On July 3, 2025, Congress passed the One Big Beautiful Bill Act (H.R.1) — a sweeping piece of legislation that extends tax cuts while making historic cuts to federal safety net programs. This bill combines tax relief for workers and families with deep reductions to Medicaid, SNAP (food assistance), and other public programs.
For those nearing or in retirement and who rely on Medicaid, the effects of this bill deserve special attention. Here’s what you need to know.
Tax Rate Extensions
A number of our clients have asked: How will the Big Beautiful Bill affect my taxes?
For about 8 years, we’ve all had lowered tax brackets and higher standard deductions, which were originally passed in the 2017 Tax Cuts and Jobs Act. These were scheduled to expire on December 31, 2025, which means most people would have faced higher tax rates and narrower income brackets. With the Big Beautiful Bill, lower tax rates and expanded standard deductions have been extended beyond 2025, effectively preventing a 1–4% increase in tax rates for many households.
Social Security Changes
One of the first questions many pre-retirees and retirees are asking is: Does this bill cut my Social Security benefits?
In short — no, not directly. If you’re currently receiving Social Security benefits, or expect to soon, those payments are expected to continue without immediate interruption.
However, the bill’s projected increase to the federal deficit — $2.4-2.8 trillion over the next 10 years — puts added strain on the federal budget. According to the Congressional Budget Office, this growing debt could accelerate the depletion of the Social Security trust fund.
If no additional changes are made, the trust fund could reach insolvency sooner than previously forecast — meaning future retirees could face benefit reductions if Congress does not act.
For now, retirees can continue relying on their Social Security benefits. But if you’re in your 40s, 50s, or early 60s, it’s a good idea to factor this uncertainty into your retirement planning — making sure you have other sources of income to complement Social Security in the years ahead.
Also note: Contrary to some headlines, the bill does not completely eliminate federal taxes on Social Security. Instead, it introduces a new “senior” standard deduction for individuals aged 65 or older — $6,000 under the Senate version, phasing out at certain income levels ($75,000 for individuals, $150,000 for couples).
This deduction significantly reduces taxable income. The White House estimates 88% of Social Security recipients will pay no tax on their benefits thanks to the deduction. However, this does expire in 2029.
Medicaid Cuts
Medicaid — which provides healthcare for low-income Americans and many people with disabilities — faces the largest cuts in its history.
The bill reduces Medicaid funding by approximately $930 billion over the next decade. It also imposes work requirements of at least 80 hours per month for able-bodied adults ages 19–64.
Though the work requirements technically exempt individuals with disabilities, the administrative burden of proving eligibility could make it harder for some disabled adults to retain coverage. Stricter eligibility checks and reduced state funding may leave vulnerable populations — including disabled individuals — at greater risk of losing care.
For people with disabilities who rely on Medicaid not only for healthcare but also for home- and community-based services, these cuts may lead to changes in access, particularly in rural areas, where providers already operate on thin margins.
If you or a loved one has a disability and depends on Medicaid, it’s crucial to stay informed about changes in your state’s eligibility rules and be prepared to document your status to maintain coverage.
Even if you or your family don’t depend directly on these programs, these cuts could affect the broader healthcare system, local hospitals, and community services — making it harder for everyone to access affordable care.
It’s not just Medicaid
The One Big Beautiful Bill Act also changes how federal funds support programs which could affect coverage for millions. How? By altering federal funding and eligibility rules, the bill poses serious risks to both Affordable Care Act (ACA) marketplace plans and the Children’s Health Insurance Program (CHIP).
According to the Congressional Budget Office, up to 11.8 million Americans, including low-income families, young adults, and the disabled, could lose health coverage over the next decade due to reductions across Medicaid, ACA, and CHIP programs.
Even if you and your family don’t depend on Medicaid, ACA, or CHIP for your own healthcare, these cuts can ripple through the broader healthcare system and your financial plan in a few important ways:
- Higher healthcare costs for everyone: When millions lose coverage, they’re more likely to delay care or rely on emergency services they can’t afford — costs that hospitals pass on to insured patients through higher premiums and fees. You may see your own health insurance rates rise as a result.
- Increased taxes or local costs down the road: States and local governments may try to fill some gaps left by federal cuts. That could mean higher state taxes or local levies, or diminished services in other areas (like public health programs or infrastructure).
- Impact on loved ones: Even if you don’t use Medicaid, ACA, or CHIP, your parents, children, or extended family members might. You could find yourself providing financial help to loved ones with special needs who lose coverage or face medical debt.
- Strain on rural hospitals & providers: In areas where hospitals rely heavily on Medicaid/CHIP funding, closures or service reductions could mean fewer care options, longer wait times, or the need to travel farther — adding stress and out-of-pocket costs if care is harder to access.
Student Loan Changes
This bill also delivers some massive changes to federal student loans, and essentially flips repayment rules on its head, as well as tightens borrowing limits. These changes are significant for your adult children or anyone considering higher education.
New borrowing caps:
Graduate and Parent PLUS loans now come with strict limits. Under the new law:
- Graduate students are capped at $20,500 per year ($50,000 for professional students), with a lifetime cap of $100,000 for most degrees and $200,000 for professional degrees such as medicine or law.
- Parent PLUS loans are limited to $20,000 annually and a $65,000 lifetime cap per child. These graduates from July 1, 2026, though existing loans are grandfathered until 2029–30.
These caps aim to curb rising student debt but will likely require families to explore private loans with less favorable terms.
Changing repayment terms:
The Big Beautiful Bill is set to eliminate existing income-driven repayment plans (like PAYE, SAVE, IBR), replacing them with:
- A standard fixed-term plan (10–25 years based on loan size), and
- A new Repayment Assistance Plan (RAP) requiring 1–10% of income monthly, with a $10 minimum payment. Under RAP, forgiveness only comes after 30 years instead of the previous 20–25-year timeline.
These changes may increase monthly payments for many borrowers and delay forgiveness but these changes are still in development. The team at Guiding Wealth is watching these updates closely!
Tax-free employer-paid loans
Starting in 2026, employers can contribute $5,250 annually toward an employee’s loans, without the employee owing federal income tax on it.
How to Prepare for These Changes
From tax rate changes to Social Security, healthcare, and college planning, this bill can have some massive effects on your financial plan.
It’s important to note that the majority of this plan does not go into effect until 2026 — and states can also file a “delay” until 2028. But in preparation for these changes, here are a few steps you can take now:
- Review your retirement plan and ensure you have income sources beyond Social Security, if possible.
- Understand what benefits you (or your dependents) receive through Medicaid and what documentation you may need to maintain coverage. Also consider your future healthcare needs and how these changes may affect your retirement plans.
- Explore supplemental insurance or state-level support programs that could help fill gaps.
- Review your children’s college accounts and savings, especially if they’re nearing or in high school. Also, review changes to loan limits when looking at schools to ensure you don’t have to take out non-ideal private loans to pay for education.
- Evaluate how much you can support children or family members who are affected by these changes, as that expense can change your retirement plans, as well.
- Talk to a trusted financial advisor about strategies to reduce your risk if public benefits are reduced in the future.
Why Planning Matters More Than Ever
At Guiding Wealth, we know that these changes can feel daunting. However, having a flexible, values-driven plan gives you clarity no matter what comes next. If you’re concerned about how the One Big Beautiful Bill could affect your Social Security, retirement income, college planning, or healthcare coverage, let’s have a conversation.
Together, we can review your plan and make sure you’re prepared for what’s ahead — no matter what changes come next. Contact us today to schedule a consultation.