The One Big Beautiful Bill Act (OBBBA) - Impacts to Alaska

Medicaid is a joint federal and state public health insurance program for people with low incomes, including children, pregnant women, older adults, and individuals with disabilities. 1 in 3 Alaskans are enrolled in Medicaid. While not all enrollees use services every year, about 40% received care in FY25. Most Medicaid enrollees in Alaska are children or adults under the age of 65.

People qualify for Medicaid by meeting both income and categorical requirements. Categorical factors include age, pregnancy, or disability. One eligibility pathway, called Medicaid expansion, covers low-income adults without disabilities and who are not covered through other eligibility categories. Around 73,000 Alaskans are enrolled through this Medicaid expansion, and about two-thirds of this group used services in FY25. 

The One Big Beautiful Bill (the bill) establishes new community engagement requirements and requires states to check Medicaid eligibility twice a year for some Medicaid enrollees.

The requirements primarily apply to the Medicaid expansion population – able bodied adults ages 19 to 65 who qualify for Medicaid based on their income.

Many Alaskans will be exempted from the new requirements, making the full impact of the changes complicated to project. Further analysis is underway to better reflect Alaska’s unique circumstances.

Alaska is likely to experience different impacts than many other states due to the unique structure of our Medicaid program and the bill’s built-in exemptions.

• Many Alaskans are exempt from new community engagement requirements, including Alaska Native and American Indian individuals, people who are pregnant or medically frail, individuals with complex health conditions, and caregivers of young children or people with disabilities. These exemptions may significantly reduce the number of people in Alaska affected by these new rules compared to other states.
• Alaska does not rely on provider taxes or state-directed payments, which are significantly affected by this bill and drive some of the largest projected funding losses elsewhere. Because our financing approach is different, Alaska’s core Medicaid funding remains stable.
• The bill also creates a Rural Health Transformation Program, which Alaska is well-positioned to benefit from. Alaska will use this funding to strengthen rural care delivery and build system supports to improve health outcomes.

The bill requires that most able-bodied adults ages 19–64 enrolled through Medicaid expansion must complete 80 hours per month of work or other qualifying activities to qualify for Medicaid coverage. These activities include job training, education, or volunteer service. Individuals must show they met the requirements at least one month before applying and must meet the same requirements when they renew. 

The bill also allows people to meet these requirements based on their average income over the past 6 months, rather than 80 hours of work each month. This flexibility is especially important for Alaskans working in seasonal industries like fishing, tourism, or construction.

Many Alaskans will be exempt. The bill includes mandatory exemptions for individuals who are:

• Pregnant or within the postpartum coverage period
• Alaska Native or American Indian 
• Have a significant physical, intellectual, or developmental disability 
• Are blind or disabled
• Have a substance use disorder or disabling mental health condition
• Have a serious or complex medical condition 
• Veterans with a total disability rating
• Enrolled in Medicare
• A parents or caregiver for a child under 14 or someone with a disability
• Recently incarcerated (within 90 days)
• Under age 26 and formerly in foster care
• Meet SNAP or TANF work requirements

States may also grant short-term hardship event exemptions for:

• People living in areas with high unemployment 
• Those in federally declared disaster areas
• Individuals receiving inpatient or residential care 
• Those traveling for medically necessary care not available locally 

Here are some examples to help illustrate who would and would not need to work:

Not Required to Work 

Must Work or Engage in Other Qualifying Activity 

Alaska is reviewing these rules and will provide more specific guidance as implementation moves forward.

The bill requires states to implement these requirements starting December 31, 2026. However, States may apply to phase in implementation of these requirements through 2028 under a good-faith waiver. Alaska is evaluating how to implement these requirements and is working closely with federal partners. 

The bill allows states to grant short-term hardship event exemptions from the new Medicaid community engagement requirements for individuals living in areas with high unemployment. To qualify, a borough or census area must have an unemployment rate that exceeds either 1.5 times the national unemployment rate, or 8%, whichever is lower. 

Based on recent Bureau of Labor Statistics data, 15 Alaskan boroughs and census areas would currently meet this threshold. The areas listed below demonstrate which areas could be exempted under current unemployment rates. This list may change over time as unemployment rates shift, so the areas eligible for exemption could be different when the new requirements take effect. Areas that could currently qualify for the exemption include:

• Bethel Census Area
• Chugach Census Area 
• Copper River Census Area
• Denali Borough
• Dillingham Census Area
• Haines Borough
• Hoonah-Angoon Census Area
• Kusilvak Census Area
• Municipality of Skagway
• Nome Census Area
• Northwest Arctic Borough
• Petersburg Borough
• Prince of Wales-Hyder Census Area
• Southeast Fairbanks Census Area
• Yukon-Koyukuk Census Area

This exemption is especially important for protecting Medicaid coverage in remote and rural parts of the state, where job opportunities may be limited. 

Disabled individuals are exempted from the new community engagement requirements. 

This bill does not make changes to eligibility for children. 

The bill does not reduce Alaska’s base federal Medicaid matching rate, which remains unchanged. While some states may see reduced funding due to changes in provider taxes or supplemental payments, Alaska does not use those financing mechanisms. Alaska will continue to receive the same federal match for eligible Medicaid expenditures.

No. Alaska does not use provider taxes or state-directed payments (SDPs), which are financing mechanisms many other states rely on to draw down additional federal Medicaid funds. 

• Provider taxes are fees that states collect from hospitals or other healthcare providers, which can be used to increase Medicaid payments and trigger higher federal matching funds. 
• State-directed payments are special payment arrangements that allow states to direct how managed care plans pay certain providers, often resulting in higher provider reimbursement. 

Because Alaska’s Medicaid program does not use these tools, it is not affected by the bill’s provisions that restrict or reduce funding tied to provider taxes and SDPs.

The bill creates a $50 billion Rural Health Transformation Program to help states improve rural health care. Funds will be distributed by the Centers for Medicare & Medicaid Services between FY26 through FY30.

• States, not individual hospitals or providers, must apply by December 31, 2025.
• If awarded, a state will receive funding for all five years.
• Alaska is well-positioned due to its large rural population and geographic challenges.
• Funds cannot be used to cover the state share of Medicaid, but they can support a wide range of rural health improvements.
  States must use the funding for at least three of the following areas:
• Chronic disease management
• Alternative payment model development
• Rural workforce recruitment and retention
• Telehealth and health technology investments
• Mental health and substance use disorder treatment
• Cybersecurity upgrades and infrastructure support
• Payments to providers for care delivery

This is a significant opportunity to address long-standing challenges in Alaska.

Beginning July 1, 2028, states may create new “needs-based” HCBS waivers under section 1915(c) for individuals who require support but do not meet an institutional level of care. This new waiver type is intended to offer flexibility to design services around state-defined needs-based criteria. 

Services under these waivers cannot include room and board and must cost less than institutional care. States can cap enrollment but cannot use these waivers to delay access for people eligible for traditional HCBS waivers. 

Alaska already has HCBS waivers in place that provide similar services, but this bill provides support to states looking to establish a new option through implementation funding ($100 million nationally) and simplified federal review.

No. Alaska’s HCBS programs are established through long-standing Medicaid waivers that remain in place. These services are critical for helping seniors and people with disabilities receive care at home or in their communities, rather than in institutions. Alaska remains strongly committed to sustaining and expanding this model of care, and will continue investing in community-based supports as part of its overall approach to Medicaid.

Starting December 31, 2026, Medicaid eligibility for many adults enrolled through expansion will need to be reviewed every 6 months instead of once a year. Some people, including Alaska Native and American Indian individuals, will be exempt from this change. 

Alaska has already implemented an “ex parte” review process, which means the state first checks existing data sources to see if someone still qualifies, before asking them for paperwork. This approach speeds up renewals and reduces how often people need to take action to keep coverage 

The Department of Health is modernizing and improving its eligibility systems to make even better use of automation which will improve efficiency and help keep eligible Alaskans covered. Full system improvements are expected to be in place by 2028.

The bill requires states to charge copayments for some Medicaid expansion enrollees with incomes above 100% of the federal poverty level, starting in 2028. There are limits on how much a state can charge. For example, copayments cannot be more than $35 or a certain percentage of an individual’s income.  

Alaska already has copayments in place for certain enrollees for many services, including hospital visits, outpatient care, and prescriptions. The state is assessing whether any changes to copayments are needed before the federal effective date.

Starting January 1, 2028, states can choose to raise the home equity limit used to determine eligibility for long-term care services.

Right now, Alaska’s limit is $500,000. Under the new law, Alaska could raise the limit to $1 million. This change would help more Alaskans qualify for long-term care coverage without being disqualified because their home is worth more than current limits.

Not immediately. Currently, states can avoid federal penalties for Medicaid payment errors (such as covering ineligible individuals) if they act in good faith to correct them. The bill ends this waiver in 2030.  

Starting then, states may face financial penalties if more than 3% of their Medicaid cases have errors.