By Richard M. Klass
The healthcare-related provisions of the One Big Beautiful Bill Act (OBBBA) affect various segments of the healthcare industry. Rule implementation timelines differ, with certain Medicaid policy changes postponed until the fourth quarter of 2026. This delay allows organizations to make necessary adjustments in response to revised federal funding levels, updated public assistance program eligibility requirements, and modifications to tax regulations.
Summary of Important Policy Shifts
Immediate Policy Changes
Select not-for-profit entities: For one year, the OBBBA prohibits Medicaid reimbursement to entities primarily engaged in family planning, reproductive health, and related medical care that also provide abortion services (except in cases of rape, incest, or danger to the mother’s life).
- Effectively, this rule change ends Medicaid funding for even non-abortion healthcare services for entities such as Planned Parenthood and other similar organizations.
Long-term care entities: Long-term care facilities get one OBBBA related win; a ten-year reprieve on the federal staffing mandate specifying nursing homes to maintain a minimum number of certified nursing assistants (CNAs) and 24/7 registered nurse (RN) coverage. Michelle Marsh, CEO of Forma Advisors opines “this provision will still not reduce staffing shortages in nursing homes. Recruiting challenges will persist for several more years.
Orphan Drug Exclusion: This provision positively impacts pharmaceutical companies and providers prescribing specialized medications to treat rare medical conditions; these medications are exempt from price negotiations. Manufacturers are encouraged to do more research and development.
Telehealth: Telehealth: Insureds with high-deductible health insurance plans (HDHPs) can access telehealth services before meeting their deductibles at low or no cost; the rule may boost telehealth adoption by lowering upfront cost barriers for patients. Gaesenee Kongsubto’s experience in managing two large hospital system telehealth programs indicates “a major benefit of the OBBBA provision is reducing overall healthcare spending by shifting routine and non-emergency visits away from more expensive sites of care. However, reimbursement for telehealth services for other insureds expires in September 2025 leaving greater adoption uncertain unless congress makes telehealth reimbursement permanent across all insurance types.”
1/1/2026 Policy Changes
Sunsetting Increased Federal Medical Assistance Percentage: This provision affects states expanding Medicaid eligibility to people below the federal poverty guideline. Florida is a non-expansion state. An OBBBA provision eliminates the incentives in states that adopted Medicaid expansion after March 2021.
Rural Health Transformation Program Begins: Rural hospitals face financial challenges, further exacerbated by upcoming Medicaid policy changes. The OBBBA offers support; states with approved rural health transformation plans can receive a share of a $50 billion fund allocated annually from 2026 to 2030. The program aims to assist rural hospitals and providers in acquiring eligible items or services specified by CMS and making infrastructure investments.
There are 27 rural hospitals in Florida that collectively maintain 1, 100 beds. The jury is out if the funding set aside will save the rural facilities from bankruptcy. Florida rural facilities are heavily dependent on Medicaid revenues.
10/1/2026 Policy Change
For details explanation of policy changes impacting Medicaid, see the companion article in this publication, Medicaid reform – What We Know and Don’t Know.
Medicaid policy changes affecting both eligibility and funding start in the fourth quarter of 2026 and effectively take place at the beginning of 2027.
- Noncitizen Alien Medicaid Eligibility – Undocumented individuals in Florida do not have Medicaid benefits. The OBBBA provisions prohibit refugees and humanitarian parolees from receiving Medicaid health insurance.
- New Provider Tax Safe Harbor Elimination – Restrictions are placed on Medicaid provider taxes; these taxes support state funding for Medicaid services. Medicaid expansion states are harder hit than non-expansion states.
12/31/2026 Policy Changes
Medicaid Work/authorized activity requirements mandate able-bodied adults aged 19 to 64 must work or participate in qualifying activities for at least 80 hours per month.
Summary of Policy Shifts Impacting Healthcare Related Not-For-Profits
Community not-for-profit organizations, often partially funded by donations, play an essential role in healthcare by offering services not provided by hospitals or government-funded providers. They fill critical gaps. Examples include free or low-cost clinics, community mental health centers, and targeted programs for vulnerable groups, all of which help lower hospital admissions and emergency department visits. These organizations also provide education and support groups that benefit overall public health.
The OBBBA introduces tax changes affecting charitable giving. Non-itemizers can now claim “above-the-line” deductions—up to $1,000 for individuals and $2,000 for couples—potentially increasing donations. Industry sources note a decline in charitable donations to not-for-profit organizations when less people filed tax returns with itemized deductions starting with the 2018 tax reforms. The OBBBA marginally increases the standard deduction in 2025 over 2024 levels.
Roland Rodriguez, President of Crosspoint Philanthropies, indicates deductible charitable contributions under the OBBBA are limited to the extent their total gifts exceed 0.5% of their annual adjusted gross income (AGI).” This means for a taxpayer with a $100,000 AGI, the first $500 of contributions are not deductible; gifts of $500 or more can be deducted for both itemizers and non-itemizers.
The OBBBA deduction cap for itemized deductions for tax payors in the top tax bracket limits the overall tax benefit of charitable contributions to 35% of taxable income beyond the standard cap.
- Mr. Rodriguez experience indicates “that many of the big charitable donors do not let the tax code, unless very significant, influence their giving decisions .”
Corporations also have a new 1% taxable income floor; i.e., corporations can only deduct a portion of charitable contributions that exceed 1% of the entity’s taxable income.
- It is uncertain the extent the new tax code will have on non-for-profit organizations.
Richard Klass, President, 2CY, Inc., can be reached at rklass@2cy4u.com.
