The Treasury Department and the IRS proposed rules on Oct. 14 that would tighten eligibility for the premium tax credit, the subsidy that lowers monthly costs for people buying health insurance on the Affordable Care Act marketplace.
The proposed regulations were published in the Federal Register the next day and cover who qualifies, how the credit is calculated, and what people owe back when advance payments exceed the credit they actually earned.
Comments are due Nov. 30, 2026, with a telephonic public hearing scheduled for Dec. 8.
The rules carry out changes from Public Law 119-21, the tax package Republicans call the One Big Beautiful Bill Act.
"Hardworking American taxpayers should not be forced to subsidize health care for people who are ineligible under federal law."
Scott Bessent, Treasury Secretary
The repayment cap disappears
For tax years after 2025, repayment caps on excess advance payments are eliminated, meaning a household that underestimates its income could owe back the full overpayment at tax time.
Marketplace verification would be required to qualify for the tax credit starting with the 2028 tax year, and certain immigrant family members drop out of the credit calculation starting in 2027.
The proposal would bar lawfully present immigrants with income below the poverty line who can't get Medicaid because of their immigration status from claiming the credit in tax years starting 2027.
That provision is expected to save $91.4B over a decade. The Congressional Budget Office estimates roughly 1M lawfully present immigrants lose ACA coverage because of the law, and KFF puts the total at 1.4M legal immigrants.
Enforcement came first
The Centers for Medicare & Medicaid Services said on Sept. 22 it was canceling roughly 315K unauthorized enrollments covering more than 760K individuals, with about $2.2B in advance credit payments expected to come back.
Flagged enrollments tied to agents and brokers showed missing Social Security numbers, unresolved income issues, and unverified immigration status.
Premium tax credit crackdown by the numbers (as of Oct. 2026)
| Measure | Figure |
|---|---|
| ACA marketplace enrollees (early 2026) | 19.2M |
| Marketplace enrollments canceled by CMS (Sept. 2026) | ~315K |
| Expected returned tax credit payments | $2.2B |
| 10-year savings (immigrant provision) | $91.4B |
| Lawfully present immigrants losing coverage (CBO) | ~1M |
| Total legal immigrants losing coverage (KFF) | 1.4M |
About 19.2M Americans were actively enrolled in marketplace plans as of early 2026.
The push extends beyond health coverage. The IRS published draft 2026 tax forms asking filers and spouses to check whether they are US citizens, nationals, or workers lawfully authorized in the US.
The administration estimates that disclosure alone could save up to $2B by keeping ineligible people from collecting federal benefits, while privacy advocates warn the data could be used outside tax enforcement.
Benefits consultants expect some workers to shift back onto employer health plans as marketplace subsidies tighten.
For anyone buying coverage on the exchange, the practical change arrives at filing season, when an income estimate that misses high no longer comes with a ceiling on what's owed back.
