One Big Beautiful Bill: New law cuts seniors' taxes, jeopardizes their health care

By Rick Haglund

October 2025

Covering 940 pages, the One Big Beautiful Bill Act is a sweeping piece of legislation that will have a significant impact – good and bad – on the finances and health care of millions of seniors.

Braund

“It gives something to everybody, almost. They’ve packed a lot in there,” said Eric Braund, founder of Black Walnut Wealth Management in Traverse City.

Braund and other financial advisors agree that the gargantuan tax-and-spending bill, signed into law in July, is mostly positive for those on the AARP magazine subscription list.

“We have a lot of retirees who will owe little or no taxes. It’s huge,” said Holly Gallagher, founder and president of Horizon Financial in Traverse City.

But Gallagher and others say seniors will likely need the tax breaks to help offset continued high prices for groceries, health care and other living costs. Many will be hit by the law’s changes to Medicare and Medicaid that could result in higher premiums and lost coverage.

That pain will migrate to Munson Healthcare, the largest hospital group in northern Michigan. The eight-hospital system said it expects to lose more than $50 million a year because of Medicaid cuts kicking in over the next several years.

“We are doing everything we can to still care for our patients and neighbors, but this legislation puts our collective community health at risk,” Megan Brown, Munson’s chief marketing and communications officer, said in a statement.

The act also is estimated to boost the federal budget deficit by about $4 trillion over the next 10 years, possibly putting seniors' Social Security benefits at risk, one local financial advisor said.

Hudson

Those deficits make "future benefit cuts more likely as we move closer to (Social Security) being depleted," said Marc Hudson, president of Hudson Wealth Management in Traverse City.

But there are lucrative tax benefits for seniors in the new law, ranging from low-income retirees to those who employ financial advisors to protect retirement income.

The new law provides a bonus deduction of up to $6,000 for those 65 and older. The full deduction is available to taxpayers with a modified adjusted gross income of up to $75,000 for individual filers and $150,000 for couples filing jointly. Older taxpayers can take the deduction regardless of whether they itemize.

Each spouse can take the deduction, for a total of $12,000 if both are 65-plus, according to AARP. The deduction is reduced for single filers making up to $175,000 and couples earning $250,000. Those earning above those levels aren’t eligible for the bonus deduction, which ends in 2028.

“That’s a lot of money, as far as a deduction goes,” Braund said. “That helps a lot.”

What’s more, those 65 and older get an extra standard deduction this year of $2,000 for single taxpayers and $1,600 per qualifying spouse for couples filing jointly.

Those deductions will reduce the taxable income of a 65 year-plus couple with a combined income of $120,000 by $46,700, according to an example cited by AARP.

An analysis by the White House Council of Economic Advisers found that 51.4 million Social Security beneficiaries, or 88%, will no longer pay federal tax on their Social Security benefits because of tax changes in the new law.

Gallagher

And as Gallagher notes, the law makes permanent personal income tax cuts that were approved during President Donald Trump’s first term in 2017 for all tax filers. Those cuts, among the largest in history, were due to expire this year.

Much of the savings from the new tax law will go to higher income tax filers. The bottom 20% of earners will save an average $150 while the top 20% will pocket $12,540, according to the Urban-Brookings Tax Policy Center.

Another provision in the new law will benefit many middle-to-high income seniors, financial advisors say.

Tax filers earning up to $500,000 can deduct $40,000 in state and local property taxes, known as SALT, from their federal returns, up from the current $10,000. Braund says that will aid many retirees and near retirees with more than one home. The benefit goes back to $10,000 in 2030.

“That one affects a lot of our clients,” Braund said. “It helps those who are wealthy, but not super wealthy.”

But many seniors are likely to see tax savings eaten away by rising health care costs. And some, who are under 65 and insured by Medicaid, might get kicked off their health insurance because of work requirements and onerous paperwork requirements under the new law.

As many as 200,000 Michigan residents could lose Medicaid benefits over the next decade because of the new work requirements and tighter eligibility standards, according to the Citizens Research Council of Michigan.

An estimated 10% of Munson’s 200,000 patients who are insured by Medicaid or through the Affordable Care Act Marketplace will lose their coverage because of the new federal law, Brown says. Most of the Medicaid cuts take effect at the end of 2026.

Enhanced ACA premium tax credits, enacted during Covid by the American Rescue Plan, are set to expire at the end of the year. Unless Congress extends those credits, premiums for the 24 million people now receiving them will rise by as much as 90%, according to the Kaiser Family Foundation, a health policy research organization.

“It’s not going to be a good scene in 2026” for anyone now getting ACA premium credits, said Geoffrey Harris, vice president of Medicare sales at Michigan Planners, an employee benefits agency in Traverse City. “The whole Medicare space is in transition.”

Overall, Michigan health insurers have proposed a rate increase of 15% to 20% for next year because of rising health care costs, Harris says. He noted that Blue Cross Blue Shield of Michigan, the state’s largest health insurer, reported an operating loss of $1.7 billion in 2024.

Dawn McConnell, a Medicare and individual health insurance specialist at Ford Insurance in Traverse City, concurs that the loss of ACA premium tax credits will hit many seniors hard.

McConnell

“For those who are not quite ready to retire [and buy insurance on the ACA Marketplace], their insurance plans are going to be very expensive,” she said.

An estimated 15 million Americans could become uninsured because of changes to Medicaid, which provides health insurance to low-income families, and Medicare, which insures those over 65, according to Kaiser. Those changes have put many of McConnell’s customers on edge.

“They’re definitely concerned about their health insurance,” she said. “When people come into my office there’s a level of anxiety about the future. It’s made us start thinking out of the box a little bit.”

One option her agency offers customers is an indemnity plan that protects against costs incurred from catastrophic medical events. Another is a concierge plan in which a patient pays a health care provider a certain amount of cash up front to treat them throughout the year.

“I’m a busy woman these days,” McConnell said.