Top 10 things to know about your health costs right now

When it comes to health insurance, prescription drugs and other health costs, 2025 is not a boring year. 

Big changes in health policy at the federal and state level have already happened, and more are coming. Not all of these changes have gotten a lot of attention, but they can affect costs and access for your prescription drugs, doctor’s appointments, hospitalizations, scans and blood tests.

“While the One Big Beautiful Bill signed into law on July 4^th includes several important and polarizing changes to Medicaid and the Affordable Care Act, most of these alterations do not take effect immediately,” said A. Mark Fendrick, M.D., a University of Michigan Medical School professor and director of the U-M Center for Value-Based Insurance Design. 

Top 10 things to know about your health costs right now

1. If you have Medicaid, or someone you know does, your coverage does not change immediately because of the new law. But you should stay informed.

The changes to Medicaid that have gotten a lot of attention are being phased in over 2026 and 2027. No one’s coverage changes immediately. People with any form of Medicaid, and children with CHIP coverage, should continue to seek and get care as usual.  

But because of the changes that are coming, people with Medicaid coverage should make sure to open emails, paper mail and text messages from their state and follow the instructions and deadlines. 

Be sure to keep your contact information up to date in your state’s system. If you have a loved one who needs help setting up and using online access to their Medicaid information, this is a good time to help them or seek help. 

Many people with Medicaid coverage will have to prove that they are working, looking for work, a student or a caregiver of a child under 14 starting in 2027, or sooner if their state chooses to implement this requirement in 2026. They will have to do so twice a year, and each state will have its own system and specific set of conditions. In general, people who have a disability or other condition that makes them “medically frail”, and people age 65 and older, will not be required to show they are working or doing another qualifying activity, but they may need to have proof of their medical condition.  

Also, if your income is just over the poverty level and you have Medicaid, you may have to pay a copay for some of your care if you don’t already. But this may not take effect for a while.

The new law also means the federal government will pay states less for their Medicaid programs, says Susan Goold, M.D., MHSA, MA, a professor at the U-M Medical School who studies health care policy. “Changes to the federal share of Medicaid spending will cause states to either cut enrollment, cut benefits, cut payments to providers or greatly increase their spending,” she said. 

Hospitals and clinics that have a large number of patients with Medicaid coverage may also face reductions in the amount of money they get, which could lead some to close or cut back on staff, services or hours, or to try to raise the prices they charge private insurance plans. This could affect everyone, not just people with Medicaid.

The new law also means that the 10 states that haven’t yet expanded Medicaid to every adult under a certain income will no longer get extra federal money if they expand the program after 2025. Some of those 10 states are debating expansion now.

2. If you have Medicare prescription coverage, your out-of-pocket drug costs will be capped at $2,000

As part of a law passed in 2022 that took effect this year, Medicare beneficiaries have a ceiling of $2,000 per year on the amount they have to pay for medications that are covered by their Part D drug plan. 

This is good news, says Fendrick, because his research and other studies have shown that people often make decisions about filling prescriptions and taking medicine on schedule that are driven by how much it costs them.

Previous research by another U-M team showed that a higher cap that took effect last year saved thousands of dollars for people receiving cancer treatment. 

The new cap will affect even more people.

Another new program, the Medicare Prescription Payment Program, can help any person with Medicare drug coverage manage their costs throughout the year by spreading them out evenly, though it doesn’t reduce total costs. 

Learn more, and find out if it might make sense for you to enroll, here. If it makes sense, you have to take steps to enroll in the MPPP.

Medicare still has a $35 per month cap on insulin costs and no cost to participants for vaccinations – such as shingles shots – that are covered under Medicare Part D.

Starting in 2026, the Medicare system will pay less than before for 10 drugs that were included in its first round of price negotiation. Some Medicare participants who take these drugs may find that their out-of-pocket cost also drops. Other drugs will be subject to price negotiation in the future.

As for an executive order about drug prices issued by President Donald Trump on May 12, Fendrick says, "Americans' frustration with hearing repeatedly that we pay much high prices for branded drugs than what's paid by those who live in other developed countries has led to a number of policies aimed to reduce medication costs. President Trump's Executive Order tying drug prices paid by the Medicare program to those paid by  other countries is a sharply different than the Biden administration approach."

He continues, "One thing in common with both strategies is that the impact of this policy on lowering medication costs for patients (not the Medicare program) remains unclear. There are a significant number of short and long term possible effects of this policy, such as opportunities for companies to 'game' how prices are set, and the potential for biomedical innovation to decrease due to reduced payments to drug companies by Medicare and reduced NIH research funding."

Also, he said, "It’s important to remember the fact that the prices the Medicare program pays for drugs are not the same amount as what people covered by Medicare pay out of pocket; this makes it extremely difficult to predict how much, if anything, individuals will ultimately save at the pharmacy counter."
 

3. If you have Medicare and a low income, you may qualify for even lower drug costs 

Many people don’t know about the Extra Help program for people with lower incomes, which can actually bring out-of-pocket drug costs down to about $5 for generic medications and about $12 for many brand name medicines. 

People with Medicare who qualify for Medicaid or Social Security disability (SSI) automatically get enrolled, but other people with lower incomes and low assets can also qualify; they have to take action to enroll.  

Need help understanding your eligibility? Contact your state health insurance assistance program.

4. You can still get vaccines, cancer screenings and other preventive care without paying anything. But that could change this year.

For more than a decade, insured adults and children have had access to no-cost preventive care if it’s recommended specifically for their age or condition.

You can see the full list here, but it includes vaccines against things like flu, shingles, COVID-19, measles and tetanus; birth control; and screenings to catch conditions like cancer, depression, high cholesterol, and diabetes early.

The Supreme Court recently ruled that this can continue. But it also ruled that the Secretary of Health and Human Services (HHS) can change which experts sit on the panels that decide which preventive care is covered. That includes the U.S. Preventive Services Task Force, which has traditionally been made up of independent experts in preventive care who assess the evidence and make recommendations. Health plans must cover the services they recommend without patient cost-sharing.

Secretary Robert F. Kennedy Jr.’s abrupt cancellation of the scheduled July meeting of the USPSTF portends that additional future changes are likely, Fendrick says. The Supreme Court decision that the HHS Secretary has the ability to accept or veto the USPSTF recommendations means the list of fully covered vaccines and preventive services could change.

However, even if a service is removed from the list for some or all people, health insurance companies can decide to cover the full cost anyway.

5. If your health insurance plan has a high deductible, you can stash cash tax-free for future medical costs

Whether you get your insurance through your job or you bought it yourself, check to see what your deductible is.

What’s a deductible? 

It’s the amount of money that you have to pay on your own for health costs, before your insurance kicks in and starts covering the rest. It’s just like most people’s car or truck insurance, though the dollar amounts can be much higher.

For 2025, the government defines having a high deductible health plan, or HDHP, if your deductible is above $1,650 if you only cover yourself, or $3,300 for family coverage.  

To help you prepare to pay your plan deductible and for certain medical costs that are not fully covered by your plan, you should determine whether your HDHP can be paired with a Health Savings Account. 

If it can, you should open one of these accounts, called an HSA for short, if you don’t already have one.

The new law signed in July will allow people who buy their own insurance on healthcare.gov for 2026 to open HSAs, if they choose a health plan at the Bronze or Catastrophic level. 

HSAs are unique in that they offer a 'triple tax advantage' because you can put money from your paycheck in before the government takes taxes out, you pay no taxes on any interest your money earns while it’s in the account, and you can withdraw the money tax-free as long as you use it for eligible health costs.

You should set up your HSA through an authorized financial institution, and learn the rules for adding money to it. 

You can also ask your employer to set up automatic withdrawals from your paycheck to go into the HSA. 

This way you’ll have money saved up when you need care. And even if you don’t spend it all this year, you can roll it over to pay for health costs in future years or in retirement. 

Note: HSAs are different from Flexible Spending Accounts, which are also tax-advantaged and offered by some employers to people who don’t have high-deductible plans, but which have a “use it or lose it” rule every year.

6. If you have medical debt, it can still hurt your credit score

Let’s say you’re still paying off the bill from medical services such a hospital stay or a dental procedure last year, chipping away at it month by month on a payment plan. Or maybe you haven't started paying yet.

This kind of debt can count against you when you tried to get a new loan for a car or house, or open a credit card or rent an apartment. 

On July 11, a judge struck down a regulation that was supposed to go into effect this year, that would have kept such debt from being part of credit reports. This means that unless the regulation is upheld in a higher court, or Congress acts, medical debt will continue to be considered as part of calculating a person's credit score.

However, credit reporting agencies have begun to disregard medical debts under $500. And some states have laws about certain aspects of medical debt.

The bottom line: don't ignore emails and patient portal alerts about your medical bills, or throw paper bills away without paying. 

If you’re having trouble paying what you owe, call the hospital or clinic where you got your care, and ask to speak with someone about payment plans or forgiveness of part of the debt under charity care provisions (for instance, Michigan Medicine’s financial assistance information is here.)

Call your insurance company to appeal their decision not to cover certain costs if you feel they should be covered.

If you don’t pay your debt, or get some or all of it forgiven, it could get sent to a collection agency. Debt that’s in collections will hurt your credit if you owe more than $500.

Learn more about how to get help with health costs, including debt.
 

7. Covered by a Medicare Advantage plan that’s not working for you? It’s not too late to switch coverage this year – but be careful

Did you or someone you love choose a Medicare Advantage plan during the Medicare Open Enrollment, or stick with the same plan as last year, and then realize that it doesn’t cover certain drugs or services that you need, or blocks access to certain doctors and hospitals?

Thankfully, there’s a way to change coverage, even mid-year. Medicare Advantage enrollees have options, including switching to a five-star plan if there’s one available in their area. 

However, if you return to traditional Medicare, you need to also pick a Part D prescription drug plan at the same time to avoid a penalty. 

And if you make this switch and want to buy a Medigap plan to cover some of the things that traditional Medicare doesn’t cover, you may find that you will pay more or that you can’t even find a plan that will cover you, depending on your state insurance laws. Learn more here.

Open Enrollment for 2026 Medicare coverage starts in early October. You can use the Plan Compare tool starting then to figure out which plan might be best for you. 

You can also reach out to a local helper who can guide your Medicare choices; every state has a program called a State Health Insurance Assistance Program or SHIP. Find yours here.

8. If you have to buy your own health insurance, be ready for changes for 2026

People who don’t get insurance through a job or the government (Medicare, Medicaid, CHIP, VA or Tricare) have been able to buy insurance coverage through healthcare.gov or their state’s insurance marketplace for 10 years now.

The new law signed July 4 shortens the Open Enrollment period for this kind of coverage, so it will only run from November 1 to December 15. 

Also, even if you want to keep the same plan you have this year, you will have to re-enroll. 

And, you will need to have your income verified before your coverage can begin. 

If your income is under 150% of the federal poverty level, you will no longer be able to switch plans at any time during the year. Switching plans will still be possible for anyone who has a qualifying life event.`                                                       

There’s another major potential change for 2026, related to the financial help that many people who buy their own coverage have received in the past several years. These include discounts on monthly premiums and tax credits that you can claim immediately, depending on your income.

This extra financial support will go away for 2026 unless Congress and the president act to extend it, Fendrick notes. People who rely on it may want to express their opinions about that to the people who represent them in Washington, D.C.

But for now, you can still get that support if you qualify for a special enrollment period on the national or state insurance marketplace. 

The most common reasons for qualifying are if you lose your insurance because of a job change, or your income goes up and you lose access to Medicaid or your child loses access to CHIP, or you have a life change such as having or adopting a child, getting married or divorced, or moving to a different state.

Another change for 2026: People referred to as "dreamers" who were brought to the U.S. as children without documentation and are covered by a policy called DACA will no longer be able to purchase insurance on the federal marketplace. For information on availability to those with this or other immigration statuses, visit this page.

9. More veterans are eligible for VA health coverage, and that coverage can be used at more locations

Under a federal law called the PACT Act, veterans’ health benefits are now available to many more people who served the nation and received an honorable discharge, including a 2024 change that opens VA benefits to people who did not deploy overseas but have a presumptive exposure to toxic substances. Find out more here  and here, and enroll here.

Also, under current programs that may be subject to change depending on what happens in Washington, D.C., veterans can get care at non-VA healthcare facilities using veterans benefits through the Community Care program. 

But veterans need to get prior authorization for each appointment or service – even if they got a referral from a non-VA provider at the same location after seeing them. 

If a veteran has another kind of health insurance as well as having veterans' benefits, this is especially important, because there are time limits on how long after the care occurs the VA will pay for it.

10. Don’t assume that because your insurance covered a drug before, that it will still cover it the same way this year, or all year

The list of prescription drugs that insurance plans will cover, and what they’ll ask you to pay when you fill a prescription (called your co-pay), can change at any time. 

These changes are called formulary changes. 

They can also include “step therapy” or “fail first” requirements or prior authorization requirements that mean you have to try a lower-cost drug before you can get a more expensive one, or your doctor has to justify why you should be allowed to get a certain drug because of your condition. 

Some states have passed laws about step therapy, but not all have. See the current status for your state here.

And though there are some rules about how insurance companies need to inform doctors and hospitals about these changes, they may not have to inform you unless you have Medicare drug coverage. 

You should be able to look at your insurance plan’s formulary on your insurance company’s website, but they may not always be up to date; you may have to call to get the most current information. 

There are things you can do if you suddenly find that your insurer has changed its coverage for your prescription medicines; learn more here.