Bridge to Medicaid Act Mandates 99% Coverage for Lowest Earners, Caps Subsidy Repayment at $300

The “Bridge to Medicaid Act of 2025” is a big, temporary overhaul of how the lowest-income Americans—specifically those earning up to 138% of the federal poverty line (FPL)—pay for health insurance. Think of it as a massive, three-year financial safety net designed to catch people who often cycle in and out of Medicaid eligibility or live in states that haven’t expanded the program. The core of the bill is simple: drastically lower out-of-pocket costs and make it easier to sign up for coverage.

The 99% Solution: Eliminating Deductibles and Copays

If you’ve ever tried to use your health insurance only to hit a massive deductible, you know the pain of "having coverage" that doesn't actually help. This bill takes aim at that problem for the lowest earners. For 2026, 2027, and 2028, if your income is at or below 138% FPL, health plans must cover 99% of your total allowed medical costs (Sec. 2). This means your deductibles, copays, and coinsurance essentially vanish for those three years. For a single adult, 138% FPL currently translates to about $20,780 a year—a population that simply cannot afford thousands in out-of-pocket costs. This provision is a game-changer, turning insurance from a piece of paper into actual financial protection.

To make this happen, the federal government is directly reimbursing health plans for the extra costs. This is the trade-off: the government pays the insurance companies 12% of the total allowed costs for these enrollees, ensuring the plans don't lose money while providing near-free care. The bill also mandates that these low-income enrollees get extra benefits in 2026 and 2027, like non-emergency medical transportation and family planning services, all at zero cost-sharing (Sec. 2).

No More Tax Bill Surprises: The $300 Cap

One of the biggest headaches for people receiving premium tax credits (PTC) under the ACA is the "recapture" rule. If you estimate your income too low when you sign up for coverage, you get too much subsidy upfront, and you have to pay it back at tax time—sometimes thousands of dollars. This bill introduces a crucial protection for low-income workers for tax years 2026 through 2028.

If your household income is less than 200% FPL (about $30,120 for a single person), your repayment is capped. You will not have to pay back more than $300 total, or $150 if you file separately (Sec. 3). This removes a huge financial risk, especially for gig workers or those whose incomes fluctuate unpredictably. Furthermore, if you are below 138% FPL, you won't even have to file a tax return just to reconcile your advance payments, which simplifies things immensely for non-filers.

Enrollment Windows and Employer Coverage

This act also addresses access. From 2026 through 2028, anyone below 138% FPL who doesn't qualify for other coverage (like Medicaid) gets a continuous open enrollment period (Sec. 2). No more missing a six-week window and being locked out for a year. If you suddenly lose a job or your income drops, you can sign up immediately.

Crucially, the bill also temporarily fixes a problem called the "affordability glitch" for the lowest earners. If you are below 138% FPL, you can get the full marketplace tax credit even if your employer offers coverage that is technically deemed “affordable” (Sec. 3). This recognizes that even “affordable” employer plans can be too expensive for the lowest-paid workers.

State Support and the Sunset Clause

Section 4 extends the enhanced federal funding (FMAP) for states covering newly eligible Medicaid populations. This higher federal share is extended through 2025 and then phased down gradually, but remains above the standard rate through 2028. This helps states keep their Medicaid programs stable, especially in the face of rising enrollment.

However, it’s essential to note the temporary nature of this entire act. The dramatic cost-sharing reductions, the tax credit caps, and the continuous enrollment periods are all set to expire after 2028. This temporary boost provides a massive, immediate benefit to millions of people, but it also creates a significant “cliff” three years down the road. If these provisions are not extended, the lowest earners will suddenly face much higher out-of-pocket costs and potentially massive subsidy repayment risks again, which is a major long-term planning challenge for both the insurance market and families.