“Hardworking American taxpayers should not be forced to subsidize health care for people who are ineligible under federal law,” Treasury Secretary Scott Bessent said on October 14. He was announcing proposed rules for the premium tax credit, the refundable credit that helps people afford coverage bought through a Health Insurance Exchange. They are proposals. Nothing in them is in effect yet.
What Treasury and the IRS put forward
The IRS release, number IR-2026-121, says the proposed regulations would limit the premium tax credit to U.S. citizens, U.S. nationals and certain lawfully present noncitizens. They would also add new verification criteria for advance payments of the credit. Bessent said the rules carry out changes enacted in the Working Families Tax Cuts law.
IRS Chief Executive Frank Bisignano said the “enhanced verification measures are designed to curb improper claims.” Dr. Mehmet Oz, the administrator of the Centers for Medicare & Medicaid Services, said that ensuring health programs serve only those who are eligible is one of the most effective ways to protect them. The release says the Department of Health and Human Services is expected to issue parallel proposed rules on how Exchanges operate.
The dates inside the proposal
The release points to 2027 as the start. The Federal Register notice shows the timing varies by provision. The eligibility rules for noncitizens apply to tax years beginning after December 31, 2026. The verification rules and some plan rules apply to tax years beginning after December 31, 2027.
The notice, document 2026-21056, was published October 15 as a notice of proposed rulemaking and a notice of a public hearing. It says the rules would affect taxpayers who enroll themselves or a family member in individual coverage through an Exchange.
The practical question is who has something to set up. The notice says the rules would affect taxpayers who enroll themselves or a family member in individual coverage through an Exchange. For those households, three things are on the calendar: the eligibility rules from 2027, the verification rules from 2028, and a repayment change that would show up at tax time. The release gives no date for final rules, and comments are open until November 30.
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The repayment change
One provision reaches beyond the eligibility question. The proposal would remove the limit on how much excess advance premium tax credit a taxpayer has to repay. Under the proposal, taxpayers would owe the full amount of any excess advance payments.
The IRS estimates about 3.7 million returns in 2028 would include such a repayment, according to the notice. That is the figure to watch for anyone who takes advance payments of the credit.
Verification and coverage months
The IRS release describes the aim as applying common-sense eligibility checks to the credit and adding verification criteria for any advance payments. It gives no further detail on what those criteria are. The Federal Register notice supplies more of the mechanics.
The Federal Register notice also describes new gatekeeping rules. A month would not count as a coverage month for the credit unless the Exchange verifies the required enrollment and advance payment information. Plans bought through certain income-based special enrollment periods would be excluded, as would plans where the Exchange lacks a required pre-enrollment verification process.
Other pieces deal with who counts. Premiums for family members who are lawfully present but not “eligible aliens” would be left out of the credit calculation. People who are ineligible for Medicaid only because they did not meet community engagement requirements would be treated as having minimum essential coverage.
The enforcement numbers behind the push
The IRS release cites work by the Centers for Medicare & Medicaid Services. In a September 22 announcement, the agency said about 315,000 unauthorized enrollments covering more than 760,000 people were canceled, and roughly $2.2 billion in taxpayer-funded subsidies was expected to be returned. It also said it had sent termination notices to more than 200 non-compliant agents and brokers since January 2026.
Health and Human Services Secretary Robert F. Kennedy Jr. said the agency was “shutting down unauthorized Marketplace enrollments.” Those actions are separate from the Treasury proposal, which would change how the credit itself is calculated and verified. The IRS release also cites an estimated $2.2 billion in savings from the CMS removals, as CMS announced.
How to weigh in
Comments on the proposal must be received by November 30, 2026, through Regulations.gov, under docket IRS-2026-1420-0001. A telephone hearing is set for December 8 at 10 a.m. Eastern. Requests to speak, with a topic outline, are due November 30, and requests to attend are due by 5 p.m. Eastern on December 4. If no outlines arrive, the hearing is cancelled.
The notice also says the proposal removes the regulatory provision for lawfully present immigrants below 100 percent of the federal poverty level who are ineligible for Medicaid because of their immigration status. The notice names Mia Romano at 202-317-4718 for questions on the rules. Comments and hearing requests go to the IRS Publications and Regulations Section at publichearings@irs.gov.
Could an uncapped repayment change your tax bill?
The detail in the proposal that gets missed is the repayment rule. If the limit on repaying excess advance payments is removed, a household that estimated its income too low would owe the full difference at tax time, and the IRS itself counts about 3.7 million returns in 2028 with a repayment.
The Retirement Tax & Withdrawal Planner does not cover health insurance rules. It covers the part of a return a retiree controls: when and from which account money comes out, with four calculators (provisional income, IRMAA tier, RMD schedule and Roth bracket fill) and the account withdrawal order.
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This article was produced with the assistance of AI and reviewed by the editorial team.
David M. Keller is a finance writer based in Columbus, Ohio, covering personal finance and consumer-focused economic topics. He earned his degree in journalism from Ohio University and began his career reporting on local business and economic trends for a regional media outlet. Since then, he has contributed to a variety of online publications, focusing on clear, practical coverage of topics such as cost of living, debt, and everyday financial decision-making.
