Finance & MarketsACA premium tax credit regulationsReviewed by a person

IRS proposes rule updating ACA premium tax credit eligibility under OBBBA

Official document: Federal Register — proposed rule (opens in a new tab)

Last updated Oct 15, 1:28 PM ET

All6Confirmed6

What’s confirmed6

Confirmed
The proposed rule disallows premium tax credits for lawfully present aliens with household income below 100 percent of the federal poverty level who are ineligible for Medicaid due to alien status, effective after December 31, 2025.
Why: The IRS and Treasury explicitly state this change in the proposed rulemaking.
- Federal Register · supports
  “Thus, for taxable years after December 31, 2025, a taxpayer who is a lawfully present alien with household income below 100% of the FPL for the taxpayer's family size and who is ineligible for Medicaid due to his or her alien status is not eligible for the PTC.”
  open Federal Register article (opens in a new tab)
Checked Oct 15, 1:28 PM ET
LabeledConfirmedOct 15
The IRS and Treasury explicitly state this change in the proposed rulemaking.
Confirmed
For taxable years starting after December 31, 2025, taxpayers must repay the full amount by which advance credit payments exceed allowable premium tax credits, eliminating previous repayment limits.
Why: The notice of proposed rulemaking confirms the statutory removal of the repayment limitation.
- Federal Register · supports
  “Thus, for taxable years beginning after December 31, 2025, a taxpayer's tax liability for the taxable year of the coverage is increased by the full amount of the excess APTC.”
  open Federal Register article (opens in a new tab)
Checked Oct 15, 1:28 PM ET
LabeledConfirmedOct 15
The notice of proposed rulemaking confirms the statutory removal of the repayment limitation.
Confirmed
Months in which an individual is denied Medicaid solely for failing to satisfy community engagement mandates do not qualify as coverage months for the premium tax credit.
Why: The proposed regulations designate individuals failing community engagement as deemed eligible for minimum essential coverage.
- Federal Register · supports
  “The months the individual was ineligible for Medicaid solely for failing to meet the requirement to demonstrate community engagement would not be coverage months for the individual.”
  open Federal Register article (opens in a new tab)
Checked Oct 15, 1:28 PM ET
LabeledConfirmedOct 15
The proposed regulations designate individuals failing community engagement as deemed eligible for minimum essential coverage.
Confirmed
The restriction on coverage months ceases to apply once an individual becomes ineligible for Medicaid for a reason other than failing to demonstrate community engagement.
Why: The proposed rule explicitly carves out an exception once Medicaid ineligibility stems from another factor.
- Federal Register · supports
  “The proposed regulations would also provide that the proposed rule in Sec. 1.36B-2(c)(2)(ii)(B) ceases to apply once the individual is determined or assessed by an Exchange to be, or becomes, no longer ineligible for Medicaid solely for failing to demonstrate community engagement.”
  open Federal Register article (opens in a new tab)
Checked Oct 15, 1:28 PM ET
LabeledConfirmedOct 15
The proposed rule explicitly carves out an exception once Medicaid ineligibility stems from another factor.
Confirmed
Under the proposed rule, a month is not a coverage month if an Exchange fails to verify an enrollee's residency and citizenship, national status, or lawful presence.
Why: The proposed rulemaking outlines these mandatory Exchange verification items.
- Federal Register · supports
  “Consistent with this proposed rule, a month would not be a coverage month for an individual if the Exchange through which the individual enrolled fails to verify the individual's place of residence and that the individual is a U.S. citizen, a national of the U.S., or an alien lawfully present in the”
  open Federal Register article (opens in a new tab)
Checked Oct 15, 1:28 PM ET
LabeledConfirmedOct 15
The proposed rulemaking outlines these mandatory Exchange verification items.
Confirmed
The Treasury Secretary is authorized to waive the verification mandate for individuals enrolling in health plans during a special enrollment period triggered by a change in family size.
Why: The proposed regulations recognize statutory waiver authority for family-size special enrollment periods.
- Federal Register · supports
  “Under section 36B(c)(5)(E), the Secretary may waive the verification requirement in section 36B(c)(5)(A) in the case of an individual who is eligible to enroll in a QHP through an Exchange ``during a SEP provided by the Exchange on the basis of a change in the family size of the individual.''”
  open Federal Register article (opens in a new tab)
Checked Oct 15, 1:28 PM ET
LabeledConfirmedOct 15
The proposed regulations recognize statutory waiver authority for family-size special enrollment periods.

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What’s confirmed6

The proposed rule disallows premium tax credits for lawfully present aliens with household income below 100 percent of the federal poverty level who are ineligible for Medicaid due to alien status, effective after December 31, 2025.

For taxable years starting after December 31, 2025, taxpayers must repay the full amount by which advance credit payments exceed allowable premium tax credits, eliminating previous repayment limits.

Months in which an individual is denied Medicaid solely for failing to satisfy community engagement mandates do not qualify as coverage months for the premium tax credit.

The restriction on coverage months ceases to apply once an individual becomes ineligible for Medicaid for a reason other than failing to demonstrate community engagement.

Under the proposed rule, a month is not a coverage month if an Exchange fails to verify an enrollee's residency and citizenship, national status, or lawful presence.

The Treasury Secretary is authorized to waive the verification mandate for individuals enrolling in health plans during a special enrollment period triggered by a change in family size.