Trump tax cuts: Here's how they'll be distributed
Trump tax cuts: Here's how they'll be distributed

Trump tax cuts: Here’s how they’ll be distributed

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Here’s how the Trump tax bill will impact Colorado, from Medicaid to new tax breaks to energy credits

The bill includes $4.5 trillion in tax cuts, slashes spending on Medicaid. It also creates temporary tax deductions for overtime and tipped income. The tax breaks will translate to savings for most earners, with the largest benefits skewing toward the wealthiest. For Colorado, the bill means drastic changes to state finances that may require lawmakers to return to the Capitol in the coming months to deal with the fallout. For the rest of this fiscal year, the state is projecting a loss of between $500 million and $1.2 billion in tax revenue due to the bill’s provisions, an official says. For more on this story, go to CNN.com/soulmatestories and follow us on Twitter @CNNSoulmatters and @jennifer_soulmatthews on Facebook. For all the latest on the Trump tax bill, visit the White House news site at http://www.whitehouse.gov/news/press-releases/2017/01/05/17/donald-trumps-tax-bill.html.

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The tax bill signed into law by President Donald Trump will have seismic implications for Colorado — ranging from its tax-cutting provisions to the axe it will drop on Medicaid and food assistance.

The bill, ushered through Congress by Republican leadership and signed by Trump Friday, includes $4.5 trillion in tax cuts, slashes spending on Medicaid, and creates temporary tax deductions for overtime and tipped income. It includes $170 billion for immigrant detention and for new personnel for Immigration and Customs Enforcement.

Planned Parenthood faces a prohibition on receiving Medicaid payments for a year. New parents can set up a new type of children’s savings account. The federal government will dramatically roll back clean energy tax credits — including those that help people buy electric vehicles — while expanding another credit for a certain kind of coal.

The tax breaks will translate to savings for most earners, with the largest benefits skewing toward the wealthiest residents.

The bill makes tax reductions passed during Trump’s first term permanent. But tens of thousands of people are at risk of losing Medicaid and food assistance in the next few years.

For Colorado, the bill means drastic changes to state finances that may require lawmakers to return to the Capitol in the coming months to deal with the fallout. State revenue is projected to fall by as much as $800 million by the end of its 2025 fiscal year.

“It’s going to be really hard,” Sen. Judy Amabile, a Boulder Democrat who sits on the legislature’s Joint Budget Committee, said of the task facing policymakers. “We are going to have to come together and figure out what (to do). An $800 million cut to our revenue is enormous.”

Here’s a look at how the tax bill will impact Colorado in different ways.

For taxpayers

The bill institutes a variety of tax cuts. Some are permanent, while others are temporary.

On the permanent side, the bill enshrines current tax rates and brackets that were rejiggered under the first Trump administration, preventing an increase at year’s end when those cuts were set to expire. It includes scores of business-related tax cuts, including allowing businesses to immediately write off 100% of the cost of equipment and research.

As for temporary reductions: The bill creates new tax deductions for tips, overtime and auto loans for the next four years. Workers can deduct up to $25,000 in tipped income on their taxes; up to $12,500 in overtime income; and $10,000 on loan interest for cars assembled in the United States, according to Fidelity.

For Colorado state tax purposes, the overtime provision applies only for the current tax year, Gov. Jared Polis’ office said. Earlier this year, the legislature passed a law requiring the state to continue taxing that income, should the federal government shift gears, but it takes effect for the 2026 tax year.

The federal bill also creates a temporary $6,000 deduction each year for people 65 and older. That will also expire by tax year 2028.

For families, the bill increases the child tax credit from $2,000 to $2,200 for most taxpayers, and the bill creates a new children’s savings program, called Trump Accounts, with a potential $1,000 deposit from the Treasury.

In Colorado, taxpayers would get total tax cuts of more than $10.5 billion next year, according to estimates from the Institute on Taxation and Economic Policy. Those making between $59,700 and $103,000 a year would save about $1,760 in 2026 from the tax provisions of the bill.

According to the University of Pennsylvania, the lowest-earning American households would lose about $885 a year by 2030, largely because of cuts to Medicaid and food assistance. The top 10% of earners are set to receive roughly 80% of the bill’s benefits, the school estimated, while noting those earners pay about 70% of federal taxes.

For state revenue

The tax bill doesn’t just cut revenue for the federal government. Its passage means less money for the state, too.

For the remainder of this fiscal year, which began July 1, Colorado officials are projecting a loss of between $500 million and $800 million, Polis’ office said Tuesday, and hundreds of millions of dollars each year after. Lawmakers already made $1.2 billion in cuts earlier this year to balance the current budget.

The changes to overtime taxation account for as much as $250 million in lost revenue projected this year for state income taxes. The other big slice comes from changes to business tax credits, particularly related to depreciation, Polis’ office said.

The bill will also shift new costs onto the state, and those will soon strain the budget from the other direction. The new costs include implementing Medicaid work and eligibility requirements and an increased expense to the state for overseeing food assistance. Those changes go into effect in the coming years — some of them after the 2026 midterm elections — so they won’t have an immediate impact.

But all told, they’ll likely require more than $200 million in new, annual spending from the state.

As for this year, the longer the state waits to sort out this latest financial gap, the governor’s office said, the harder it will be to fill. Since Colorado’s fiscal year just started, each day means there is less money to cut or room to maneuver to make up for lost revenue.

That, in turn, raises the specter of yet another special legislative session that would be the third in three years, ahead of the next regular convening in January. The governor’s office said Polis is still evaluating the bill’s impacts.

Amabile said she was bracing for a special session — and for the “painful” decisions it will bring.

“What scares me is that we are going to have to make some cuts,” she said. “And the best way to make the cuts is to come together and decide what is it — what are our priorities? What are the most important things? And what are the most efficient ways to achieve the things that we all agree need to be protected?

“What I already see happening is silos (of organizations and causes) starting, to want to protect their thing, without any other context.”

For Medicaid

The tax bill includes more than $1 trillion in cuts to planned Medicaid spending through 2034 at the national level. Most Medicaid changes won’t take effect for more than a year, but the state may have to increase its spending before then to prepare.

Federal spending on Medicaid in Colorado will likely drop somewhere between $11 billion and $18 billion over 10 years, according to KFF, formerly known as the Kaiser Family Foundation, which is a nonprofit that studies the health system. The state, which shares Medicaid costs with the federal government, hasn’t yet projected how its own spending will change. In the state’s last fiscal year, total spending on Medicaid was about $15 billion, including federal contributions.

In some cases, such as when people no longer qualify for Medicaid, the state will spend less. In others, Colorado will have to decide whether to make up the lost federal dollars or make cuts to either services for recipients — who include about one in four Coloradans — or payments to providers.

Starting in January 2027, the state will have to verify that about 377,000 people in the Medicaid expansion population under the Affordable Care Act — adults earning up to 138% of the poverty line, who don’t qualify for Medicaid for another reason — either meet new work requirements or qualify for an exemption. That will put significantly more work on the state and on counties.

Many able-bodied recipients between ages 19 and 64 will have to show they worked, attended school or volunteered for 80 hours per month. Colorado will have to build infrastructure for people to report that information and to monitor their compliance.

In addition, recipients will have to go through the full eligibility process twice a year, instead of once. Colorado can complete that process automatically about three-quarters of the time, but when it can’t, recipients will have to fill out a 16-page packet to keep their coverage.

KFF estimated that 150,000 people in Colorado would become uninsured if the bill passed, and an additional 40,000 would lose coverage if enhanced ACA subsidies in insurance exchanges expire this year, as scheduled. It made those calculations before the Senate amended the bill, increasing the Medicaid cuts, so the projections are likely higher now.

A clearer loss for the state budget is set to come in 2027. That’s when the federal government will start reducing how much states can tax health care providers, such as hospitals. Colorado currently charges the maximum provider tax rate of 6%, but the threshold will drop by 0.5% per year, until it reaches 3.5%.

States use the money they collect from providers to claim federal matching funds, so reducing the tax has wider implications. The Colorado Hospital Association estimated the state could lose about $10 billion over 10 years, leaving less money available to compensate facilities that treat larger numbers of poor patients. The state also uses the money to pay its 10% share of costs to cover the Medicaid expansion population (those earning up to 138% of the poverty line).

For food assistance

The tax bill will slash food assistance — the Supplemental Nutrition Assistance Program, or SNAP — by $186 billion through 2034, according to the Congressional Budget Office. That’s the biggest cut to the program since it began in 1939. It will do that by instituting new work requirements and by shifting new costs onto Colorado and other states.

Roughly 617,000 Coloradans, or more than 10% of the state’s population, receive food assistance each month.

The program provides money for low-income people to buy food. In Colorado, a family of four with a maximum income of $62,400 a year qualifies. The benefits can be spent on a variety of foods but not alcohol, hot foods or other household items.

The bill will require the state to pay for more of SNAP’s administrative costs — about $50 million in new spending annually. It will also require Colorado and other states to start paying for some of the program’s cost, depending on the scale of each state’s error rate. In Colorado, that would mean as much as $140 million a year, according to the state Department of Human Services.

All of that translates to more Coloradans losing food assistance. According to the left-leaning Center for Budget and Policy Priorities, 55,000 Coloradans are at risk of losing SNAP benefits because of new work requirements that expand on existing work rules in the program.

For climate and energy

When it comes to the environment and natural resources, the bill rescinds a vast swath of Biden-era investments in clean energy, ends tax credits for consumers who buy climate-friendly products, and undoes regulations and fees on oil and gas production. It also rescinds $267 million in Inflation Reduction Act money that’s used to supplement National Park Service staffing.

The cuts reflect stark opposition from the majority of Republicans to many government efforts to address climate change.

The policy package will raise electricity costs for consumers, said Will Toor, the executive director of the Colorado Energy Office in the Polis administration. He called it a “remarkable act of national self-sabotage” that will allow China to lead the sector.

“We’re talking about kneecapping advanced industries in the United States,” he said. “It’s as if somebody was designing a bill to try to assure that the future belongs to other countries and that the United States will weaken its competitiveness in almost every advanced industry.”

Under the Biden administration’s 2022 Inflation Reduction Act, companies building wind and solar farms could qualify for tax breaks of up to 30% of costs. Those tax breaks now end after 2026 for projects that have not yet begun construction.

Susan Nedell, a senior advocate for the West for Environmental Entrepreneurs — a nonpartisan group of climate-minded business leaders — expects the cancellation of big projects in Colorado and nationwide, along with layoffs and fewer investments in solar and wind projects,

The bill also ends a swath of tax credits for consumers:

Tax deductions for energy-efficient lighting and HVAC systems used in construction, expiring June 30, 2026.

A tax credit for new homes that meet energy efficiency standards, expiring June 30, 2026.

A credit for home renovations that improve efficiency, expiring Dec. 31.

Tax incentives for geothermal heat pumps and other home efficiency products, expiring Dec. 31.

Federal tax credits of up to $7,500 for people buying new electric cars and a $4,000 credit for used cars will now end Sept. 30.

On Dec. 31, a federal tax credit for homeowners of up to 30% of the cost of installing rooftop solar systems will end.

A provision opposed by a broad coalition of Coloradans that would have mandated the sale of public lands was struck from the bill. But other changes remained that make it cheaper for oil and gas companies to use public lands.

The bill undoes the Biden administration’s increase in royalty rates for oil and gas leasing and rescinds mandatory royalty payments on methane produced on public lands by oil and gas companies. It also mandates quarterly lease sales for public lands in the West — a change that eliminates agency and local discretion on whether land should be leased.

Industry leaders in the West applauded the bill, with Western Energy Alliance president Melissa Simpson saying it will “unleash the energy we need.”

The Associated Press and The New York Times contributed to this story.

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Source: Denverpost.com | View original article

Unusual Social Security email touts Trump bill. Here’s what to know.

The Social Security Administration issued an overtly political statement. The agency also published a news release titled “Social Security Applauds Passage of Legislation Providing Historic Tax Relief for Seniors” The White House referred USA TODAY’s request for clarification to the SSA. The bill creates a $6,000 federal income tax deduction for Americans 65 and older and phases out for individuals making more than $75,000 or couples earning over $150,000. The Social Security and Medicare trust funds were on track to be depleted by 2033, but that date will now be moved up to 2032, because the senior tax deduction will lop off an estimated $30 billion per year off the tax revenues those trust funds collect, according to the Committee for a Responsible Federal Budget. The tax cut for some seniors will be mixed, with one-tenth of what those in the middle of the income distribution will save on their tax bill, the Tax Policy Foundation’s analysis says.”It’s been marketed as tax relief for seniors, but a lot of seniors are going to be surprised when they find out it doesn’t apply to them,” Garrett Watson says.

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Social Security beneficiaries are accustomed to getting occasional emails from the program about matters like a benefits statement, but many were perplexed to get a different kind of message from the Social Security Administration late in the evening on Thursday, July 3.

“The Social Security Administration (SSA) is celebrating the passage of the One Big, Beautiful Bill, a landmark piece of legislation that delivers long-awaited tax relief to millions of older Americans,” the email, reviewed by USA TODAY, said. The message is referring to the legislative package of Trump’s priorities for cuts to taxes and spending on social programs that was passed by the House of Representatives earlier that day.

The agency also published a news release titled “Social Security Applauds Passage of Legislation Providing Historic Tax Relief for Seniors” that mirrored the email.

Issuing an overtly political statement is unusual for the agency that oversees Social Security, which makes monthly payments to 73 million retirees, their survivors, and people with disabilities.

“It’s completely unprecedented,” said Alex Lawson, executive director of Social Security Works, a left-leaning advocacy organization focused on retirement benefits. “It’s an enormous breach of trust.”

Lawson contends that the email praising Trump’s “Big, Beautiful Bill” violates the Hatch Act, a law against partisan political activity by federal government employees.

The Social Security Administration did not immediately respond to inquiries seeking clarification. The White House referred USA TODAY’s request to SSA.

A tax cut for some seniors

During his campaign, Trump promised to eliminate income taxes on Social Security benefits. Instead, the just-passed bill − which Trump will sign in the late afternoon on July 4 − creates a $6,000 federal income tax deduction for Americans 65 and older.

Since Social Security benefits are often a large part of seniors’ income, some portion of those benefits will now be untaxed for those who qualify for the deduction.

“It reduces the amount of Social Security benefits subject to tax, but it’s not just for Social Security,” explains Garrett Watson, senior policy analyst at the Tax Foundation, a center-right think tank.

“This is a historic step forward for America’s seniors,” said Social Security Commissioner Frank Bisignano, a former Wall Street executive appointed by Trump. “For nearly 90 years, Social Security has been a cornerstone of economic security for older Americans. By significantly reducing the tax burden on benefits, this legislation reaffirms President Trump’s promise to protect Social Security and helps ensure that seniors can better enjoy the retirement they’ve earned.”

There are many Social Security recipients and seniors who won’t get a tax cut, however.

About 5% of retired Social Security beneficiaries are ages 62 to 64.

There are also deceased workers’ survivors and disabled workers who are younger than 65.

Among those 65 and older, many have incomes below the standard deduction of $14,600 per person or $29,200 per couple, so they already aren’t paying income taxes anyway.

At the other end of the spectrum, the deduction phases out for individuals making more than $75,000 or couples earning more than $150,000.

Less benefit for those with lower incomes

“Lower-income earners benefit less than middle and upper-middle income households,” Watson said.

On average, seniors in the bottom 20% income will save just 0.1% on their tax bill, according to the Tax Policy Foundation’s analysis, about one-tenth of what those in the middle of the income distribution will save.

“It’s been marketed as tax relief for seniors, but a lot of seniors are going to be surprised when they find out it doesn’t apply to them,” Watson said. “I’m getting asked all the time by folks what this actually means for their tax situation.”

Social Security’s long-term funding problem

And while some will soon benefit from lower taxes, the lost tax revenue could trigger a future automatic benefit cut for all beneficiaries.

That’s because Social Security benefits aren’t taxed like normal income. Instead of being used as general revenues, they go specifically into the trust funds that provide a backstop for Medicare and Social Security.

The Social Security and Medicare Hospital Insurance trust funds were on track to be depleted by 2033, but now that date will be moved up to 2032, because the senior citizen tax deduction will lop an estimated $30 billion per year off the tax revenues those trust funds collect, according to the Committee for a Responsible Federal Budget. That, in turn, will trigger a future automatic benefit cut of 24% to all recipients, the centrist think tank projects.

Those problems will only grow worse, Watson noted, if Congress renews, increases or makes permanent the senior tax deduction, when it expires in 2028.

“It’s a mixed bag for seniors, because some seniors will get some tax relief; the cost of that, though, is borne by the entire Social Security system,” Lawson said.

Email comes amid customer-service ‘crisis’

Critics are pouncing on the message arriving at a time when the Social Security Administration has been suffering from problems with customer service.

The Trump administration has reduced the agency’s staff and instituted new rules on identification for applicants, resulting in average wait times that have ballooned to 90 minutes.

In June, the agency stopped making public real-time performance metrics about how long they will have to wait to reach a live person on the phone, and how long applications for new benefits take to be approved, USA TODAY reported on June 26. Multiple times, USA TODAY reporters called Social Security’s 1-800 line they did not reach a live person before the line disconnected with no warning.

Contributing: Sarah D. Wire

Source: Usatoday.com | View original article

Here’s who stands to gain from the ‘big, beautiful bill.’ And who may struggle

The bill could end up boosting some workers and industries, while others may be left worse off. Corporations are betting they will benefit from the legislation making permanent the tax breaks in the 2017 Tax Cuts and Jobs Act. The top 20% of earners would increase by nearly $13,000 per year, after taxes and transfers, according to an analysis of a near-final version of the Senate bill by Penn Wharton Budget Model. millionaires who lose their jobs will not be able to collect unemployment benefits. The bill would enact historic cuts to the nation’s safety net program, particularly Medicaid and food stamps, particularly for the first time in its 60-year history. Parents of children ages 14 and up are among those who would have to volunteer, take job training classes or participate in job-training classes to keep their food stamps. The legislation would enhance tax credits for semiconductor firms building manufacturing facilities in the U.S. in a bid to incentivize more chipmaking in America. It would also make permanent a special deduction for the owners of certain pass-through entities who pay businesses taxes on their individual tax returns.

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New York CNN —

President Donald Trump has promised that the “big, beautiful bill” passed by Congress will be one of the most successful pieces of legislation in American history.

Of course, the ultimate beauty of this sweeping legislation is very much in the eye of the beholder.

The bill could end up boosting some workers and industries, while others may be left worse off.

Better off

Corporate America

Big business groups, including the US Chamber of Commerce and Business Roundtable, applauded the Senate’s passage of the bill on Tuesday.

Corporations are betting they will benefit from the legislation making permanent the tax breaks in the 2017 Tax Cuts and Jobs Act.

The package would restore a tax break from the 2017 tax package that allowed businesses to fully write off the cost of equipment in the first year it was purchased. The incentive has been phasing out since 2023.

Also, the legislation would once again allow businesses to write off the cost of research and development in the year it was incurred. The TCJA required that companies deduct those expenses over five years, starting in 2022.

Manufacturers

Manufacturers are especially happy that the bill would make significant changes to how the US tax code treats the construction of new manufacturing facilities.

Businesses will be allowed to fully and immediately deduct the cost of building new manufacturing facilities. This temporary provision is retroactive to January 19, 2025 and continues for construction that begins before January 1, 2029.

And in a bid to incentivize more chipmaking in America, the legislation would enhance tax credits for semiconductor firms building manufacturing facilities in the United States.

Small businesses and partnerships

The National Federation of Independent Business, the leading small business lobbying group, praised the legislation for making permanent a special deduction for the owners of certain pass-through entities who pay businesses taxes on their individual tax returns.

That deduction, which applies to small businesses and partnerships formed by lawyers, doctors and investors, would get increased in the House version of the bill from 20% to 23%. The Senate bill kept it at 20%.

High-income Americans

The net income for the top 20% of earners would increase by nearly $13,000 per year, after taxes and transfers, according to an analysis of a near-final version of the Senate bill by Penn Wharton Budget Model.

That amounts to a 3% average increase in income for those households.

For the top 0.1% of earners, the average annual income gain would amount to more than $290,000, according to Penn Wharton.

Americans living in high-tax states should also benefit because the bill temporarily increases limits on deductions for state and local taxes for householders making up to $500,000 annually to $40,000 per year for five years.

However, millionaires who lose their jobs will not be able to collect unemployment benefits, according to a recent provision added to the Senate bill.

Workers who receive tips and overtime

Certain workers will receive an extra tax break through 2028.

Employees who work in jobs that traditionally receive tips could deduct up to $25,000 in tip income from their federal income taxes, while workers who receive overtime could deduct up to $12,500 of that extra pay.

Income limits apply, however.

Speaker of the House Mike Johnson, center, celebrates with fellow Republicans after final passage of President Donald Trump’s signature bill of tax breaks and spending cuts, at the Capitol in Washington, on Thursday. J. Scott Applewhite/AP

Worse off

Low-income Americans

Many people at the lowest end of the income ladder would be worse off because the package would enact historic cuts to the nation’s safety net program, particularly Medicaid and food stamps.

Among the many changes to these programs would be the addition of federally mandated work requirements to Medicaid for the first time in its 60-year history and the expansion of the work mandate in the Supplemental Nutrition Assistance Program, or SNAP, the formal name for food stamps. Parents of children ages 14 and up are among those who would have to work, volunteer, take classes or participate in job training to keep their benefits.

Millions of low-income Americans are expected to lose their benefits because of the work requirements and the bill’s other measures affecting Medicaid and food stamps. Notably, few of those dropped from Medicaid coverage would have access to job-based health insurance, according to a Congressional Budget Office report about the House version of the package.

Those in the lowest-income group, earning less than $18,000 a year, would see a $165 reduction in their after-tax, after-transfer income, once the safety net cuts are taken into account, according to Penn Wharton. That’s a 1.1% decrease.

The next level, who earn between $18,000 and $53,000, would get a $30 bump in income, or 0.1%.

Middle-income households would see their income rise by $1.430, or 1.8%. They earn between $53,000 and $96,000.

The health provisions won’t only hit low-income Americans. The Senate is also tightening verification requirements for the Affordable Care Act’s federal premium subsidies, which could also leave some middle-income Americans uninsured.

All told, the bill could result in more than 10 million more people being uninsured in 2034, according to a CNN analysis of the bill and CBO forecasts.

Hospitals

Hospitals are not happy with the health care provisions of the bill, which would reduce the support they receive from states to care for Medicaid enrollees and leave them with more uncompensated care costs for treating uninsured patients.

“The real-life consequences of these nearly $1 trillion in Medicaid cuts – the largest ever proposed by Congress – will result in irreparable harm to our health care system, reducing access to care for all Americans and severely undermining the ability of hospitals and health systems to care for our most vulnerable patients,” said Rick Pollack, CEO of the American Hospital Association.

The association said it is “deeply disappointed” with the bill, even though it contains a $50 billion fund to help rural hospitals contend with the Medicaid cuts, which hospitals say is not nearly enough to make up for the shortfall.

Clean energy and EVs

The Senate removed a last-minute excise tax on wind and solar that experts warned would have been a “killer” for the clean energy industry.

However, the Senate bill still strips tax incentives for wind, solar and other renewable energy projects by 2027 and gives developers stringent requirements to claim them.

The American Clean Power Association slammed the legislation as a “step backward for American energy policy” that will eliminate jobs and raise electric bills.

Electric vehicle makers could also be left worse off because the GOP bill ends EV tax credits of up to $7,500 at the end of September. Previously those tax credits were scheduled to last through 2032, providing a powerful incentive for car buyers.

Deficit hawks

The Senate version of the package would increase the deficit by about $3.4 trillion over the next decade, according to CBO.

Adding trillions to the debt risks lifting already elevated interest rates. That in turn will make it more expensive for Americans to finance the purchase of a car or a home and for businesses to borrow money to grow.

Not only that, but higher rates would force the federal government to devote even greater resources to finance its own mountain of debt.

The CBO expects US federal government interest costs to surpass $1 trillion per year.

US spending on interest has already more than tripled since 2017, surpassing what the federal government’s entire defense budget.

Source: Cnn.com | View original article

5 ways Trump’s megabill will limit health care access

5 ways Trump’s megabill will limit health care access in the U.S. The bill cuts federal health spending by about $1 trillion over a decade. It is expected to reverse many of the health coverage gains of the Biden and Obama administrations. The deepest cuts to health care spending come from a proposed Medicaid work requirement, which will end coverage for millions of enrollees who do not meet new employment or reporting standards. Less cash means less care in rural communities and fewer health services, medical professionals, and even hospitals, especially in rural areas.. The GOP’s plan curtails a practice, known as provider taxes, that nearly every state has used for decades to increase Medicaid payments to hospitals, nursing homes, and other providers. It will also make it harder to enroll and to retain their coverage under the Affordable Care Act, making it more difficult to get and keep health care coverage in the long run. It’s also expected to push more than 300 rural hospitals — many of them in Kentucky, Louisiana, and Oklahoma — toward service reductions or closure.

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5 ways Trump’s megabill will limit health care access

toggle caption J. Scott Applewhite/AP

The tax and spending legislation the House voted to send to President Donald Trump’s desk on Thursday, enacting much of his domestic agenda, cuts federal health spending by about $1 trillion over a decade in ways that will jeopardize the physical and financial health of tens of millions of Americans.

The bill, passed in both the House and the Senate without a single Democratic vote, is expected to reverse many of the health coverage gains of the Biden and Obama administrations. Their policies made it easier for millions of people to access health care and reduced the U.S. uninsured rate to record lows, though Republicans say the trade-off was far higher costs borne by taxpayers and increased fraud.

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Under the legislation Trump is expected to sign on Friday, Independence Day, reductions in federal support for Medicaid and Affordable Care Act marketplaces will cause nearly 12 million more people to be without insurance by 2034, the Congressional Budget Office estimates.

That in turn is expected to undermine the finances of hospitals, nursing homes, and community health centers — which will have to absorb more of the cost of treating uninsured people. Some may reduce services and employees or close altogether.

Here are five ways the GOP’s plan will affect health care access.

1. Many people will have to work to stay on Medicaid

The deepest cuts to health care spending come from a proposed Medicaid work requirement, which is expected to end coverage for millions of enrollees who do not meet new employment or reporting standards.

In 40 states and Washington, D.C., all of which have expanded Medicaid under the Affordable Care Act, some Medicaid enrollees will have to regularly file paperwork proving that they are working, volunteering, or attending school at least 80 hours a month, or that they qualify for an exemption, such as caring for a young child. The new requirement will start as early as January 2027.

The bill’s requirement doesn’t apply to people in the 10 largely GOP-led states that have not expanded Medicaid to nondisabled adults.

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Health researchers say the policy will have little impact on employment. Most working-age Medicaid enrollees who don’t receive disability benefits already work or are looking for work, or are unable to do so because they have a disability, attend school, or care for a family member, according to KFF, a health information nonprofit that includes KFF Health News.

State experiments with work requirements have been plagued with administrative issues, such as eligible enrollees’ losing coverage over paperwork problems, and budget overruns. Georgia’s work requirement, which officially launched in July 2023, has cost more than $90 million, with only $26 million of that spent on health benefits, according to the Georgia Budget & Policy Institute, a nonpartisan research organization.

“The hidden costs are astronomical,” said Chima Ndumele, a professor at the Yale School of Public Health.

2. Less cash means less care in rural communities

Belt-tightening that targets states could translate into fewer health services, medical professionals, and even hospitals, especially in rural communities.

The GOP’s plan curtails a practice, known as provider taxes, that nearly every state has used for decades to increase Medicaid payments to hospitals, nursing homes, and other providers and to private managed-care companies.

States often use the federal money generated through the taxes to pay the institutions more than Medicaid would otherwise pay. Medicaid generally pays lower fees for care than Medicare, the program for people over 65 and some with disabilities, and private insurance. But thanks to provider taxes, some hospitals are paid more under Medicaid than Medicare, according to the Commonwealth Fund, a health research nonprofit.

Hospitals and nursing homes say they use these extra Medicaid dollars to expand or add new services and improve care for all patients.

Rural hospitals typically operate on thin profit margins and rely on payments from Medicaid taxes to sustain them. Researchers from the Cecil G. Sheps Center for Health Services Research who examined the original House version of the bill concluded it would push more than 300 rural hospitals — many of them in Kentucky, Louisiana, California, and Oklahoma — toward service reductions or closure.

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Republicans in the Senate tacked a $50 billion fund onto the legislation to cushion the blow to rural hospitals. The money will be distributed starting in 2027 and continue for five years.

3. ACA coverage will become harder to get and keep

For those with Obamacare plans, the new legislation will make it harder to enroll and to retain their coverage.

ACA marketplace policyholders will be required to update their income, immigration status, and other information each year, rather than be allowed to automatically reenroll — something more than 10 million people did this year. They’ll also have less time to enroll; the bill shortens the annual open enrollment period by about a month.

People applying for coverage outside that period — for instance because they lose a job or other insurance or need to add a newborn or spouse to an existing policy — will have to wait for all their documents to be processed before receiving government subsidies to help pay their monthly premiums. Today, they get up to 90 days of premium help during the application process, which can take weeks.

Republican lawmakers and some conservative policy think tanks, including the Paragon Health Institute, say the changes are needed to reduce fraudulent enrollments, while opponents say they represent Trump’s best effort to undo Obamacare.

The legislation also does not call for an extension of more generous premium subsidies put in place during the covid pandemic. If Congress doesn’t act, those enhanced subsidies will expire at year’s end, resulting in premiums rising by an average of 75% next year, according to KFF.

4. Those on Medicaid will pay more to see the doctor

Many Medicaid enrollees can expect to pay more out-of-pocket for appointments.

Trump’s legislation requires states that have expanded Medicaid to charge enrollees up to $35 for some services if their incomes are between the federal poverty level (this year, $15,650 for an individual) and 138% of that amount ($21,597).

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Medicaid enrollees often don’t pay anything when seeking medical services because studies have shown charging even small copayments prompts low-income people to forgo needed care. In recent years, some states have added charges under $10 for certain services.

The policy won’t apply to people seeking primary care, mental health care, or substance abuse treatment. The bill allows states to enact even higher cost sharing for enrollees who seek emergency room care for non-emergencies. But if Medicaid patients fail to pay, hospitals and other providers could be left to foot the bill.

5. Some immigrants will lose access to subsidized ACA plans

The GOP plan could cause at least hundreds of thousands of immigrants who are lawfully present — including asylum-seekers, victims of trafficking, and refugees — to lose their ACA marketplace coverage by cutting off the subsidies that make premiums affordable. The restriction won’t apply to green-card holders.

Because the immigrants who will lose subsidies under the legislation tend to be younger than the overall U.S. population, their exit would leave an older, sicker, and costlier population of marketplace enrollees, further pushing up marketplace premiums, according to marketplace directors in California, Maryland, and Massachusetts and health analysts.

Taking health care access away from immigrants living in the country legally “will do irreparable harm to individuals we have promised to protect and impose unnecessary costs on local systems already under strain,” John Slocum, executive director of Refugee Council USA, an advocacy group, said in a statement.

The bill reflects the Trump administration’s restrictive approach to immigration. But because it ran afoul of Senate rules, the legislation doesn’t include a proposal that would have reduced federal Medicaid payments to states such as California that use their own money to cover immigrants without legal status.

KFF Health News chief Washington correspondent Julie Rovner contributed reporting.

KFF Health News is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at KFF.

Source: Npr.org | View original article

How Trump’s big bill will affect you, from Medicaid cuts to tax credits

The measure imposes work and reporting requirements for the first time on Medicaid recipients. Able-bodied adults between 19 and 64 years old will have to prove they are working, volunteering or going to school at least 80 hours a month. States have to put these requirements in place by Dec. 31, 2026.

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Medicaid patients

Lost health care: The bill slashes about $1 trillion from Medicaid — the largest cut in the program’s history — and at least 17 million Americans are projected to lose health coverage or insurance subsidies that make coverage affordable, according to the nonpartisan Congressional Budget Office.

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Work requirements: The measure imposes work and reporting requirements for the first time on Medicaid recipients whose income is from 100 percent to 138 percent of the federal poverty level (roughly $32,000 to $44,000 for a family of four). These are people who became eligible for Medicaid under the 2010 Affordable Care Act’s expansion of the program. Able-bodied adults between 19 and 64 years old will have to prove they are working, volunteering or going to school at least 80 hours a month. The bill provides exemptions for certain groups, including those who are pregnant, disabled or taking care of dependent children 13 or younger. States have to put these requirements in place by Dec. 31, 2026.

More documentation: Medicaid recipients will have to submit paperwork, such as pay stubs, proving they are meeting the work requirements. Even those who are exempt will have to demonstrate they are still eligible. Health care providers view these requirements as onerous and warn they will throw people off their coverage because many will struggle to stay on top of the paperwork or not even know about the change.

Source: Washingtonpost.com | View original article

Source: https://finance.yahoo.com/video/trump-tax-cuts-heres-theyll-221500839.html

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