The Future of Medicare and Medigap: How”One Big Beautiful Bill Act” Impacts You

The future of Medicare and Medigap has recently been a big concern with our Senior65.com clients. Since there has been a lot of discussion over Medicaid cuts of this most recent act, many also ask, “How will the US government legislation affect Medicare?” Let’s break down the key Medicare-related provisions of the newly passed “One Big Beautiful Bill Act” (OBBBA) and what they might mean for you.

Changes to Medicare under “One Big Beautiful Bill Act” (OBBBA)

The OBBBA does not explicitly change Medicare Part A and B benefits. This means your essential coverage for hospital stays, doctor visits, and necessary medical services remains intact. However, the bill’s impact on Medicare’s financial stability could lead to changes in benefits or payment structures in the future. Note: This bill is enormous with volumes of pages, so if we missed something, please let us know in the comments.

1. Automatic Medicare Cuts via PAYGO

The bill is expected to add $2.3–2.8 trillion to the deficit over a decade. Under current budget rules, this would trigger automatic spending cuts as part of the statutory Pay-As-You-Go (PAYGO) requirement. We could see $490–500 billion cut from Medicare between 2026 and 2034 (Source). How these potential budget cuts will affect Medicare benefits at this point is unclear.

2. Paused Expansion of Cost-Saving Medicare Rules

Two recent rules that were supposed to expand access to Medicare Savings Programs (which help with premiums and out-of-pocket costs) are now paused until October 1, 2034 (Source). This delays relief for lower-income and disabled seniors who would’ve benefited.

3. Eligibility Restrictions

The law tightens Medicare eligibility by excluding certain non-citizen groups—even those lawfully present—despite decades of paid contributions to the system (Source). The impact is targeted but significant for affected immigrants.

4. Increased Medicare Costs for Some Beneficiaries

A Center for American Progress report shows about 1.3 million dual‑eligible seniors may lose Medicaid assistance, which reduces their coverage and will increase their out-of-pocket costs within Medicare. The bill seeks to implement hundreds of billions of dollars in federal Medicaid spending cuts over the next decade. These reductions are projected to increase costs or even eliminate coverage for millions of Medicaid beneficiaries. (Source).

5. Temporary Increased Payments to Doctors

The bill provides a 1-year, 2.5% increase to the Medicare Physician Fee Schedule for 2026. This temporary increase aims to help physician practices account for “exceptional circumstances” and maintain stability in the Medicare payment system, though it’s acknowledged as a short-term solution for long-term issues.

6. Increased Medicare Premiums and Deductibles?

Medicare premiums and deductibles tend to increase each year. It’s important to differentiate between general annual Medicare adjustments and those specifically stemming from this new legislation. Every year, Medicare premiums, deductibles, and coinsurance amounts are typically updated, reflecting overall healthcare costs and utilization. You can read our “2025 Medicare Costs Revealed: Part A & B Premiums, Deductibles, and Coinsurance” to see the current fees.

Will these Medicare cost sharing fees increase due to this act? Not directly but some predict that if Medicare is forced to cut their budget to comply with PAYGO, Medicare may have to increase people’s Medicare Part B monthly premium, deductibles, etc.

We don’t know when OR if this will happen. We will publish the 2026 numbers as soon as they are available.

With some uncertainty in Medicare we believe it’s important to have a Medigap plan that can cover the expenses left uncovered by Medicare. So if you have a Medigap plan, we recommend you keep it. If you don’t have a Medigap plan, you should considering purchasing one. Our Instant Medigap Quote can help you see prices and enroll online.

Changes to Medicare Part D Drug Coverage Under OBBBA

When it comes to your prescription drug coverage under Medicare Part D, the OBBBA contains some targeted provisions, though it does not fundamentally change the new $2,000 out-of-pocket cap starting in 2025 as we reviewed here: “Medicare Part D Changes 2025: Lower Costs, Simplified Coverage but Maybe Higher Premiums“.

One specific change within the OBBBA is related to “Expanding and clarifying the exclusion for orphan drugs under the Drug Price Negotiation Program.” This means certain drugs developed for rare diseases may have exemptions from the Medicare drug price negotiation process. This means certain cutting edge drugs could cost more.

So as a reminder, the bill does not address the broader issue of rising prescription drug prices or out-of-pocket caps. If you’re concerned about your medication costs, make sure you review your Part D plan during AEP open enrollment.

Changes to MEDIGAP under OBBBA

The OBBBA doesn’t introduce any provisions that would eliminate Medigap plans or restrict their availability for existing beneficiaries as far as we can tell. This means you should be able to continue to rely on your Medigap policy for the financial predictability and reduced out-of-pocket costs it provides.

As Medicare costs rise and the trust fund faces insolvency, there’s growing speculation that Medigap plans could face regulatory changes or pricing shifts. If you’re considering switching or enrolling for the first time, now is a good time to review your Medigap options.

💡 Missed the Medigap Initial Open Enrollment period? You may still have options, especially if you live in a state with flexible rules. If not, enrolling might mean going through health questions. Use our free Instant Medigap Underwriting Checker tool to see how you might do, or just call us directly.

Changes to Medicare ADVANTAGE under OBBBA

The PAYGO related cuts to Medicare explained above could reduce CMS reimbursements to Medicare Advantage (MA) plans, forcing insurers to trim benefits or raise premiums/co-pays. The legislation also tightens eligibility and reimbursement formulas, which should lead to lower Medicare Advantage payments (Source).

If you currently have a Medicare Advantage plan, please keep an eye out for any changes in benefits and consider switching to Medigap. You should get an Annual Notice of Change each year from your current MA provider

When Will These Changes Take Effect?

The effective dates of the OBBBA’s provisions vary. Many key changes, particularly those concerning tax provisions, are slated to begin with the 2025 tax year. However, some health-related impacts, like the reversion of enhanced premium tax credits, are set for January 1, 2026. The temporary 2.5% increase to the Medicare Physician Fee Schedule, outlined above, is specifically for Calendar Year 2026. Medicare Budget issues due to PAYGO would not be expected to happen immediately.

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Recap: What You Should Know

• The “One Big Beautiful Bill Act” does not directly cut Medicare Part A or B benefits but may trigger automatic spending cuts in the future. It also includes a temporary 2.5% increase to the Medicare Physician Fee Schedule for 2026.
• The OBBBA is estimated to accelerate Medicare’s trust fund insolvency by one year, to 2032, which continues the long-term financial challenges for the program.
• Medigap plans are not going away; their role in supplementing Original Medicare remains unchanged by this bill. Medicare Advantage plans may see a more immediate impact
• Medicaid changes within the bill, including potential work requirements and eligibility terminations for certain non-citizens, could significantly impact dual-eligible seniors and their out-of-pocket Medicare costs.
• The bill includes adjustments to Medicare Part D regarding orphan drugs, but the $2,000 Part D out-of-pocket cap from the Inflation Reduction Act remains in place.

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What You Should Do Now

👉If you have a Medicare Part D or Medicare Advantage, review coverage options between Oct 15-Dec 7
👉 If you don’t have a Medigap plan, you should get one. Use our Instant Quote Tool to compare Medigap options and enroll online or call Senior65.com at 800-930-7956 👉If you don’t already have a Medicare Supplement Plan but want a lower monthly premium, check your eligibility: Run an anonymous check with the Underwriting Checker.