U.S. House of Representatives Moved the Federal Budget Process Forward

Last Thursday, the U.S. House of Representatives passed the “One Big Beautiful Bill Act” along party lines 215 (R)/214 (D).  The bill now moves to the U.S. Senate for their consideration. If H.R. 1 becomes law, several provisions of the bill will have a serious and devastating impact on NJ FamilyCare (which is funded by Medicaid) and the Supplemental Nutrition Assistance Program, or SNAP. Below are highlights. There are also provisions related to tax credits and student loans, which will impact children, youth, and families. We will update the ACNJ website as we learn more, so continue to check in.

Medicaid Related Sections

Almost 20% of New Jersey residents have health insurance coverage through NJ FamilyCare, which is funded by federal and state Medicaid dollars, as well as the federal Children’s Health Insurance Program (CHIP). This includes over 860,000 children. H.R. 1 will “save” nearly $700 billion in spending over the next 10 years by imposing additional eligibility requirements or restricting eligibility, thus reducing the number of people being covered by state public health insurance programs like NJ FamilyCare. H.R. 1 includes the following provisions:

• Impose 80 hours of work or community engagement activities, such as education or volunteer service, for individuals ages 19 to 64 applying for coverage or enrolled through the Affordable Care Act expansion group, no later than December 31, 2026. This population is commonly referred to as the Medicaid expansion population. ACNJ was pleased to see an exemption in the bill for pregnant women, individuals under the age of 19 or over the age of 64, foster youth and former foster youth under the age of 26, members of tribes, and individuals who are considered “medically frail.” Individuals will have to verify that they are exempt.
• Reduce retroactive coverage for Medicaid and Children’s Health Insurance Program (CHIP) to one month from three months as of December 31, 2026.
• Require redetermination of eligibility every six months for the Medicaid expansion populations to begin on December 31, 2026.
• Freeze current amount of provider taxes for states.
• Require states to impose co-pays for Medicaid expansion adults with incomes over 100% of the federal poverty level (FPL). This cost-sharing may not exceed $35 per service. Exempted services include: primary care services, mental health care services, or substance use disorder services.
• Impose new penalties for states that provide healthcare to undocumented immigrants. H.R. 1 would reduce the federal Medicaid expansion match rate from 90% to 80% for states like New Jersey that use state funds to provide health coverage for children, regardless of their immigration status, or pregnant adults covered under the Medicaid option for these groups.

Supplemental Nutrition Assistance Program (SNAP) Related Sections 

Close to 360,000 New Jersey children participate in SNAP currently. The House Resolution will reduce spending on SNAP by approximately $267 billion over the next ten years by restricting eligibility and shifting a greater percentage of the cost for both the benefit and administration of SNAP to the states.

Currently, the actual SNAP benefit is paid with federal dollars. H.R. 1 shifts 5% of the benefit and an additional 25% of the administrative costs to the states. According to the Center on Budget and Policy Priorities, if every state paid 5% of food benefit costs last year, states would have needed to collectively pay about $4.7 billion. The New Jersey Department of Human Services estimates that the additional 25% of administrative costs being shifted to the states will cost New Jersey counties an additional $78 million. Following are SNAP related provisions:

• Limit the frequency of updates to the Thrifty Food Plan (TFP)—the basis for calculating SNAP benefits—to once every five years, requiring cost neutrality in updates.
• Expand work required for able-bodied adults without dependents, raising the age from 54 to 64, and narrow the definition of a dependent child to those under the age of 7, limiting caregiving exemptions.
• Restrict the automatic qualification for utility deductions in SNAP calculations to households with elderly or disabled members and limit income exclusions for state energy assistance.
• Require states to contribute at least 5% toward SNAP benefit costs starting in FY 2028, with higher contributions (up to 25%) required for states with high SNAP error rates. Currently, the federal government pays 100% of the SNAP benefit.
• Increase in the state’s share of administrative costs for implementing SNAP to 75%.

Ways and Means Bill Sections 

• For the Child Tax Credit
  • Temporarily increase the Child Tax Credit to $2500 until 2028 and then return to $2000.
  • Set the refundable portion of the credit to $1400.
  • Require that individuals have earned income to be eligible for the credit.
  • Require a social security number for children, tax filers, and the tax filer’s spouse if married.

• Temporarily boost the standard deduction — a $1,000 increase for individuals, bringing it to $16,000 for individual filers, and a $2,000 boost for joint filers, bringing it to $32,000. The deduction reduces the amount of income that is actually subject to income tax.
• Increase the State and Local Tax (SALT) cap to $40,000 for incomes up to $500,000, with the cap phasing downward for those with higher incomes. Also, the cap and income threshold will increase 1% annually over 10 years.
• Create a tax credit for school vouchers.
• Parents or guardians who open new “Trump” accounts for their children will receive $1,000 from the federal government for babies born between Jan. 1, 2024 and Dec. 31, 2028. Families could add $5,000 a year, however, funds cannot be withdrawn before age 18, at which time they could access up to 50% of the money to pay for higher education, training, and first-time home purchases. At age 30, account holders have access to the full balance of the account for any purpose.

Pell Related Sections

• Eliminate Pell Grant eligibility for less-than-half-time students.
• Raise the definition of “full-time” to 15 credits per semester to get full Pell (from the current 12 credits).
• Eliminate Stafford subsidized loans.
• Eliminate graduate student PLUS loans and limit parent PLUS loans.
• Eliminate existing income-contingent repayment plans and create a single income-based repayment plan, increasing the percentage of discretionary income and the number of payments needed before a loan can be forgiven.
• Prevent the Department of Education from promulgating regulations that increase loan subsidy costs or are economically significant (no new debt relief regulations).
• Clarify that payments made by new borrowers on or after July 1, 2025, who are serving in a medical or dental residency, do not count as a qualifying payment for purposes of the Public Service Loan Forgiveness Program.
• Cap federal loans at the median cost of the student’s program of study.