The IRS and Treasury Department have proposed regulations, published Oct. 15, to implement HR 1 provisions and reform premium tax credits for ACA exchanges.
“The proposed rules protect eligible taxpayers while strengthening the integrity of the premium tax credit,” IRS CEO Frank Bisignano said in an Oct. 14 news release. “The enhanced verification measures are designed to curb improper claims, ensuring these vital tax benefits go strictly to the hardworking Americans who qualify for them.”
The proposed rule follows earlier ACA verification and subsidy eligibility regulations. Some marketplace integrity rules have faced legal challenges in 2025 and 2026.
Comments for the new proposed rule are due Nov. 30, and a hearing is scheduled for Dec. 8.
Here are seven things to know about the rule:
- Beginning in tax year 2028, “coverage months” count only if exchanges have verified residency and citizenship or lawful presence. Exchanges must also confirm income, family size, coverage access and “eligible alien” status for those receiving advance premium tax credits. HR 1 defines eligible aliens as green card holders, Cuban and Haitian entrants with legal status under a 1980 refugee law and U.S. residents from nations with Compact of Free Association agreements.
- Excess advance premium tax credit repayment caps are eliminated for 2026 and beyond. The Treasury Department estimates roughly 3.7 million tax returns will include an excess repayment in 2028.
- Starting in 2027, lawfully present immigrants who are not eligible aliens are excluded from premium tax credit calculations.
- People denied Medicaid solely because they do not meet the forthcoming Medicaid work requirements will still be considered Medicaid eligible and are blocked from tax credits. That ends if they become ineligible for Medicaid for a different reason.
- If an exchange fails to check prior-year reconciliation, those months do not count for enrollees getting advance credits. The recent proposal also suggests future CMS regulations concerning ACA enrollee verification.
- Beginning in tax year 2028, verification requirements are waived for special enrollment periods spurred by a divorce, death or new dependent. The Treasury Department estimates that this will benefit 50,000 families with newborns.
- The regulations are expected to reach about 15.6 million individuals with exchange coverage, including 13.5 million enrollees who may be eligible for premium tax credits.
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