The first half of 2025 was filled with reports of what legislation would pass with a new presidential administration. While discussion continues regarding certain items, July’s passing of H.R. 1 (formerly known as the “One Big Beautiful Bill Act”) has locked in some significant new policies that everyone should be aware of when building their financial plans. For those approaching or already enjoying retirement, there are some specific provisions that may be pertinent.
This post, the second of two about H.R. 1, covers the Medicare and Social Security benefits sections of the bill and how they might affect your clients’ retirement plans.
Medicare
If you’re one of the 68.6 million recipients of Medicare benefits, discussion on the “One Big Beautiful Bill” likely filled your feed with plenty of talk. Now that the legislation is settled, here is what did (and didn’t) make it into the final version1:
Not Included
HSA contributions after enrollment in Medicare Part A
If enrolled in Medicare Part A, you’re ineligible to contribute to a Health Savings Account (HSA). Legislators initially proposed provisions to reverse this rule, but they do not appear in the signed legislation.
“Rural Emergency Hospital” registration
From 2005 to 2023, over 200 hospitals in rural U.S. counties either converted to lower standards of care or were forced to shutter their doors entirely. There were initial proposals for these hospitals to receive Medicare designation as a Rural Emergency Hospital in order to receive financial assistance, but these provisions were not included in final legislation.
AI assistance in recovering payments
A proposed addition would have allowed artificial intelligence contractors to investigate Medicare payments. Legislators removed this provision entirely before the bill’s signing.
Included
Limited Medicare eligibility
Medicare eligibility is being eliminated for illegal immigrants. Specific requirements can result in eligibility for lawful permanent residents and certain immigrants from Cuba, Haiti, and the Pacific Island nations of Micronesia, the Marshall Islands, and Palau.
Changes to Medicaid
Reductions in Medicaid spending and assistance account for over $1 trillion over the next decade. Medicaid enrollees will be required to regularly file paperwork proving employment or other qualified status to maintain enrollment. This requirement, per the bill’s schedule, goes into effect in January of 2027.
Social Security
Cutting to the chase: the new spending bill won’t reduce current benefits.
Those small changes made to Social Security policy instead revolve around tax implications. Those classified as higher or lower income benefit recipients won’t see a change, but the White House Council of Economic Advisors estimates that a new “senior bonus” tax deduction will save an average of $690 for 33.9 million seniors age 65 and older. It is important to note that this bonus begins at age 65, meaning those receiving early Social Security benefits will not be eligible for the new incentive1.
Remember that Social Security can be much more than a monthly check. Per a 2024 survey, around two-thirds of seniors’ Social Security benefits account for at least half of their income2. When considered as part of a comprehensive financial and retirement plan, there are many ways to elect the benefits received. A thorough review of your clients’ financial landscape can provide efficient ways to elect benefits best suited for their overall goals and needs.
