Have you ever felt like retirement rules change faster than you can keep up? Well, hold onto your hats—there’s a new law in town called the "One Big Beautiful Bill Act" (OBBBA), and it’s shaking things up for Medicare and Medicaid. Before we dive in, we want to make clear that this isn't a political post. At Elkin Financial Group, we're simply focused on helping you understand how this act might impact your retirement healthcare options—specifically around Medicare and Medicaid. Our goal is to break down these changes in easy-to-follow terms, so you can feel confident and prepared.
What's the "One Big Beautiful Bill Act" All About?
Signed into law on July 4, 2025, this new act makes major changes to federal funding for Medicare, Medicaid, and some taxes. While some parts might help retirees, others could lead to higher costs or fewer benefits in the long run.
Here's the simplified scoop:
How Does This Affect You?
1. Medicare May Get More Expensive
Starting in 2026, Medicare is going to see some big funding cuts—up to $500 billion over ten years. This means doctors and hospitals get paid less from Medicare, and they might pass extra costs onto you. You could end up paying higher premiums, especially if you have Medicare Supplement (Medigap) insurance.
2. New Medicaid Requirements
Beginning in 2027, Medicaid rules will change. Seniors who rely on Medicaid to help pay for Medicare or long-term care should familiarize themselves with the new requirements to avoid any disruption in coverage. Up to 1.3 million seniors may by required to have work or volunteer hours to remain eligible.
3. Healthcare Insurance Landscape (including ACA & Employer-Based Plans)
Premium Increases: Health insurance premiums are projected to rise substantially in 2026. Employer-sponsored health plan costs may increase 6-8% annually, reaching average premiums of about $15,000 per employee for comprehensive packages, up from $13,000 - $14,000 in 2024. For the individual (ACA / Marketplace) market, median premium increases of 15% are anticipated for 2026 – these would be the largest in several years.
Drivers of Cost Increases:
- Persistent medical inflation, rising pharmaceutical prices, a tight healthcare labor market, and a shift toward use of expensive specialty drugs. Tariffs on some drugs, equipment, and medical supplies may add about 3% in premium increases, compounding cost pressures.
- The Enhanced Premium Tax Credits (ePTCs) expire at the end of 2025 which will drive out-of-pocket premium payments up for subsidized enrollees by over 75%. Healthier individuals are expected to leave the market, resulting in a risk pool that is sicker on average and causing even higher premiums.
4. Medicare Supplement and Medicare Advantage:
Many states have implemented “Birthday Rules” 🎂🥳 for 2025 and 2026. During the month of your birthday, you may change Supplement Plans (Medigap) without undergoing medical underwriting. This gives the beneficiary the opportunity to shop for better rates or a plan that better suits their needs without penalty for being penalized for their health status. However, this could have an impact on the stability of insurance risk pools for these plans driving uncertainty for actuarials and who may increase premiums. CMS has finalized a 5.06% average increase in payments to MA plans for 2026, supporting continued investment in supplemental benefits and access to care. However, some experts predict that insurers are. likely to cut some extra perks (such as dental and transportation) due to ongoing cost pressures and federal spending scrutiny.
5. Prescription Drug (Part D) changes:
The out-of-pocket coverage will increase to $2,100 up from $2,000 in 2025. The prescription drug market faces uncertainty over stabilized premiums, availability of standalone plans, and the impact of new Medicare drug price negotiation rules. Enrollment in Medicare Advantage (MA) is projected to continue expanding, with the Congressional Budget Office expecting nearly two-thirds of all Medicare beneficiaries to be enrolled in private MA plans by 2034.
6. Temporary Tax Savings for Seniors
On the brighter side, from 2025 through 2028, seniors get a special tax deduction ($6,000 for individuals and $12,000 for couples). This can lower your tax bill, giving you a bit more money in your pocket for the next few years.
7. Medicare Eligibility Rules Tighten
Starting mid-2025, only legal residents will qualify for Medicare. This means stricter rules around who gets Medicare coverage, impacting non-citizens the most.
What Can You Do About It?
Don’t worry—you’re not alone! At Elkin Financial Group, we’re already helping our clients navigate these changes. Here's what we recommend:
- Review Your Medicare Plans: Make sure your current plan still makes sense, especially with rising costs.
- Check Long-Term Care Coverage: Consider private long-term care insurance, especially if Medicaid coverage might be harder to get.
- Take Advantage of Tax Savings: Plan ahead to use the tax benefits fully before they end in 2028.
We’re committed to keeping retirement simple for you. Changes like these can feel overwhelming, but you’ve got a trusted advisor in Elkin Financial Group.
Final Thoughts
Laws change, but your retirement goals don’t have to. Keep informed, stay prepared, and lean on us—we’re here every step of the way.
Still have questions? Schedule a one on one consultation, give me a call at 317-828-9005, or register to attend one of our free live, and in-person Medicare 101 educational seminars → Visit our Events page to register.
