What the One Big Beautiful Bill Act Means for Rural Health Care and Small Medical Practices
Signed into law on July 4, 2025, the One Big Beautiful Bill Act (BBB Act) includes a variety of provisions tailored to rural hospitals, small medical practices, and independent physicians. While much attention has been given to tax cuts for businesses, this law also delivers targeted relief and funding to support health care in underserved communities.
If you’re a clinic owner, physician, or administrator in a small or rural practice, here’s what the BBB Act means for you—broken down in plain English, with examples.
1. $50 Billion for the Rural Health Transformation Program (RHTP)
What Changed: The BBB Act creates a brand-new $50 billion federal program to help transform rural health care, with $10 billion per year available from 2026 to 2030.
How It Works: States must submit a Rural Health Transformation Plan to CMS by December 31, 2025. Once approved, they’ll receive funding to invest in at least three of these areas:
Telehealth and technology upgrades (remote monitoring, AI, robotics)
Chronic disease prevention and rural-focused payment reforms
Substance use and mental health programs
Recruiting and retaining rural clinicians
Example: Dr. Kim runs a 3-provider clinic in western Nebraska. Once her state’s rural plan is approved, she applies for a grant to upgrade her EHR and add remote blood pressure monitoring. The funding offsets costs she couldn't cover alone—and helps her retain a young NP with new telemedicine capabilities.
Takeaway: Get involved now. Talk to your state health department about how funds will be used and whether your clinic can participate in pilot programs or apply for grants in 2026.
2. Medicare Fee Schedule +2.5% Bump (For 2026)
What Changed: Medicare payments to physicians will receive a one-time 2.5% increase in 2026, helping offset prior cuts and inflation.
Example: A small internal medicine clinic billing $400,000 to Medicare would see an estimated $10,000 boost in reimbursement in 2026 under this change.
Takeaway: This is a modest but helpful increase. Practices relying heavily on Medicare should reflect this in 2026 revenue forecasts.
3. Telehealth & Direct Primary Care Made HSA-Compatible
What Changed:
Telehealth can now be covered under High-Deductible Health Plans (HDHPs) without disqualifying HSA eligibility—and this rule is now permanent.
Direct Primary Care (DPC) memberships are now also HSA-eligible (up to $150/month individual or $300/family, starting in 2026).
Before the BBB Act: If an HDHP covered telehealth services before the deductible was met, the participant risked losing HSA eligibility. DPC fees weren’t HSA-eligible.
After the BBB Act: Both are now allowed without risk to HSA eligibility, retroactive to January 1, 2025.
Example: A family physician in rural Iowa offers a DPC plan at $100/month. Patients can now use their HSAs to pay for the service tax-free. She also adds no-cost telehealth visits without disqualifying patients from HSA contributions.
Takeaway: Rural and small practices can confidently expand or launch DPC and telehealth programs, now supported by permanent tax rules.
4. Bigger & Friendlier Staff Benefits
What Changed:
Dependent Care FSA limit increased to $7,500 in 2026
Tax-free student loan payments by employers (up to $5,250/year) are now permanent
Paid Family Leave Tax Credit is permanent
Moving expense exclusions remain taxable
Example: A rural OB-GYN clinic uses the new student loan assistance to help recruit a recent med school grad with $150,000 in debt. Meanwhile, a working parent on staff saves more via the higher FSA cap.
Takeaway: These enhanced fringe benefits can help small practices recruit and retain talent in competitive healthcare labor markets.
5. Practice-Friendly Tax Changes
Here’s a quick breakdown of tax provisions relevant to physicians and clinics:
20% QBI Deduction Made Permanent
Pass-through practices (LLCs, partnerships, S corps) can now permanently deduct 20% of qualified business income, with expanded phase-in thresholds and a new $400 minimum deduction.
Example: A family practice with $180,000 in QBI can deduct $36,000 on their owners’ personal returns—providing consistent savings year after year.
100% Bonus Depreciation & R&D Expensing
You can now deduct the full cost of new medical equipment or software in the year it’s placed in service. Domestic R&D costs—like developing care models or protocols—are also fully deductible.
Example: A pediatric clinic spends $45,000 on new ultrasound machines and $20,000 developing a new remote asthma management protocol. All $65,000 is deducted in 2026.
SALT Deduction Cap Raised
If itemizing, physicians can now deduct up to $40,000 in state/local taxes (joint) or $20,000 (single) through 2029.
Tip: Electing PTET (Pass-Through Entity Tax) at the business level lets you claim these deductions federally even without itemizing.
1099 Reporting Simplified
Starting in 2026, you only need to issue 1099s when you pay $2,000 or more (up from $600), reducing administrative burden.
Estate Tax Exemption Increased
If your practice is part of your estate, the lifetime exemption rises to $15 million per person, reducing succession planning risks.
6. Medicaid Work Requirements & Coverage Changes
What Changed:
The BBB Act introduces stricter Medicaid eligibility rules, including:
Work requirements for some adults
Reduced retroactive coverage periods
New cost-sharing obligations
Example: A rural urgent care center sees a rise in uninsured patients after the state implements Medicaid work requirements. Collections fall, and uncompensated care rises.
Takeaway: Expect higher uncompensated care in some areas. Watch state Medicaid changes closely and explore RHTP grant support to help offset.
7. New 1% Excise Tax on Foreign Transfers
What Changed: Starting in 2026, a 1% excise tax applies to cash, money orders, or crypto sent abroad outside of regulated financial channels.
Example: A rural hospital sponsoring an international doctor paying family back home in cash apps could see 1% lost in excise tax. Using U.S. banks avoids this.
Takeaway: Clinics employing foreign-born staff should notify them of this rule—using U.S. financial institutions avoids the tax.
8. Clean-Energy Credits Are Rolling Back
What Changed: Many of the solar, wind, and green building credits introduced under the Inflation Reduction Act will phase out earlier than expected, especially after 2027.
Example: A clinic planning a solar panel installation in 2028 may no longer qualify for the original tax credits.
Takeaway: If you’re considering a renewable energy project, accelerate planning now to claim full credits before deadlines shift.
Final Thoughts for Rural and Small Practices
The BBB Act offers new funding, certainty, and tools—but also creates new risks in Medicaid and energy planning. Focus on these action steps:
Engage with your state’s Rural Health Transformation Plan
Update your 2026 telehealth and DPC strategy
Revisit benefits and tax planning with your CPA
Watch for Medicaid eligibility shifts in your state
Need help planning around these changes? Contact us today for your free FIT CALL. Let's navigate your path to success together.
