H.R. 6494 — Territories Health Equity Act of 2025

This section sunsets the Medicaid funding limitations under subsections (f) and (g) of Section 1108 of the Social Security Act (42 U.S.C. 1308)—which cap annual federal Medicaid payments to specified amounts—for Puerto Rico, the Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa beginning in FY2026. (As background, unlike states, which receive open-ended federal matching payments for Medicaid expenditures at the federal medical assistance percentage (FMAP), territories are subject to fixed annual caps; thus, this change makes these territories eligible for uncapped federal matching funds.) It also makes conforming amendments to cross-reference the sunset provision and to eliminate certain statutory references to the prior caps.

This section (1) limits the fixed reduced Federal Medical Assistance Percentage (FMAP) rates for Puerto Rico, the Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa under SSA §1905(b)(2) to fiscal years before FY2026 (previously applicable for all fiscal years) and (2) terminates temporary enhanced FMAP rates for territories under SSA §1905(ff)(2) after FY2025 (from FY2027). (Thus, beginning in FY2026, these territories qualify for FMAP rates under the standard formula applicable to states, which is based on per capita income and exceeds 75% for Puerto Rico.)

This section establishes Medicaid disproportionate share hospital (DSH) allotments for Puerto Rico, the Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa beginning in FY2026. (As background, DSH allotments provide federal funding for additional payments to hospitals serving disproportionate numbers of low-income or uninsured patients.) It (1) allocates a total of $300 million for FY2026 pro rata based on each territory's share of such individuals across all territories (as estimated by the Secretary) and (2) subjects subsequent fiscal years' allotments to existing inflation-based increases; it also expands the definition of covered jurisdictions to include these territories.

This section directs the Secretary of Health and Human Services, not later than 180 days after enactment, to publish and periodically update on the Centers for Medicare & Medicaid Services (CMS) website specified information on Medicaid (title XIX of the Social Security Act) and CHIP (State Children’s Health Insurance Program, title XXI) in U.S. territories (i.e., Puerto Rico, the Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa). Such information includes, for each territory, (1) income eligibility levels; (2) enrollment numbers; (3) state plan amendments; (4) waivers of title XIX or XXI requirements (including under SSA §1115), applications, and related documentation; (5) federal and non-federal expenditure shares; (6) health care delivery systems; (7) CHIP design; and (8) other information comparable to that published for states and the District of Columbia.

This section directs the Secretary of Health and Human Services to submit to Congress, not later than February 1, 2026, a report detailing the adverse impacts in each U.S. territory from their exclusion from American Health Benefit Exchanges under the Patient Protection and Affordable Care Act (ACA). (As background, ACA Exchanges are marketplaces through which individuals and small businesses in the 50 states and District of Columbia may purchase subsidized health insurance.) The report must include (1) estimates of uninsured and underinsured individuals in each territory; (2) the number of health insurance issuers and plans offered in each territory; (3) estimates of individuals denied premium and cost-sharing assistance available through an Exchange to state or District residents; (4) estimates of the forgone federal assistance amounts for each territory; and (5) estimates of small employers eligible for Small Business Health Options Program (SHOP) Marketplaces if located in a state or the District of Columbia.

This section establishes a mechanism, to be implemented by the Secretary of HHS (in consultation with the Secretary of the Treasury and OPM) not later than three months after enactment, enabling eligible residents of U.S. possessions certified by the Secretary as lacking any qualified health plans (QHPs) offered through an ACA Exchange—specifically, bona fide residents (per IRC §937(a)) ineligible for employer-sponsored coverage—to access, for plan years beginning on or after the mechanism's establishment date, health coverage at least as broad as that available to Members of Congress and congressional staff through the DC Exchange. Such individuals are eligible for premium tax credits (IRC §36B), reduced cost sharing (ACA §1402), and advance payments thereof (ACA §1412). (Thus, this addresses the lack of Exchange-based coverage options in possessions such as Puerto Rico, Guam, American Samoa, the Northern Mariana Islands, and the U.S. Virgin Islands.) The section further directs the Treasury Secretary to make periodic payments (at least annually) to mirror-code possessions (i.e., those mirroring U.S. income tax laws) equal to revenue losses from this provision and to non-mirror-code possessions equal to estimated aggregate benefits (conditioned on an approved distribution plan), while denying U.S. income tax credits to prevent duplication. The District of Columbia, its residents, and small businesses are held harmless from any increased costs.