H.R. 1, signed into law by President Trump on July 4, 2025, will have wide-ranging impact. The consequences for people with Medicaid and marketplace coverage have been discussed at length but less has been said about the implications for older adults and people with disabilities on Medicare.
Medicare affordability for people with low incomes. The law blocks the Secretary of Health and Human Services from implementing a 2023 final rule until fiscal year 2035. This rule would have required states to streamline enrollment into programs that lower health care costs for beneficiaries with low incomes and few assets. These include the Medicare Savings Programs (MSPs) and Low-Income Subsidy (LIS) programs. MSPs cover Part A and B premiums and cost-sharing, while LIS lowers Part D plan expenses.
By blocking implementation of this rule, states may continue to require a separate application process for MSPs, adding administrative burden for beneficiaries and likely resulting in fewer eligible beneficiaries enrolling. The Congressional Budget Office (CBO) has estimated that if this requirement is not implemented, 1.38 million fewer beneficiaries will be covered by MSPs and dually covered by Medicare and Medicaid by 2034, which will reduce federal spending by $66 billion for 2025–2034.
The rule would have required states to use data from LIS applications to determine MSP eligibility and automatically enroll people receiving Supplemental Security Income into MSPs. To do this, some states would have been required to update their policies, operations, or systems to facilitate determinations.
Home equity limits on Medicaid long-term care (LTC). The law caps at $1 million the home equity allowed to be eligible for Medicaid-covered LTC services, with some exclusions. Most Medicaid beneficiaries (62%) who use LTC services are also Medicare enrollees. Previously, the federal government did not set a limit on home equity for Medicaid eligibility, leading to variability across states. Medicaid is a means-tested program, but certain assets are exempt, which allows beneficiaries to maintain assets that have appreciated in value, like homes. In 2023, fewer than 5 percent of Medicare beneficiaries had home equity assets valued over $1 million. This provision takes effect January 1, 2028, and is expected to reduce the number of people qualifying for Medicaid LTC services and cut federal spending by $0.2 billion for 2028–2034.
Minimum staffing requirements for LTC facilities. The law delays until 2035 a 2024 final rule that would have set minimum staffing standards for LTC facilities. This rule had yielded some disagreement from stakeholders over whether staffing minimums would lead to measurable improvements for patients. The rule was overturned in April 2025 by the U.S. District Court for Northern Texas. About 20 percent of nursing homes met these requirements in 2024. The CBO has estimated that not implementing these requirements will reduce federal spending by $23.1 billion for 2025–2034.
Payments for physician services. The law increases payments under the Medicare Physician Fee Schedule by 2.5 percent for 2026. The CBO has estimated that this change will increase federal spending by $1.9 billion.
Tax changes for people age 65 and older. The law includes a $6,000 annual tax deduction for adults over 65 with taxable incomes up to $75,000 annually ($150,000 for those filing jointly), with smaller deductions for those making up to $175,000 ($250,000 filing jointly) for 2025–2028. Low-income older adults generally do not make enough taxable income to be eligible for the deduction, but the provision could help middle- and higher-income older adults. The CBO has not separately estimated the cost of this deduction.
Loss of Medicare coverage for certain legally present immigrants. Previously, immigrants who were lawfully present could buy in to Medicare after turning 65 and living in the U.S. legally for at least five years. These individuals could qualify for Medicare without paying a premium for Part A after turning 65 and after paying payroll taxes for 10 years. The law disqualifies some legally present noncitizens from Medicare, including individuals with status as refugees, asylees, and temporary protected status designees, with an exception for certain Haitian and Cuban entrants. Individuals with disqualifying statuses who are currently enrolled in Medicare will be disenrolled, and will either need to find other coverage or will become uninsured. The CBO has estimated that this change will reduce federal spending by $0.1 billion for 2025–2034.
Reductions in federal spending for Medicaid and the Supplemental Nutrition Assistance Program (SNAP). The law makes multiple changes to financing for Medicaid and SNAP. While some of these changes, like work requirements, do not apply to people with disabilities and older adults, other changes could affect Medicare beneficiaries. For low-income beneficiaries who are dually covered by Medicare and Medicaid, some changes to Medicaid, such as limiting Medicaid payments to providers and changes to financing home and community-based services, could reduce access to health care services. Additionally, funding reductions could reduce the availability of SNAP, which has been shown to improve health outcomes and lower health care use, for the one in four recipients who are Medicare beneficiaries. The CBO has not separately estimated federal savings from these changes for Medicare beneficiaries.
Sequestration of Medicare payments. Since the law is expected to increase the federal deficit, it will trigger sequestration, or mandated cuts in direct federal spending, unless subsequent legislation offsets the deficit increase, waives the trigger in this case, or otherwise changes the statutory requirements. For Medicare, this spending reduction would be limited to 4 percent annually and would apply to Medicare payments to providers, as well as to Medicare Advantage and Part D plans. If triggered, sequestration could reduce beneficiaries’ access to health care providers. The CBO estimated a 4 percent reduction in Medicare payments would amount to $45 billion for 2026 and $535 billion for 2026–2034.
Discussion
These changes to Medicare, Medicaid, SNAP, immigration, and tax policies will all have implications for Medicare beneficiaries. While provisions in the law may help some beneficiaries in terms of tax deductions and physician payments, other beneficiaries — particularly lower-income individuals — may face challenges accessing health care and healthy food. The final implementation and implications of the law should be monitored to understand its full impact on different populations and to observe states’ responses.
