The One Big Beautiful Bill Passed. Now What?

Here’s how the OBBBA will impact your group health plans and how HR can prepare for these changes.

On July 4, the President signed the One Big Beautiful Bill or OBBBA, which included significant cuts to Medicaid, into law. While these changes are set to roll out over time, HR teams should use this runway to strategically get ahead of upcoming compliance needs, cost implications, and employee questions.  

Let’s get ready to answer your executive’s questions as to how OBBA may impact your organization’s bottom line complete with a strategic game plan. 

What will impact your group health plan?

We read through the entire bill (yes, really) to get the full scoop on what’s changing and how HR will be impacted. The biggest takeaway? These budget cuts will likely squeeze even more increases across the board. 

1. Costs may increase over time: Cuts to Medicaid mean many will lose access to subsidized healthcare, increasing the number of uninsured individuals. We can anticipate seeing higher rates of uncompensated costs for hospitals which could in turn raise premiums for employer-sponsored plans.  Requiring ACA exchange verification of eligibility for the premium assistance credit and any cost-sharing reductions be verified by the exchange using enrollment information provided by the individual may make it harder for individuals to access the exchange. This may place increased pressure on employer group health plans, if those individuals go for long periods of time without coverage prior to entering the employer’s group health plan. 

2. Medicaid cuts may impact access to care: Rural and underserved communities may be especially at risk due to the Medicaid funding cuts. Reduced Medicaid payments may put financial strain on care facilities, such as hospitals, and may lead to closures and reduced access to care. This is especially concerning as many rural areas rely on hospitals for primary care access. 

3. HSA access is expanding: HSA eligibility will expand to include bronze and catastrophic plans.  

4. Dependent care FSAs (DCFSAs) are also changing: The DCFSA limits are increasing to $7,500/year (or $3,750 for married couples who files taxes separately). but this could pose challenges when it’s time to run non-discrimination testing (NDT), the 55% Average Benefits Test, as many employers today already struggle to pass NDT with higher limits. Confirm with your FSA vendor that its system is ready to handle the increase. Ensure that the plan document/SPD is also amended to include the increase. 

5. Telehealth is now covered under HDHP: Telehealth services can now be covered by a high-deductible health plan without requiring the employee to meet their deductible first, starting with plan years after 12/31/24. This closes a loophole and makes permanent a similar provision made during the COVID-19 pandemic. 

Need a hand with your compliance to-dos? We’re helping HR teams like you stay a step ahead on complex topics just like this. 

3 ways HR can strategically stay ahead of these changes

Many of these changes don’t go into effect until January 2026 at the earliest. And while those six months might feel like an eternity now, that date will be here before we know it. Getting your bearings and a plan in place now can only benefit you later. Here are three things you can do that your future self will thank you for.  

1. Pull a census file

First thing’s first: You need to understand who (and how many) of your employees will be impacted by upcoming hospital closures or will lose easy access to primary care in their area. The budget cuts may hit rural populations particularly hard, and we know these employees already face challenges accessing quality and affordable care. 

2. Review your claim cost drivers

Are unnecessary ER visits trending high when a clinic is just around the corner? Have a high diabetic population? Want to get ahead of heart disease risk? Whatever is driving the costs behind your claims year over year, it’s wise to check out the data now and look at how you can tailor your plan design to support driving better outcomes—both for your employees and your bottom line.  

Today’s employees want holistic benefits to help them manage their wellbeing—including those cost drivers. Check out which benefits employees rank as must-haves in the Benefits Insights report. 

3. Develop a communications plan

Big changes come with big questions. Hospital closing? Help employees find their next closest option. More people on the company plan who used to be on Medicaid? Look at financial wellbeing resources alongside medical options. Whatever you need to communicate on, though, make sure you’re helping your employees understand the real value behind what you offer. 

We’ve said this a lot, but a strong benefits communications plan can, and should, play a starring role in your benefits administration strategy. Here’s how email communications can pay off for you. 

The one thing

These are complex changes with complex implications for group health plans and individuals. As you assess the impact to your group health plan, we recommend talking to your own legal counsel to develop a long-term plan to help you maintain stability for your plan and your business.