Federal Health Care Funding in Place for 2026

On February 3, President Trump signed legislation funding most federal agencies through fiscal year 2026 (FY26), which ends September 30. The package includes key health care extenders and reforms, including Medicare telehealth flexibilities and support for low-income beneficiary outreach. It also largely protects Administration for Community Living (ACL) programs and others which are important to older adults and people with disabilities.

Medicare Outreach and Enrollment

The State Health Insurance Assistance Program (SHIP) received level funding for FY26 relative to FY25 despite being targeted for cuts earlier in the funding cycle. SHIPs provide objective, free, one-on-one assistance to Medicare beneficiaries, their families, and caregivers, empowering them to make informed decisions about their coverage and care.

The bill includes a two-year extension of funding for outreach and enrollment activities originally authorized under the 2008 Medicare Improvements for Patients and Providers Act (MIPPA). Community-based organizations across the country, including SHIPs, rely on these dollars to connect low-income Medicare beneficiaries with programs make health care and prescription drugs more affordable.

Medicare Part D

The package further addresses affordability by reducing cost sharing for Medicare Part D Low Income Subsidy (LIS) enrollees, limiting their copays for generic drugs to $1 to $3 before zeroing them out entirely in 2028.

Another set of policies establish new reporting requirements and compensation guardrails for pharmacy benefit managers (PBMs), the entities that oversee prescription drug benefits for health insurance companies.

Medicare Telehealth

The bill extends COVID-19 Medicare telehealth flexibilities through 2027, keeping in place the geographic and location waivers, expanded lists of originating sites and eligible practitioners, and coverage of audio-only telehealth, among other policies. It also delays in-person visit requirements for mental health telehealth services until 2028, and requires the Department of Health & Human Services (HHS) to issue guidance within one year on best practices for telehealth services for individuals with limited English proficiency.

Hospital at Home

The bill continues another pandemic-era initiative, Medicare’s Acute Hospital Care at Home (AHCAH) program for five years, through September 30, 2030. Under the program, certain Medicare-certified hospitals can provide inpatient-level care in a patient’s home. As of this week, 366 hospitals across 139 health systems and 37 states were approved to participate.

Medicare Diabetes Prevention Program 

Another extension keeps the Medicare Diabetes Prevention Program (MDPP) in place through 2029. The MDPP provides eligible Part B beneficiaries with a free, year-long diabetes prevention program. Since the COVID-19 pandemic, virtual providers have been allowed to deliver MDPP services under temporary authority, similar to other Medicare telehealth flexibilities. The FY26 funding package provides longer-term certainty and expands participation options.

Medicare Advantage Provider Directories

Critically, the package tackles the longstanding problem of inaccurate Medicare Advantage (MA) provider directories. Beginning in 2028, MA plans must verify the accuracy of their provider directories every 90 days, the following year, plans will be required to post accuracy scores and protect enrollees from higher cost sharing that stems from incorrect directory information.

These updates are important steps towards ensuring provider directories are up-to-date and meaningful for enrollees. Directory errors and “ghost networks,” which list providers who may no longer be in-network, practicing, or accepting patients, have serious consequences for enrollees who rely on these tools to make decisions about their coverage and care. Better reliability will boost plan transparency and accountability as well as improve the beneficiary experience.

ACA Tax Credits Excluded

Missing from the bill is an extension of the enhanced Affordable Care Act (ACA) premium tax credits that helped more than 22 million people afford health care. Their expiration on December 31 puts nearly 5 million adults 50 and older at risk of skyrocketing premiums. The hardships and coverage losses that are expected to follow will mean reduced access to care and worse health outcomes, as well as higher Medicare costs, as more people enter the program with higher acuity than they would have otherwise. Medicare Rights continues to urge lawmakers to extend the credits without delay.