Medicaid and ACA Marketplace
The bill makes the largest cuts to Medicaid in the program’s history. The reconciliation package will reduce Medicaid spending by an estimated $911 billion over the next decade, while also cutting federal Marketplace funding by an additional $213 billion. These funding cuts are largely driven by policy changes that restrict eligibility and create new barriers for individuals accessing health coverage. The only way to reduce spending by these levels is for people to lose their health coverage. As a result, the Congressional Budget Office estimates H.R. 1 will increase the number of uninsured people by 10 million individuals nationwide. This estimate does not account for the law’s failure to extend the enhanced Marketplace premium tax credits, which are scheduled to expire at the end of calendar year 2025 – leaving even more people at risk of losing coverage.
In Montana, 216,000 Montanans receive health coverage through Medicaid and CHIP, including about 76,500 (or 35%) through expanded Medicaid, available to adults with low incomes. Nearly three quarters of adult Medicaid enrollees are in the labor force or attending school, and another 23% have caregiving responsibilities or are disabled.
An analysis by KFF finds that an estimated 34,000 Montanans, or 1 in 7 enrollees, are at risk of becoming uninsured by 2034 due to losing Medicaid coverage. With this decreased enrollment and other changes included in H.R. 1, Montana’s health system faces a loss of $2 to $4 billion over 10 years in federal Medicaid dollars, a reduction of 14%. These changes will disproportionately impact rural Montanans, critical access hospitals, and rural communities.
The most significant changes to Medicaid in H.R. 1 include:
Mandatory 80-hour per month work reporting requirements for Medicaid expansion enrollees
- Research shows, and the CBO previously concluded, that work requirements do not increase employment. Instead, they lead to people losing health coverage, delaying medical care, and taking on more medical debt.
- Work reporting requirements must be implemented in states by December 31, 2026, but Montana is moving forward with a waiver requesting to implement the new requirements sooner.
- Some populations will be able to seek an exemption from reporting requirements, including American Indians, people with disabilities, and parents/caregivers with dependent children aged 13 or below or caring for a disabled person.
- Montana’s waiver includes additional exemptions for people experiencing homelessness or fleeing domestic violence.
- Even with these exemptions, work reporting requirements will result in eligible Montanans losing Medicaid coverage due to new barriers to accessing and maintaining health coverage.
- A person denied or disenrolled from Medicaid for not meeting the work reporting requirements is ineligible for subsidized Marketplace coverage.
- Increased numbers of uninsured Montanans will lead to worse health outcomes and a loss of critical revenue for Montana’s health providers, especially those in rural areas that serve a higher proportion of Medicaid patients.
Limiting states’ ability to raise the state share of Medicaid revenues through provider taxes
- H.R. 1 prohibits the implementation of new provider taxes across states and gradually phases down existing provider taxes to 3.5% by FY2032 (from the current 6% limit). This will make it harder for states to finance Medicaid and lessen their federal matching funds. Nursing and intermediate care facilities are exempt.
- While Montana may fare better in the short-term than some states with this policy change, limiting states’ ability to restructure provider taxes into the future will impact the long-term sustainability of Montana’s Medicaid program.
Cost sharing for some Medicaid enrollees
- H.R. 1 requires states that have expanded Medicaid, including Montana, to charge participants up to $35 per service and capped at 5% of income for certain services. In addition to these co-pays, Montana is also seeking to add monthly premiums for certain enrollees.
Increased frequency of eligibility redeterminations
- H.R. 1 increases the frequency of Medicaid redeterminations from annually to every six months beginning December 31, 2026, for Medicaid expansion enrollees.
Rural Health Fund
H.R. 1 allocates $50 billion ($10 billion per year from 2026-2030) for state grants through the new Rural Health Transformation Program to attempt to mitigate harm to rural hospitals and healthcare providers, as the rates of uninsured individuals increases and Medicaid funding decreases. However, many questions remain about the allocation and use of these funds, and one-time grant awards will not match the permanent losses elsewhere, especially over the long-term.
Supplemental Nutrition Assistance Program (SNAP)
The bill makes the largest cuts to SNAP in the program’s history. According to the CBO, the bill cuts federal funding for SNAP by $186 billion, or nearly 20%, over the next 10 years by reducing eligibility and access, and shifting costs to states. The cuts will be even bigger if states decide to reduce their SNAP program rather than cover the new costs.
In Montana, SNAP helps keep food on the table for nearly 80,000 adults, children, and seniors. An estimated 12,000 Montanans, including children, live in households that risk losing some or all of their food assistance due to H.R. 1’s expanded work reporting requirements. More Montanans may lose benefits due to new restrictions on states’ ability to request waivers of the work requirement in areas with insufficient jobs, and other changes made at the state level to meet new cost-share demands.
The most significant cuts to SNAP in H.R. 1 include:
Expands 20-hour per week work reporting requirements (no date specified for implementation, awaiting guidance from USDA)
- Childless adults on SNAP already face a three-month time limit on SNAP, unless they can qualify for an exemption or show compliance with work reporting requirements.
- H.R. 1 expands this time limit to older adults, age 55-64, veterans, people experiencing homelessness, former foster care youth, and caregivers or parents with children ages 14 or older. The bill exempts Native American people from the new requirements.
- Like Medicaid, many SNAP participants are already employed but will face new barriers and red tape in trying to report their work hours, particularly those in jobs without consistent hours.
Shifts costs to states, further straining state budgets
- States will have to cover a greater share of SNAP administrative costs starting Oct 1, 2026. H.R. 1 requires states to pay 75% of administrative costs, compared to the current 50% requirement, or an additional $8.1 million in state funds for Montana.
- States with payment error rates (based on both underpayments and overpayments of SNAP benefits) of 6% or more will have to cover the costs of some food benefits beginning October 1, 2027.
- In Federal Fiscal Year 2024, Montana had an error rate of nearly 9%., compared to the national average of nearly 11%. At this level, the state would be responsible for 10% of the costs of benefits – or about $16.7 million per year.
Cuts the amount of food benefits families receive
- H.R. 1 restricts future updates to the Thrifty Food Plan, the basis for determining SNAP benefit levels, making SNAP increasingly inadequate to afford a healthy diet.
Philanthropy
On the whole, H.R. 1’s changes to charitable giving tax law will make it harder for nonprofits to raise money to support their missions, although there is one bright spot with the creation of a universal deduction.
A bright spot – H.R. 1 establishes a universal deduction (aka “non-itemizer deduction”)
H.R. 1 permanently authorizes an above-the-line tax deduction for charitable contributions for non-itemizer taxpayers. The limit is set at $1,000 for individuals and $2,000 for joint filers.
- Under current law, only taxpayers who itemize their deductions can receive a federal tax incentive for charitable giving.
- Establishing a universal deduction is a meaningful shift toward incentivizing charitable giving among the 90% of taxpayers who do not itemize their deductions, bolstering the work of charitable nonprofits in local communities.
New limits on charitable giving for taxpayers who itemize deductions
- The legislation creates a minimum threshold of 0.5% for charitable tax deductions for taxpayers who itemize their deductions. This means that taxpayers who itemize will only receive a charitable deduction for giving in excess of 0.5% of their adjusted gross income.
- Additionally, H.R. 1 caps the value of all itemized deductions at 35% of taxable income for high income taxpayers (current law cap is 37%). The new cap is estimated to eliminate $4.1 – $6.1 billion in charitable donations per year, according to a study at Indiana University Indianapolis.
Floor on charitable contributions from corporations
- Tax incentives for corporate contributions will now be deductible only when they contribute at least 1% of the corporation’s taxable income. It is unclear whether corporations will be able to deduct the full value of their contributions or only the value in excess of 1%. A study on behalf of Independent Sector estimates that this floor will eliminate $4.2 – $4.8 billion in charitable donations per year.
Child Tax Credit
The federal Child Tax Credit (CTC) was created in 1997 and expanded multiple times with bipartisan support to help families cover the costs of raising children. Under current law, the credit is worth up to $2,000 per child under age 17. While an effective anti-poverty tool, the structure of the credit, which is not fully refundable, means that an estimated 17 million receive less than the full credit or no credit at all.
H.R. 1 includes a number of changes to the CTC, benefitting some families, while further excluding others.
- H.R. 1 makes permanent the $2,000 credit per child, indexed to inflation. Further, the bill boosts the maximum credit from $2,000 to $2,200 for tax years 2025-2028.
- The bill adds a new restriction requiring parents to have an SSN to claim the credit, rather than allowing an Individual Taxpayer Identification Number (ITIN). This change excludes millions of formerly eligible U.S. citizen and legal permanent resident children residing with parents that do not have an SSN.
H.R. 1 does not change how the refundable portion of the credit is calculated, meaning the children who were ineligible for the full credit prior to H.R. 1 will not see their CTC increase under the new law.
- Further, an additional 2 million children may be ineligible for the full credit because their incomes are not high enough, including an estimated 25-30% of children in Montana.
Children in larger families, young children, children in rural areas, and children with single parents will all be disproportionately ineligible for the full CTC under H.R. 1, as will children who are Black, Latino, or American Indian or Alaska Natives.
Rescission of Inflation Reduction Act Spending
H.R. 1 includes sweeping changes to the majority of the clean energy tax incentives passed through the Inflation Reduction Act of 2022.
- H.R. 1 accelerates the phase out of tax credits for clean energy projects like wind and solar, requiring construction to begin and/or projects to be completed by certain deadlines to qualify.
- H.R. 1 largely preserves credits for certain clean energy technologies like battery storage and carbon capture.
- All new clean energy projects must meet new foreign ownership and sourcing requirements to qualify for tax incentives.
- The bill rescinds an estimated $5 billion in unobligated funds for certain energy programs that were created or expanded in the Inflation Reduction Act.
Immigration
Reductions in Benefit Eligibility
H.R. 1 includes the most significant reductions in benefit eligibility for immigrants who legally reside in the U.S. since 1996 welfare reform.
Child Tax Credit changes include:
- Makes permanent a provision of the 2017 Tax Cuts and Jobs Act that excluded children without an SSN from receiving the CTC, an estimated 1 million children.
- New provision requiring at least one parent with an SSN, excluding an estimated 2.6 million U.S. citizen children whose parents file taxes with an Individual Tax Identification Number.
Medicaid changes include:
- As of October 1, 2026, many lawfully present immigrants are newly ineligible for Medicaid including refugees, trafficking survivors, and persons granted humanitarian parole. Undocumented immigrants have never been eligible for Medicaid.
- The only immigrants eligible for CHIP or Medicaid under H.R. 1 are Legal Permanent Residents after a 5-year wait period, people granted Cuban or Haitian entrant status, and people residing under a Compact of Free Association (citizens of Micronesia, the Marshall Islands, and Palau).
ACA Marketplace changes include:
- Eliminates premium tax credit eligibility beginning in 2027 for many lawfully present immigrants, including many who work and pay taxes in the U.S. The only immigrants eligible for premium tax credits to help cover the cost of health insurance are Legal Permanent Residents, people granted Cuban or Haitian entrant status, and people residing under a Compact of Free Association.
- All other lawfully present immigrants will be newly ineligible for premium tax credits on the Marketplace, including visa holders, refugees, people who were approved for asylum, people granted Temporary Protected Status, survivors of trafficking or domestic violence.
- Legal Permanent Residents with incomes below 100% of the poverty line will be ineligible for Marketplace coverage, and, if still in their 5-year wait period, are excluded from Medicaid as well.
SNAP changes include:
- Upon passage and enactment of the bill, the only immigrants eligible for food assistance through SNAP are Legal Permanent Residents after a 5-year wait, people granted Cuban or Haitian entrant status, and people residing under a Compact of Free Association.
- Many legal status immigrants are newly ineligible for SNAP including refugees, trafficking survivors, and persons granted humanitarian parole. Undocumented immigrants have never been eligible for SNAP.
Immigration and Border-Related Spending
H.R. 1 includes significant new funding for border protection and immigration detention and enforcement.
H.R. 1 provides $170.7 billion in additional funding for immigration and border enforcement activities to be spent out by September 30, 2029, including:
- H.R. 1 provides more than $70 billion in supplemental funding over four years for U.S. Customs and Border Protection (CBP) to increase border security operations.
- H.R. 1 provides more than $75 billion in supplemental funding over four years for Immigration and Customs Enforcement (ICE) to expand interior enforcement operations, including $45 billion for detention capacity.
Student Loans
H.R. 1 makes multiple changes to student loans, including new borrowing limits and changes to repayment options that may impact the nonprofit workforce:
- The bill creates a new income-based repayment plan, known as the Repayment Assistance Plan, available to borrowers by July 1, 2026. The bill will end the SAVE Plan and other income-based repayment plans.
- Unlike previous repayment plans, even the lowest income borrowers must make a minimum monthly payment of at least $10. Also, unlike previous income-based plans, which allow cancelation after 10-25 years, the Repayment Assistant Plan allows cancelation after 30 years of qualifying payments.
- H.R. 1 determines repayment lengths based on the amount borrowed for loans issued on or after July 1, 2026. The new structure impacts which payments are eligible for the Public Service Loan Forgiveness program.
- The bill creates new limits on how much students can borrow in federal student loans, including graduate students, medical students, and others with advanced degrees.
