The recent enactment of the One Big Beautiful Bill Act (OBBBA) on July 4, 20251 brought sweeping changes to numerous government programs, including Medicare, which provides health insurance coverage for certain persons who are age 65 or older or disabled, and who meet the other applicable statutory requirements provided for under Title 18 of the Social Security Act.2 The OBBBA creates a new subsection in Title 18 of the Social Security Act that limits eligibility for Medicare benefits to U.S. citizens and nationals, green card holders, certain refugees and asylees, and persons residing in the U.S. lawfully under the 1996 Compact of Free Association with the former Trust Territory of the Pacific Islands.3
WHY THIS MATTERS
This change will affect beneficiaries who reside in the United States lawfully but who do not fall into one of the aforementioned categories. Additionally, many non-U.S. residents who worked for at least 10 years under U.S. Social Security before returning to their respective home countries will no longer be eligible for Medicare benefits. While Medicare generally only covers medical services performed in the United States, many non-U.S. residents return to the United States to receive health-care services under Medicare. This change in the law prevents many persons residing outside the United States from being able to return to the U.S. to receive covered Medicare services.
Moreover, the law applies this prohibition not only to prospective Medicare beneficiaries, but also to beneficiaries who were entitled before the legislation went into force. The OBBBA provides that such benefits shall terminate 18 months after its enactment.4 Thus, affected individuals who currently are or were planning to rely on Medicare services for post-retirement health coverage may need to secure another source of health insurance upon retirement.
More Details
The new law does not affect monthly Social Security retirement, survivors, or disability benefits for non-U.S. nationals, which can still be paid to certain non-U.S. residents.5 It also does not affect the ability of certain U.S. residents who lack sufficient contributions into the system to pay an additional premium to receive Medicare benefits.6 It is not presently clear how Medicare benefits for spouses of affected persons might be affected if such spouses are U.S. citizens or green card holders.
KPMG INSIGHTS
Cross-border workers who were expecting to receive Medicare coverage upon retirement may need to revise their retirement planning. A significant population of non-residents (particularly residents of Canada, Mexico, and elsewhere in the Americas) were previously able to attain sufficient periods of work contributions in the United States to have Medicare coverage when they reached age 65. For many such people, this will no longer be the case, and they may want to seek additional health-care options in retirement.
KPMG LLP (U.S.) will continue to monitor how the Social Security Administration implements the new law, as well as any possible litigation stemming from these changes to the law, to determine how they might affect this population of workers.
FOOTNOTES:
1 One Big Beautiful Bill Act, Pub. L. No. 119-21 (2025).
3 One Big Beautiful Bill Act, Pub. L. No. 119-21 Sec. 71201 (2025).
4 Ibid.
5 See “Your Payments While You Are Outside the United States” on the website of the Social Security Administration.
6 See "Program Operations Manual System (POMS)" on the website of the Social Security Administration.
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Disclaimer
The above information is not intended to be “written advice concerning one or more federal tax matters” subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230 as the content of this document is issued for general informational purposes only.
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