This bill, known as the "Territories Health Equity Act of 2025," seeks to significantly improve healthcare provisions for U.S. territories under the Medicare and Medicaid programs. A primary focus is on Medicaid, where it eliminates general funding limitations , or "caps," for Puerto Rico, the Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa starting in fiscal year 2026. It also removes specific Federal Medical Assistance Percentage (FMAP) limitations for Puerto Rico and permits Medicaid Disproportionate Share Hospital (DSH) allotments for all territories, establishing a formula for their allocation. Under Medicare, the bill introduces several enhancements. For Part A, it revises the calculation of Medicare DSH payments for hospitals in Puerto Rico and allows hospitals in all territories to rebase their target amounts to a more favorable historical period (FY 2017) for higher payments. Hospitals in territories other than Puerto Rico will also receive a Medicare DSH target adjustment based on their disproportionate patient percentage. Part B sees the elimination of late enrollment penalties for certain Puerto Rico residents, while Part C (Medicare Advantage) adjusts benchmarks for low-base payment counties in Puerto Rico to ensure they are not less than 80% of the national average. Finally, Part D grants automatic eligibility for low-income territorial residents for premium and cost-sharing subsidies, effective January 1, 2026. The legislation also includes miscellaneous provisions to enhance transparency and address coverage gaps. It mandates the Secretary of Health and Human Services to publish and regularly update comprehensive information on Medicaid and CHIP programs in the territories , including eligibility, enrollment, and expenditures. Furthermore, it requires a report detailing the adverse impacts of the territories' exclusion from Affordable Care Act (ACA) exchanges. Crucially, for individuals in U.S. possessions where no qualified health plans are offered through an Exchange, the bill establishes a mechanism to provide access to health insurance coverage through the District of Columbia Exchange , complete with eligibility for premium tax credits and cost-sharing reductions.