey

Section 71307. Allowance of Bronze and Catastrophic Plans in Connection with Health Savings Accounts

Background

ACA-compliant health insurance plans are categorized into “metal levels” based on the amount of cost sharing they require. Some bronze plans meet the deductible requirements to be paired with an HSA (the out-of-pocket maximum or other design features might not meet IRS rules though). Catastrophic plans, which have the highest cost sharing and are only available to people under age 30 or those who cannot find other affordable ACA-compliant coverage, are ineligible to be paired with an HSA.

Description

• Treats bronze and catastrophic plans sold on and off the ACA Marketplace as HDHPs that can be paired with an HSA.

Effective date: January 1, 2026.

Budgetary and Coverage Impact

The CBO and JCT estimate a decrease in revenue of over $3.5 billion through 2034. This provision is not expected to impact the number of people who are uninsured.

KFF Resources

• FAQs: Health Insurance Marketplace and the ACA

Section 71308. Treatment of Direct Primary Care Arrangements

Background

Direct primary care (DPC) arrangements typically offer unlimited primary care services to patients in exchange for a periodic fee paid to the DPC practice. Current law may treat DPC arrangements as a health plan under certain circumstances, making an individual covered by a DPC arrangement ineligible to use an HSA.

Description

• Certain DPC arrangements will not be considered health plans, allowing individuals covered by these arrangements to be eligible for an HSA. This will apply if the only compensation for the DPC is a fixed periodic fee that does not exceed $150 monthly, or $300 monthly where more than one individual is covered.
• For the purposes of this provision, DPC arrangements not considered health plans are limited to those only offering primary care services, and do not include:
• services that require general anesthesia;
• prescription drugs, except for vaccines, and;
• laboratory services not typically administered in an ambulatory primary care setting.
• Treats fees paid for any DPC arrangement as a medical expense (not the payment of insurance) that can be paid for with HSA funds.

Effective date: January 1, 2026.

Budgetary and Coverage Impact

The CBO and JCT estimate a decrease in revenue of over $2.8 billion through 2034. This provision is not expected to impact the number of people who are uninsured.

KFF Resources

• Expansions to Health Savings Accounts in House Budget Reconciliation: Unpacking the Provisions and Costs to Taxpayers