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In this JAMA Health Forum column, Larry Levitt highlights how the Make America Healthy Again agenda aimed at chronic disease does little to address the affordability of health care and that efforts to lower federal spending on health care may worsen the problem, raising out-of-pocket costs for many people with Medicaid and Affordable Care Act coverage.
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The budget reconciliation bill that passed in the U.S. House of Representatives in May 2025 includes provisions intended to make ICHRAs – Individual Coverage Health Reimbursement Arrangements – easier to use and more financially attractive for small businesses.
Three sections of the bill address these health reimbursement arrangements integrated with individual-market coverage, currently known as ICHRAs. The changes include providing a tax incentive for small businesses that start reimbursing employees for the cost of individual health insurance and relaxing some existing administrative rules. The budget bill also calls for ICHRAs to be rebranded as Custom Health Option and Individual Care Expense (CHOICE) Arrangements.
ICHRAs have been available for adoption by businesses since 2020, offering a way for employers of any size to reimburse employees for the cost of individual-market health insurance or Medicare, and other qualified medical expenses if the employer allows that. But ICHRAs have not yet been codified under any federal legislation. That will change if the budget reconciliation bill, also known as the “One Big Beautiful Bill,” is enacted.
Legislation to rebrand ICHRAs as CHOICE Arrangements passed in the House in 2023, although it did not advance in the Senate. But the specific provisions of the budget reconciliation bill that we’ll discuss in this article weren’t part of the 2023 legislation.
Here’s how the new budget legislation – if enacted – would affect ICHRAs:
Section 110203 of the House budget bill creates a nonrefundable tax credit that would be available to small employers (those with fewer than 50 full-time equivalent employees) during the first two years they offer a CHOICE Arrangement to their employees. The tax credit would be $100 per employee per month for the first year and $50 per employee per month in the second year. Both amounts would be adjusted for inflation in years after 2026.
Although ICHRA utilization has increased significantly in recent years, it still accounts for a very small segment of employer-sponsored health benefits. But the addition of a federal tax credit available to employers nationwide might incentivize more small employers to begin offering ICHRA benefits to their employees.
Indiana began offering a two-year tax credit in 2024, to small employers that offer ICHRAs to their employees. But while Indiana’s tax credit provides a maximum of $400 per employee in the first year, the federal tax credit in the House’s budget legislation would provide up to $1,200 per employee in the first year.
Under current rules, an ICHRA can be used to reimburse employees for individual-market coverage purchased through the ACA Marketplace / exchange or outside the exchange. If the employer’s ICHRA contribution is not enough to cover the full premium, the employee is responsible for covering the remaining premium.
Employers that utilize Section 125 cafeteria plans can allow employees the option to use a pre-tax salary reduction to pay the employee’s share of the premiums, but only if the plan is purchased outside the Marketplace (meaning the plan is purchased directly from an insurer, with or without the assistance of an agent or broker, without utilizing the health insurance Marketplace).
Section 110202 of the House budget bill would change that. It would allow employees to utilize pre-tax salary reductions (if offered by the employer) for the employee’s share of an individual-market plan, even if the plan is obtained in the Marketplace.
If implemented, this would help to create a “no wrong door” environment for taking advantage of an employer’s offer to reimburse premiums, in situations where the employer also offers a way for the employee’s share of the premium to be paid on a pre-tax basis.
Under current rules, an employer can offer both an ICHRA and a traditional group plan, but only if they’re offered to different employee classes. In other words, no employee can be offered a choice between a traditional group plan and an ICHRA.
Section 110201(a)(2)(C) of the House budget bill would relax this rule for small employers. If all of the employees in a class are offered a fully insured small-group health plan, those employees could also be offered the option to be reimbursed for individual-market coverage with a CHOICE Arrangement instead.
It’s unclear whether small employers would utilize this option however, as doing so would require the administrative burden of offering both a CHOICE Arrangement and a small-group health plan.
The House passed the One Big Beautiful Bill on May 22, 2025 and sent it to the Senate. Senate Majority Leader, John Thune, has said that his goal is for the Senate to vote on the bill by the 4th of July, but the Senate is also preparing to modify the bill in various ways.
So it is unclear whether the bill will pass in the Senate, and if so, what provisions of the House bill will remain intact after the Senate’s revisions. But while many aspects of health policy are politically contentious, ICHRAs have enjoyed broad bipartisan support since their debut.
It’s worth noting that the budget bill’s fairly brief sections dealing with CHOICE Arrangement contain far fewer regulatory details than the existing ICHRA rules, although it appears the House intends to keep the existing ICHRA rules unless otherwise specified in the legislation. But additional details could be included in the Senate’s version of the budget bill, or could be addressed in additional administrative rulemaking.
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written hundreds of opinions and educational pieces about the Affordable Care Act for healthinsurance.org.
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The No Surprises Act, which was signed into law by President Trump during his first term and took effect in 2022, aims to protect consumers from certain surprise medical bills. The law established processes to keep the patient out of the payment negotiations between the provider and the plan. In the event of an unsuccessful negotiation, providers and payers enter an independent dispute resolution (IDR) process in which a designated third-party arbitrator examines eligible evidence from both parties to decide on a final payment rate.
KFF’s analysis examines the implementation status of the IDR process and discusses some of the impacts on providers, payers, and ultimately, consumers, with some key findings, including that nearly two in three disputed services involved care that was furnished in an emergency room. The top 10 dispute-initiating parties are all providers or their billing consultants, and they submitted 72% of the out-of-network payment disputes from 2023-mid-2024. The top three parties accounted for 53% of payment disputes from the beginning of 2023 through mid-2024: TEAMHealth, SCP Health, and Radiology Partners, all of which are backed by private equity firms. While the No Surprises Act is protecting consumers from surprise bills, it is likely not reducing prices and spending.
The analysis is available through the Peterson-KFF Health System Tracker, an online information hub dedicated to monitoring and assessing the performance of the U.S. health system.
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The 2025 federal budget reconciliation bill passed by the House aims to promote the use of health savings accounts (HSA) through a variety of changes to the HSA provisions included in the 2003 law that created HSAs. While these changes could provide more incentives for individuals to use HSAs, they would cost the federal government almost $45 billion over 10 years, according to an estimate from the Congressional Budget Office. This Policy Watch provides an overview of HSAs and examines key HSA-related provisions in the House-passed budget reconciliation bill and their costs to the federal budget.
HSAs are tax-advantaged spending accounts designed to help enrollees in high-deductible plans (HDHPs) pay out-of-pocket medical costs. Individuals can contribute amounts and later make withdrawals to pay for unreimbursed qualified medical expenses (e.g., deductibles, copays, coinsurance, services not covered by insurance). There are annual contribution limits for individuals (for 2025, the contribution limit is $4,300 for individual coverage, $8,550 for a family). Employers are also eligible to make contributions to their employees’ HSAs, as well as family members on behalf of an individual with an HSA. HSAs are owned by the individual, not the employer. These accounts are characterized as “portable,” meaning they can be carried to a new job or retained upon retirement or loss of work.
A key feature of these accounts is that an individual must be enrolled in an HSA-eligible HDHP with a deductible of at least $1,650 for an individual or $3,300 for a family in 2025. HSA enrollees must pay all medical costs out-of-pocket until they reach the deductible, except for specified preventive services and certain insulin products, which insurance can start paying for before the deductible is met.
Also, an individual cannot have other health coverage in addition to the HDHP to be eligible for an HSA. So, receipt of medical services outside of the HDHP may jeopardize eligibility for an HSA. Additionally, once an individual is enrolled in Medicare, they can no longer contribute to an HSA (although they can still access funds in an existing HSA).
Health savings accounts are unique in offering a “triple-tax advantage”: contributions are tax deductible, growth of funds via investment is tax-free and account balances roll over, and withdrawals are tax-free if they are used for qualified medical expenses (e.g., doctor visits, prescription drugs, medical equipment) incurred after the HSA is established.
According to the KFF 2024 Employer Health Benefits Survey, 22% of firms offering health benefits offered a high-deductible health plan (HDHP) paired with an HSA to their employees. Larger firms offering health benefits are much more likely than smaller firms to offer an HSA-qualified HDHP (50% for offering firms with 200 or more workers compared to 21% for firms with 3-199 workers). In addition to the contributions that enrollees can make to their HSA, employers are also permitted to contribute to covered workers’ HSAs. Among firms that contribute, the average employer contribution is $842 for single coverage and $1,539 for family coverage.
HSA-qualified HDHPs are also offered on the Affordable Care Act (ACA) Marketplace; however, the share of total health plans offered on the Marketplace that are HSA-eligible HDHPs has decreased from 7% in 2017 to 3% in 2023, and total enrollment in these plans has fallen from 8% in 2017 to 5% in 2022. Even though the deductibles of most HDHPs offered on the ACA Marketplace well exceed the minimum deductible requirements for HSAs, some HDHPs sold on the Marketplace cover services before the deductible in addition to the specific health services that the IRS permits for HSA-eligible plans. The drop in HSA availability on the Marketplace could also be because the Centers for Medicare and Medicaid Services (CMS) limits insurers on the exchange to offering no more than two non-standardized plans for each standardized plan they offer in a metal level for a given product/network type (e.g., HMO, PPO).
There are disparities in HSA contributions and balances across race and income groups. Research has found that higher-income individuals are more likely than those with lower incomes to be enrolled in an HSA. One explanation for this difference could be that those with higher incomes have more means to pay for out-of-pocket expenses for medical care received pre-deductible. Additionally, the tax advantages of HSAs may be particularly attractive to higher-income individuals, who may have more disposable income to maximize contributions than individuals with lower-incomes, who may not be able to afford to contribute to an HSA. Because they are in a higher tax bracket, the reduction of taxable income by making HSA contributions is also of greater value to a higher-income family than to a family with a household income in a lower tax bracket (or that earns too little to file a federal tax return). For instance, a married couple with a household income of $600,000 saves 35 cents for every dollar they contribute to their HSA, while a married couple making a combined $80,000 saves 22 cents per dollar contributed to their HSA.
Research also finds that HSA enrollment is skewed more towards White HDHP enrollees than their Black and Hispanic counterparts, which might be exacerbating existing racial income disparities and financial barriers to health care. In an analysis conducted by the Employee Benefits Research Institute (EBRI) in 2022, accountholders living in disproportionately Black or Hispanic zip codes had, on average, lower HSA balances and lower contributions than accountholders living in disproportionately White zip codes.
Investing HSA balances provides a unique, untaxed wealth-building vehicle for those who are aware of this option and have the means to do so. Despite the appeal of the tax-free investment option though, only 9% of HSA holders in 2024 invested a portion of their funds, according to a Devenir report. However, investments made up a more substantial portion of HSA assets that same year, representing a little over two-fifths of total assets. Separately, EBRI found that disproportionately White and Asian zip codes, as well as zip codes with a higher median household income, had a higher propensity to invest HSA funds in 2022.
The first Trump administration was a proponent of expanding access to HSAs. In 2019, an Executive Order and subsequent guidance expanded the list of services allowed to be covered pre-deductible by HSA-qualified HDHPs to include preventive services that help maintain health status for those with certain chronic conditions. This definition was further expanded in IRS guidance from 2024. Congress in COVID-relief legislation permitted telehealth services to be covered by HDHPs pre-deductible up until the end of last year. In the Inflation Reduction Act, Congress changed the HSA law to allow individuals to access certain insulin products pre-deductible.
If passed by the Senate and signed into law, key changes to HSAs would include:
Making gym memberships a qualified medical expense that individuals can pay for with their HSA. The reconciliation bill would allow HSA distributions to pay for certain sports and fitness expenses, such as gym memberships and participation/instruction in physical activities. Annual HSA distributions for these expenses would be capped at $500 for single taxpayers and $1,000 for joint or head of household filers. This is the costliest provision in the budget reconciliation bill: $10.5 billion from 2025 to 2034.
Allowing individuals to qualify for an HSA even if they are covered by a direct primary care arrangement or an on-site employee clinic. Direct primary care (DPC) is a different model of primary care delivery in which patients pay a periodic fee to a practice that covers unlimited primary care services (e.g., vaccines, lab work, office visits, consultive services) without cost-sharing. DPC does not usually cover specialized and other services and is therefore not generally considered comprehensive coverage. Some HDHP enrollees and others choose to add DPC to meet their primary care needs. The budget reconciliation bill stipulates that DPCs that meet specific requirements will not be treated as a health plan. In addition, the legislation would also treat dollars used to pay DPC fees as an HSA-specific qualified medical expense. This would allow HSA holders to add it on as a complement to their HDHP and use their HSA funds to pay DPC membership fees, with the caveat that these fees cannot exceed $150 monthly ($1,800 annually) in order to not be considered a health plan. This provision is projected to cost about $2.8 billion from 2025 to 2034.
On-site employee sponsored health clinics are health care facilities on an employer’s premises (or facilities used primarily for the same employer) that provide free or reduced cost services to employees. Current law makes an individual ineligible to use an HSA if they have access to an on-site employee clinic that provides significant health benefits (i.e., providing care for all medical needs for free or waiving copays and deductibles) in addition to disregarded coverage and preventive services. The budget reconciliation bill proposes to not treat on-site employee clinics offering qualified items and services as health plans for purposes of determining HSA eligibility if the services provided at the clinic meet certain parameters. This provision is projected to cost about $2.4 billion from 2025 to 2034.
Increasing the amount certain individuals can contribute to their HSAs in a year and allowing contributions that the law currently restricts. For example:
Treating Marketplace bronze plans and catastrophic plans as a high-deductible plan that can be paired with an HSA. To increase accessibility of HSAs in the individual market, bronze plans and catastrophic plans would be treated as HDHPs. Bronze plans have the highest cost-sharing and lowest premiums among metal-tier plans, while catastrophic plans have lower premiums than bronze plans and deductibles are equal to the ACA annual limit on out-of-pocket costs ($9,200 for individual coverage in 2025 and $10,150 in 2026). This provision is projected to cost about $3.6 billion from 2025 to 2034.
If passed by the Senate and signed into law, HSA tax deductions would cost the federal government almost $14.8 billion in lost revenue in fiscal year (FY) 2025, and if eligibility and regulations governing the accounts remained the same, they would cost an estimated $180.9 billion from 2025 to 2034. The House-passed budget reconciliation bill contains ten reforms that broaden the range of HSA-eligible qualified medical expenses, loosen restrictions on individual contributions, and increase access to HSAs. According to the Congressional Budget Office’s estimated revenue effects for this bill, these expansions would increase the total projected cost of HSAs by approximately $44.3 billion over the next ten years (Figure 1).
Efforts to expand HSAs would mean new large government expenditures, at a time when proposed tax cuts and significant changes to Medicaid and ACA programs will leave more people without coverage. Congress arguably created HSAs in 2003 to be paired with HDHPs as a tool to pay for current health care costs and to incentivize price shopping for anticipated health services. Today, expansions to HSAs appear to focus less on cost-conscious shopping, as federal rules have added more pre-deductible coverage of certain items and services and expand the items that can be treated as medical services, but only for consumers with health savings accounts. Proposals aimed at promoting “choice and control” would allow more individuals to use funds in an HSA to pay directly for certain services. Although some pre-deductible items and services are aimed at managing specific chronic illnesses, these provisions do not reach all consumers who could benefit from other types of specialized items and services, which often come at a high cost, to manage and treat their chronic condition.
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If you’re a small-business owner and you’d like to reimburse your employees, pre-tax, for the cost of health insurance that they buy on their own, you have two options: An ICHRA (Individual Coverage Health Reimbursement Arrangement) or a QSEHRA (Qualified Small Employer Health Reimbursement Arrangement).
As long as you have fewer than 50 full-time equivalent (FTE) employees and don’t also offer a group health plan, you have your choice of either an ICHRA or a QSEHRA. Note that only employers with fewer than 50 FTE employees can select a QSHERA.
Read our overviews of ICHRAs and QSEHRAs.
Here’s a summary of how these two types of health reimbursement arrangements compare, to help you determine which one will be a better fit for your business:
Key differences between ICHRA and QSEHRA |
||
|---|---|---|
| ICHRA | QSEHRA | |
| Eligible employer size | Available to employers of any size. | The employer must have fewer than 50 full-time equivalent employees. |
| Can the employer also offer a group health plan? | Yes, as long as the ICHRA and group plans are offered to different employee classes. | No. |
| Are there caps on how much an employer can reimburse? | No, this is up to the employer. | Yes. In 2025, reimbursements are capped at $6,350 for a single employee, or $12,800 for an employee with family coverage. (Employers can set lower limits.) |
| Can employees use the benefit in addition to a Marketplace subsidy? | No. Learn more about Marketplace plan affordability and ICHRAs. | Yes, but the subsidy amount is reduced by the amount of the QSEHRA. |
| Do employees get an individual-market special enrollment period when the reimbursement arrangement becomes available to them? | Yes. | Yes. |
| What type of coverage can employees have? | Individual-market coverage or Medicare. | Any minimum essential coverage. (If it’s a group plan through their spouse’s employer, pre-tax QSEHRA reimbursement is likely not available, because group premiums are typically already paid with pre-tax dollars.) |
| Can out-of-pocket medical expenses be reimbursed? | Yes, if allowed by the employer. | Yes, if allowed by the employer. |
| Are there minimum contribution or participation requirements? | No. | No. |
| Can different benefits be offered to different employees? | Yes, if you divide your employees into aauthorized classes and offer different benefits to different classes. (If any classes are being offered a traditional group plan instead of an ICHRA, each class must have at least 10 employees.) | No, the QSEHRA must be offered on the same terms to all eligible employees. (Employees might receive different reimbursement amounts, depending on the receipts they submit for reimbursement.) |
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written hundreds of opinions and educational pieces about the Affordable Care Act for healthinsurance.org.
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Updated: May 20, 2025
On May 18, the House Budget Committee advanced a budget reconciliation bill that includes significant changes to the Medicaid program and the Affordable Care Act, as well as additional provisions related to Medicare and Health Savings Accounts. The following includes a summary of the health provisions included in the House Rules Committee Print released on May 19 compared to current law.
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In the United States, the percentage of adults seeking mental health treatment or counseling has been steadily rising.
In this article, we’ll take a look at some of the top mental health insurance considerations that consumers should understand.
Let’s start with an obvious and frequently asked question:
Whether or not your health plan is required to cover mental health care will depend on the type of coverage you have. Here are some basic rules to keep in mind:
Individual and small-group plans must cover mental health and substance use disorders (SUD) treatment, but with specific coverage requirements that vary by state. These rules do not apply to plans that are grandfathered or grandmothered under the ACA.
Total out-of-pocket costs and how those costs are distributed vary greatly from one plan to another. For example, some plans might cover various services with copays from the outset, while other plans might require you to meet your deductible (which could be thousands of dollars) before the plan starts to pay for any care. And as is the case for any type of care, total out-of-pocket exposure varies by plan.
Mental health parity rules apply to these types of plans.
Fully-insured large-group plans are plans an employer purchases from an insurance company either directly, or through a sales agency. In most states, “large-group” means the employer has 51 or more employees, but there are some states where the threshold is 101 employees. (Under the ACA, this threshold was intended to be 101 employees, but the PACE Act reduced it to 51. States had the option to use the 101 threshold instead, and a few do so.)
This type of plan must cover mental health and SUD treatment only if state regulations require it. These requirements vary from one state to another.
For plans that provide coverage for mental health and SUD treatment, out-of-pocket costs vary by plan, but there cannot be any dollar limits on how much the plan will pay for these services.
Mental health parity rules apply to these plans.
Self-insured plans, under which an employer uses its own money to pay employees’ claims, rather than purchasing coverage from an insurer, are not required by federal regulations to cover mental health care or SUD care, and states cannot set coverage mandates for self-insured plans. If a self-insured plan covers mental health or SUD treatment, the plan cannot limit how much the plan will pay for those services.
Mental health parity rules apply if the employer sponsoring the self-insured plan has more than 50 employees.
Medicare covers a wide range of mental health and SUD care, including both inpatient and outpatient care.
Medicare Advantage plans must cover at least the same services that Original Medicare covers, although out-of-pocket costs can be different. Medicare Advantage plans can also limit coverage to a specific network of providers, and can require prior authorization.
Federal parity rules do not apply to Medicare, but a separate law passed in 2008 reduced Medicare cost-sharing for outpatient mental health care to align it with cost-sharing for other kinds of outpatient medical care.
Medicaid is the largest payer for mental health services in the United States, and various types of behavioral health care are encompassed under Medicaid’s mandatory benefits that all states must provide.
As with other aspects of Medicaid coverage, specific benefits for mental health and SUD treatment vary from one state to another. But many states have federal Medicaid waivers that include various services to assist people with SUDs Medicaid waivers are an option provided for in federal law that gives states flexibility to test innovative approaches to providing care.
Mental health parity rules apply to Medicaid managed care plans, Medicaid alternative benefit plans (including the ACA’s expansion of Medicaid), and the Children’s Health Insurance Program (CHIP).
Short-term health insurance and coverage that is considered an “excepted benefit” do not have to cover mental health and SUD treatment.
Short-term health insurance policies are not considered individual health insurance, are not regulated by the ACA, and are limited to total durations of no more than four months, including renewals. “Excepted benefits” include coverage such as workers’ compensation, fixed-indemnity plans, accident insurance, and critical illness plans.
Mental health parity rules do not apply to short-term plans or excepted benefits coverage.
While many plans – including Marketplace plans and most employer-sponsored plans – cover mental health and SUD treatment, short-term plans and excepted benefit plans typically do not provide these benefits.
The Affordable Care Act significantly expanded coverage of mental health treatment in several key ways.
Prior to the ACA, mental health conditions and substance use disorders (SUD) were an obstacle to obtaining health insurance and often resulted in declined applications in the individual health insurance market. But that is no longer the case, because of the ACA. The ACA banned the use of medical underwriting in the individual market (where it was used extensively before 2014), and eliminated pre-existing condition waiting periods for employer-sponsored health insurance.
The ACA also allowed states to expand Medicaid to cover adults with income up to 138% of the federal poverty level, which 40 states and DC have done. As of June 2024, nearly 21 million people are enrolled in Medicaid due to this expansion, resulting in better access to mental health and SUD treatment.
The ACA also requires all non-grandfathered major medical health plans to cover various preventive care at no cost to the patient. Among the benefits included are depression screening and alcohol misuse screening for adults and adolescents, as well as autism screening and behavioral assessments for children.
The ACA requires individual and small-group health plans (with effective dates of Jan. 2014 or later) to cover essential health benefits (EHBs), with no annual or lifetime dollar limits. One of the categories that must be covered on all of these plans is “mental health and substance use disorder services, including behavioral health treatment.”
For perspective on the significance of this requirement, more than a third of non-group health plans didn’t provide any mental health benefits in 2013, and almost half did not cover SUD treatment. (Pre-ACA coverage was better among employer-sponsored plans.)
Within the ACA’s basic EHB framework, it’s up to each state to determine exactly what services must be covered. Each state has selected an EHB benchmark plan that details minimum coverage requirements for each EHB category. So the specific mental health and SUD care that must be covered will vary from one state to another, depending on the state’s EHB benchmark plan’s coverage.
Prescription drugs are also an EHB under the ACA. So all individual and small-group plans with effective dates in 2014 or later are required to cover prescriptions, including medications to treat behavioral health problems. But health plans set their own formularies – covered drug lists – within certain guidelines. (Those guidelines include a requirement that the plan must cover at least as many drugs in each category and class of drugs as the state’s EHB benchmark plan – not necessarily the same drugs that the benchmark plan covers – or one drug in each category and class, whichever is greater.)
Large-group and self-insured plans are not required to cover the ACA’s EHBs. But if they do, they must cover them without any annual or lifetime dollar limits on how much the plan will pay for an enrollee’s care.
No, mental health parity rules do not require health plans to cover mental health care. Learn more about mental health parity requirements.
As a result of the ACA, some health plans are required to provide coverage for mental health and SUD treatment. And states can impose coverage mandates on plans that aren’t self-insured.
Self-insured plans are subject to federal rules, but they are not subject to state insurance rules. There is no federal requirement that self-insured plans cover mental health or SUD treatment. For plans that aren’t required to provide those benefits, mental health parity rules only apply if the plan opts to provide mental health and/or SUD benefits. And for self-insured plans, mental health parity rules only apply if the employer has more than 50 employees
As noted above, coverage requirements vary depending on the type of plan a person has. And as is the case for coverage of any type of healthcare, out-of-pocket costs and benefit specifics will vary from one health plan to another.
But most major medical health plans in the U.S. do cover mental health therapy and mental health medications. Many plans will also cover telehealth therapy, although this varies by plan.
A recent AHIP survey found that the majority of insured Americans who sought mental health care were able to obtain it without difficulty, and 90% were satisfied with the care they received. In addition, 60% reported that their mental health care was fully covered by insurance, and 33% reported that their mental health care was partially covered by insurance, while only 3% said that it wasn’t covered. (Note that “covered” doesn’t mean the health plan pays the full bill, since enrollees have cost-sharing for covered services, in the form of deductibles, copays, and coinsurance.)
But on the other hand, the American Psychological Association (APA) points to an analysis done by KFF and CNN, which found that a third of survey respondents were not able to access the mental health care they needed. Cost was the primary obstacle, as well as stigma and a shortage of mental health providers.
Compounding the shortage of providers is the fact that many mental health professionals do not accept insurance, and psychiatrists are much more likely than other medical specialists to not accept new patients with either private health insurance or Medicare.
So, if you already have a relationship with a mental health provider, you may have to switch to a different provider to utilize your health plan’s benefits, as your preferred provider might not accept your insurance. You can check with your plan to see if any out-of-network benefits are available. If so, you may be able to seek reimbursement from your plan for some of the cost of seeing a mental health professional who doesn’t accept insurance.
Although most major medical health plans will cover substance use disorder (SUD) treatment, the specifics vary by plan. As noted above, the only plans that are required to cover SUD treatment are individual and small-group plans (under the ACA), or fully-insured large-group plans in states that require the coverage. Parity rules apply to far more plans, but again, that’s only applicable if the plan includes coverage for SUD treatment.
Treatment needs vary depending on the patient, but can range from outpatient therapy to partial hospitalization to inpatient rehabilitation that can last anywhere from just a couple of weeks to more than three months.
Despite state and federal efforts to improve access to affordable SUD treatment, barriers remain. For example, some people may find that their policy doesn’t cover the type of inpatient care they need, or doesn’t cover medication-assisted addiction recovery.
And for Medicaid, which plays a significant role in covering SUD treatment in the U.S., there is significant state-to-state variation in the coverage provided and the care that enrollees receive.
As with other behavioral health care, it can sometimes be challenging for patients to find SUD practitioners who are in-network with their health plan.
If you need SUD treatment, you or a caregiver should check with your health plan to see what’s covered, whether prior authorization is needed, and what SUD treatment programs are in-network with your plan.
Eating disorders are among the most serious behavioral health issues, and a multifaceted treatment approach is often necessary.
But while many health plans cover at least some aspects of eating disorder treatment, patients still face challenges in obtaining the care they need. For example, it can be difficult for a patient and their care team to prove to the patient’s health plan that a certain level of care – such as a residential program or inpatient treatment – is medically necessary, and health plans generally deny coverage if the care isn’t deemed medically necessary.
And some health plans will deny coverage based on metrics such as how much weight the patient has lost, without considering the full picture of the patient’s medical needs.
There are also gaps in the type of care covered by various plans, and some patients have difficulty finding in-network providers who can treat their eating disorder (as is the case for other types of behavioral health care).
Most health insurance policies will not cover marriage counseling, as it’s not considered medically necessary treatment.
If one or both partners are diagnosed with a mental illness, such as depression or anxiety, health insurance will generally cover therapy to treat that condition. Depending on the circumstances, that might involve therapy where both partners are present, and it might include discussions about the marriage.
But if the purpose of the therapy is marriage counseling without a medical diagnosis, it’s unlikely that health insurance will cover the cost.
If your employer offers an employee assistance program, it may include access to a limited number of basic couples counseling sessions.
To find out whether your health insurance covers mental health treatment, you’ll need to confirm coverage details with your plan.
To see exactly what’s covered, you can read the summary plan description (SPD) that came with your policy, or the policy documents you received if your policy doesn’t have an SPD. If you have questions about your benefits, you can contact the plan’s customer service department.
Here are examples of questions you may want to ask your plan administrator before you seek non-emergency mental or SUD health care:
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written hundreds of opinions and educational pieces about the Affordable Care Act for healthinsurance.org.
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Updated: May 13, 2025
On May 11, the House Energy and Commerce Committee released draft legislative language of a bill to meet spending targets aimed at funding President Trump’s domestic priorities that includes significant changes to the Medicaid program. The Congressional Budget Office (CBO) estimates that the bill would decrease the federal deficit by more than the $880 billion over 10 years that was called for by the budget resolution passed by Congress in April. CBO preliminary estimates show that the health provisions (including Medicaid) would reduce the deficit by $715 billion over ten years and increase the number of people without health insurance by at least 8.6 million by 2034.
The following includes a summary of the Medicaid provisions included in the draft legislation compared to current law. The Energy and Commerce Committee is expected to consider this legislation in a committee mark-up on May 13, so provisions could change during that process.
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There’s been a lot of buzz in the media in early 2025 about the likelihood of Medicaid cuts to significantly reduce federal spending on the program. With almost 72 million people covered by Medicaid, there is widespread concern about what sort of cuts are likely.
This article examines what could be cut – and who the cuts would likely affect.
Medicaid cuts are making the news due to a Congressional budget proposal that calls for reducing federal spending by hundreds of billions of dollars to pay for various tax cuts. Both chambers of Congress have agreed on a framework for the budget. They ultimately have to agree on details of a budget change, and we don’t yet know how that will unfold.
But the budget framework passed by both the House and Senate directs the Committee on Energy and Commerce, which is the House committee with jurisdiction over Medicaid, Medicare, and the Children’s Health Insurance Program, to reduce the federal deficit by $880 billion over 10 years. According to the Congressional Budget Office, cuts of that magnitude would have to primarily target Medicaid.
So what Medicaid cuts could Congress make, and how would they affect enrollees? While we don’t yet know what will be in the final budget bill, we do have information from the House Ways & Means (W&M) and Budget Committees, outlining various cuts, along with potential savings.
Here’s a look at five likely focus areas for Medicaid cuts:
Potential funding cut: About $100 billion over a decade
Medicaid work requirements are not a new idea. Several states received federal approval for work requirements under the first Trump administration, although most were never implemented. Georgia, which has had a work requirement in place since mid-2023 for certain adults, is currently the only state that requires some enrollees to be working to qualify for Medicaid.
If a federal Medicaid work requirement were implemented, the impact would depend on several factors, including:
The Robert Wood Johnson Foundation estimates applying a federal work requirement just to the Medicaid expansion population could result in 4.6 to 5.2 million people losing Medicaid eligibility.
Potential funding cut: $387 billion over a decade
May impact: 10 states and Washington, DC
Medicaid is jointly funded by the federal and state governments. In states with lower per-capita incomes, the federal government pays a larger share of total Medicaid costs. But there’s a minimum 50% matching rate, so the federal government always pays at least 50% of total Medicaid costs.
The W&M Committee projects that federal Medicaid funding could be reduced by $387 billion over the coming decade if the 50% minimum was eliminated, allowing higher-per capita income states to receive less federal funding for Medicaid. (If the 50% floor is removed and some states end up with lower federal matching rates as a result, the federal government would spend less to fund those states’ Medicaid programs, resulting in savings for the federal government.)
This change would impact 10 states: California, Colorado, Connecticut, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Washington, and Wyoming. Their total Medicaid enrollment accounts for about 26.4 million of the 71.8 million people enrolled in Medicaid nationwide.
If the federal matching rate were reduced under this proposal, states would have to determine how to account for the funding shortfall, potentially leading to benefit cuts or changes in eligibility rules.
In Washington, DC, federal Medicaid funding is statutorily set at 70%. The W&M list and the Budget Committee call for this to be changed so that the funding percentage would be set the same way it is in the rest of the country, which would reduce it to 50%. If the 50% minimum were to be eliminated as well, the District of Columbia could potentially be subject to additional federal Medicaid funding cuts.
Potential funding cut: $561 billion over a decade
Population potentially affected: 20 million people who have gained coverage due to Medicaid expansion
Under the Affordable Care Act (ACA), the federal government pays 90% of the cost of covering the Medicaid expansion population. This is much larger than the federal government’s share of the cost of covering the rest of the Medicaid population, which ranges from 50% to nearly 77%, depending on the state.
The House Committees want to reduce the federal funding percentage for the Medicaid expansion population so that it matches the funding percentage that applies to the rest of each state’s Medicaid population. This change could save the federal government up to $561 billion over the coming decade.
In nine states, this would result in an automatic termination of Medicaid expansion, and in three others, it would result in an automatic review process that would likely lead to coverage losses. The rest of the states would have to consider whether Medicaid expansion would continue to be financially feasible with the reduced federal funding.
Depending on how the rest of the states would handle the reduction in funding, up to 20 million people could lose Medicaid due to a reduction in federal funding for Medicaid expansion.
Potential funding cut: Up to $900 billion over a decade
Population potentially affected: 72 million Medicaid enrollees
The W&M Committee estimates that a per-capita cap on federal Medicaid funding could save the federal government up to $900 billion over the next ten years.
Under current rules, federal Medicaid funding is based on the federal government matching the amount that states spend at least dollar-for-dollar, and in some states, up to $3 in federal funding is provided for every dollar the state spends. This is an open-ended match, with no limit on how much federal funding a state can receive.
If Congress switched federal Medicaid funding to a per-capita (per-enrollee) cap, the federal government would give a certain amount of money to each state based on a preset formula, independent of states’ actual costs.
A recent Urban Institute analysis found that states would see significant reductions in federal Medicaid funding under per-capita caps and “would have to consider a range of policy options, including increasing taxes, shifting state spending away from education and other priorities, cutting Medicaid provider payment rates, and reducing benefits for Medicaid beneficiaries.” The analysis also clarifies that “if states cannot find additional revenues or sufficient savings… inevitably, there would be enrollment cuts.”
If a per-capita cap were to be implemented nationwide, it could potentially affect eligibility and benefits for all 72 million Medicaid enrollees. The specifics would vary from one state to another, depending on the approach each state takes.
Projected funding cut: $285 billion over a decade
All of the proposals discussed above would require Congressional action. But the W&M Committee also noted that federal Medicaid funding could be reduced by up to $285 billion over the coming decade by rescinding some Biden administration rules. This could be done by federal agencies and would not require Congressional action.
The first Biden administration rule is one that expands access to Medicaid Home and Community Based Services (HCBS).
The other Biden administration rule is a two-part rule that makes it easier for people who are eligible for Medicaid to enroll in the program and renew their coverage.
According to the Economic Policy Institute, extending tax cuts would primarily benefit those with the highest incomes, while Medicaid cuts would result in people with the lowest incomes losing benefits and coverage. And the impact of Medicaid cuts would apply disproportionately to people of color and children.
Amid pushback on the idea of Medicaid cuts, Republican lawmakers have noted that their intent is to improve efficiency and administration in the Medicaid program, but not to cut benefits or eligibility. However, the scale of federal funding cuts called for in the Congressional budget resolution would require changes like the ones detailed above, which experts agree would result in reduced benefits, fewer enrollees, or both.
Based on historical experience, when people are disenrolled from Medicaid, the majority end up being uninsured for at least some time after losing Medicaid.
So if any Medicaid cuts are implemented, it will be important to devise a strategy that minimizes the number of people who become uninsured.
The views and opinions expressed in this blog post are those of the author and do not necessarily reflect those of HealthInsurance.org, LLC or its affiliates.
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written hundreds of opinions and educational pieces about the Affordable Care Act for healthinsurance.org.
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As the Trump administration and Congress pursue broad cuts to federal health agencies and budgets, most of the public, including some Republicans, oppose deep budget and staffing cuts to federal health programs and agencies, a new KFF Health Tracking Poll finds.
Across a range of questions, large majorities of Democrats and independents oppose the Trump administration’s major cuts to federal health agencies and programs, while Republicans are more supportive. Those who identify with President Trump’s Make America Great Again movement are even more supportive of cuts to health agency’s staff and budget but still split on cuts to funding for Medicaid and a few other programs.
For example, most of the public (61%), including large shares of Democrats (89%) and independents (67%), oppose major health spending and staff cuts at federal health agencies. In contrast, MAGA supporters overwhelmingly support such cuts (78%), while Republicans and Republican-leaning independents who don’t align with MAGA are divided (48% support the cuts, 52% oppose).
Similarly, most (59%) of the public, including large majorities of Democrats (92%) and independents (65%), say the Trump administration and its Department of Government Efficiency (DOGE) have been “recklessly making broad cuts to programs and staff.”
In contrast, the vast majority of MAGA supporters (87%), and a narrower majority of non-MAGA Republicans and Republican leaners (57%), say that the administration is “carefully making cuts to programs and staff to reduce fraud and waste.”
On Medicaid, a contentious issue as the Trump administration and Congressional Republicans weigh budget cuts to help finance tax cuts, three quarters (76%) of the public say they oppose major federal funding cuts.
A narrow majority of Republicans (55%), as well as larger majorities of Democrats (95%) and independents (79%), oppose major Medicaid cuts. MAGA supporters are closely divided on major funding cuts to Medicaid, with similar shares in favor (51%) and opposed (49%) to major cuts.
Large Majorities Oppose Specific Cuts to Federal Health Programs and Agencies
The poll also gauges the public’s views on federal funding cuts for other health programs. In each case, more than six in 10 oppose specific federal health cuts. For example:
Most of the public also opposes major staffing cuts to key federal health agencies such as the Department of Veteran Affairs (74% oppose), Centers for Medicare & Medicaid Services (67%), the Centers for Disease Control and Prevention (63%), the Food and Drug Administration (63%), and the National Institutes of Health (62%).
Republicans and MAGA supporters narrowly oppose major staffing cuts for Veterans Affairs but favor them at each of the other agencies.
Partisans See Different Drivers of Fraud and Waste in Government Health Program
About half of the public say that fraud, waste, and abuse are a major problem in Medicaid (52%), Social Security (51%), and Medicare (50%), and a slightly larger majority say it is a major problem in private health insurance (57%).
Partisans choose different groups when asked who is most responsible for fraud, waste, and abuse in government health programs. About half of Democrats (49%) say private health insurers are most responsible, while Republicans most often name government workers (42%). Fewer across partisans blame people enrolled in the programs or hospitals, doctors and other health providers.
Designed and analyzed by public opinion researchers at KFF, this survey was conducted April 8-15, 2025, online and by telephone among a nationally representative sample of 1,380 U.S. adults in English and in Spanish. The margin of sampling error is plus or minus 3 percentage points for the full sample. For results based on other subgroups, the margin of sampling error may be higher.