Media Center
May 22, 2025 Special Edition
There’s a lot to unpack in the president’s One Big Beautiful Bill Act. As the bill heads to the Senate for final approval, here are the top benefits-related items you should be watching:
Taxing Employer-Sponsored Health Benefits
While the idea of taxing employer-sponsored health insurance has been floated by the administration, this provision was not included in the bill passed by the House on May 22.
For now, the tax-free treatment status of employer-sponsored plans remains unchanged, and employers can offer these benefits without them being taxed as income.
Why it matters:
This has been an ongoing discussion within the administration about potentially taxing a portion of employer-sponsored health benefits in future legislation. This could mean employees might have to pay taxes on part of the value of their health insurance. Employers could face new administrative and financial burdens, and the overall cost of offering and receiving health benefits could increase.
While the bill doesn’t bring any changes for now, employers should stay alert for future changes that could impact how health benefits are taxed.
Medicaid Spending Cuts
The bill includes nearly $800 billion in Medicaid cuts over the next 10 years. The cuts are driven by several major changes:
- New work requirements bring stricter eligibility rules. Adults must work in approved activities for at least 80 hours per month to remain eligible.
- Prohibition of certain services such as gender-affirming care under Medicaid and CHIP.
- Moratorium on provider taxes limit how states can fund their Medicaid programs.
Projections estimate that over 7 million could lose coverage by 2034. Many of these individuals will likely turn to employer-sponsored or private insurance plans, increasing demand and potentially raising costs for employers and insurers. This could significantly shift the health benefits landscape, employers may see increased pressure to provide more comprehensive coverage options and public programs scale back.
Health Savings Account Contributions
The updates to HSAs are aimed at expanding access and flexibility for individuals and families and to encourage more Americans to save for healthcare expenses. The key changes include:
- Increased contribution limits, especially for older adults and those nearing retirement.
- Expanded flexibility for using HAS funds on a broader range of medical expenses.
- New incentives for employers to contribute to employee HSAs.
For employers, this may serve as a strategic tool to offset rising insurance premiums while supporting employee wellness.
Pharmacy Benefit Managers
The bill introduces new transparency requirements for PBMs. The key provisions include:
- PBMs will now be required to be more transparent about their pricing and rebate practices, particularly related to Medicare. Aiming to increase accountability and potentially lower prescription drug costs for consumers.
- They are required to report how much of the negotiated savings are passed on to consumers vs retained as profit.
- Greater oversight of PBM practices that may contribute to inflated drug prices.
These new rules aim to increase accountability, potentially lowering prescription drug costs and ensuring that savings are more directly passed on to patients.
Click below to learn more about the bill overall.
Tax Foundation: The Good, the Bad, and the Ugly
The Hill: Key Last-Minute Changes
Forbes: More than 7 million could lose Medicaid
