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H.R. 1 Advocacy

H.R. 1 is legislation, commonly referred to as the One Big Beautiful Bill Act (OBBBA), that was signed into law on July 4, 2025. It includes dramatic cuts to health care and nutrition assistance, alongside numerous other provisions affecting family physicians and their patients.

The Academy's analysis of H.R. 1 indicates several key areas of concern besides Medicaid, including Affordable Care Act (ACA) Marketplaces, Medicare and education loan borrowing power for future family physicians.

On this page: Health savings account changes | Work requirement guidance | Academy advocacy

New changes to health savings accounts (HSA)

Direct primary care (DPC) fees are now reimbursable from an HSA

The IRS released Notice 2026-5, which provides guidance on changes to HSAs enacted by the OBBBA. It implements OBBBA-included language, which defines DPC arrangements, indicating that they shall not be “treated as a health plan” for the purposes of HSA eligibility.

The FAQ section of the IRS guidance further clarifies that DPC fees are reimbursable from an HSA. Accordingly, enrollment in a DPC arrangement no longer disqualifies an individual from making HSA contributions and DPC fees may be paid for with HSA funds.

CMS guidance on H.R. 1 work requirements

Starting January 1, 2027, most adults in the Medicaid expansion group will need to demonstrate 80 hours per month of work or community engagement to keep their coverage. States can choose to start earlier through a section 1115 demonstration or state plan amendment.

Temporary exemptions for states showing good-faith effort may be granted by the HHS Secretary on a case-by-case basis through December 31, 2028, but are expected to be rare.

adults eligible or enrolled in the Medicaid expansion group, and
adults covered under certain Section 1115 demonstrations that meet minimum essential coverage standards and are aged 19-64, not pregnant, not enrolled in Medicaid A/B, and not otherwise eligible under state Medicaid plan.

Former foster care youth,
American Indian/Alaska Native individuals,
parents/guardians/caregivers of a disabled individual or children under 13,
veterans with disability rating,
individuals with medically frail or special medical needs,
individuals meeting TANF work requirements or in SNAP households subject to work requirements,
participants in drug or alcohol treatment programs,
inmates of public institutions, or
pregnant or postpartum people.

States can grant exceptions for the following short-term hardships for beneficiaries: Hospitalization/high-acuity care, living in an area under a declared emergency or with high unemployment, and needing to travel outside the community for specialized medical care.

Eighty hours per month of work, community service, workforce training, or half-time education, or income equal to 80 hours at federal minimum wage.

States must notify applicable beneficiaries before these requirements take effect and continue periodic communication afterward. To confirm compliance, states must use reliable data sources (e.g., payroll records, Medicaid provider payments, school enrollment) before asking patients for extra documentation.

Beneficiaries must show at least one month, or up to three months, of engagement before enrollment, per the state's direction. At renewal, now every six months, they must show at least one month of engagement, and states may check more often. CMS will provide additional details on these processes in future guidance.

States must send a notice of non-compliance, giving beneficiaries 30 days to either comply or claim an exemption. If they do not comply, the state will check if they qualify for Medicaid under other criteria or another insurance affordability program. If not, their Medicaid coverage will end the month following the notice.

Importantly, these individuals cannot receive premium tax credits for marketplace plans, meaning they may be left uninsured. Further, states will not lose enhanced federal matching funds (FMAP) when individuals lose Medicaid coverage for non-compliance.

Additional H.R. 1 implementation details

States will receive $200 million in federal grants in fiscal year 2026 to implement these requirements, with $100 million split equally among states and the District of Columbia, and $100 million based on share of applicable individuals. States may also request enhanced federal match for Medicaid IT system updates.

CMS plans to issue further guidance to clarify what counts as reliable data for verifying compliance and how managed care plans can assist without making compliance determinations. CMS will also publish formal rulemaking on work requirements by June 1, 2026.

Download our member-exclusive resource on reconciliation implementation requirements and deadlines.

The Academy's advocacy on H.R. 1

The AAFP believes in a primary care-based U.S. health care system in which all people have appropriate and affordable coverage.

H.R. 1's negative impacts include:

added work reporting requirements as a new condition of Medicaid coverage for adults enrolled via expansion
prohibitions to the implementation of new provider taxes across states, including Medicaid-expansion states and local-government taxes
imposed cost-sharing of up to $35 per service on expansion population adults with incomes within 100% to 138% of the federal poverty line
provisions to the Rural Health Transformation Fund that cover only 37% of what H.R. 1 strips from Medicaid funding in rural areas
prevension of re-evaluation to SNAP benefits beyond inflation
lowered caps on federal student loan borrowing

The AAFP’s message to lawmakers as they considered H.R. 1 was that it would likely leave 16 million people, including some of the nation’s most vulnerable adults and children, without health care coverage. The AAFP continues to advocate for policies to soften the blow of H.R. 1’s implementation through the rulemaking process.

Recent AAFP communications

Joint communications with other organizations

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Important links