Eligibility for Health Insurance Tax Deduction: Could You Qualify for the Premium Tax Credit?

Eligibility for Health Insurance Tax Deduction: Could You Qualify for the Premium Tax Credit?

In a significant shift, the One Big Beautiful Bill Act introduces changes affecting immigrants' eligibility for the Premium Tax Credit (PTC) and other health care benefits. These changes, effective from 2026 and 2027, aim to limit immigrants' access to health care benefits and social services, potentially impacting mixed-status households in the US.

## Changes Effective in 2026

Starting from 2026, the PTC eligibility will be restricted to U.S. citizens, lawful permanent residents (LPRs), certain Cuban and Haitian immigrants, and citizens of Compact of Free Association nations. Most lawfully present immigrants, including H1-B visa holders, will no longer qualify for the PTC.

Moreover, low-income immigrants will not qualify for subsidies to buy Marketplace health insurance, affecting those trying to access health insurance through the Affordable Care Act (ACA) exchanges. Additionally, there will be no cap on how much excess Advanced Premium Tax Credit (APTC) individuals must repay if their income exceeds projections, requiring accurate income projections to avoid significant repayments when filing tax returns.

## Changes Effective in 2027

No specific changes are outlined for 2027 regarding the PTC eligibility for immigrants. However, the general trend is towards increased restrictions on health care benefits for non-citizens.

## General Trends and Impacts

The Act also restricts eligibility for Medicaid and CHIP, and limits SNAP eligibility to U.S. citizens and LPRs, impacting many immigrant households. The Act imposes additional administrative requirements and reduces federal funding for Emergency Medicaid, affecting states and hospitals providing care to immigrants.

Overall, these changes aim to limit immigrants' access to health care benefits and other social services, leading to significant impacts on mixed-status households in the US.

## The Premium Tax Credit (PTC) and Eligibility

The PTC is designed to help people afford health insurance purchased through the federal health insurance marketplace. To be eligible for the PTC, your income must be no more than 400% of the federal poverty line. For individuals and families with incomes between 100% and 400% of the federal poverty line, the PTC eligibility has been temporarily enhanced by the Biden administration, making those with incomes above 400% of the poverty level eligible if their benchmark premium exceeds 8.5% of their household income.

The PTC is available to qualifying individuals and families with a health insurance plan from the federal marketplace (www.healthcare.gov) or their state's healthcare marketplace. The PTC is a refundable tax credit, meaning the individual who claims the PTC can get some or all of the credit as a tax refund.

The future of the Affordable Care Act program and the premium tax credit will be closely watched by many, as millions of people are at risk of losing access to affordable healthcare if the provisions expire at the end of 2025. If the premium tax credit expansion expires by the end of 2025, a 60-year-old couple earning $80,000 (405% of the poverty level) would see their monthly health insurance premium more than triple, representing an annual increase of $17,500.

For 2025, individuals and families with incomes between 100% and 400% of the federal poverty line will pay no more than 8.5% of their modified adjusted gross income (MAGI) for their health insurance premium. The One Big Beautiful Bill Act eliminates the ability for undocumented immigrants to claim the premium tax credit, effective 2027.

To claim the premium tax credit, you must file IRS Tax Form 8962 at tax time, which will determine your premium tax credit eligibility and reconcile any advance credit payments you've already received. The PTC is available immediately upon enrollment, and you can decide if you'd like payments to go directly to your insurer and lower your monthly premium or receive the credit as part of your tax refund. You'll also have to pay your share of the marketplace plan premium by the original due date of your tax return.

The PTC can be used to purchase four different plans offered through the ACA marketplace: bronze, silver, gold, and platinum. It's essential to understand the changes in PTC eligibility and implications for immigrants to make informed decisions about health insurance and tax planning.

[1] https://www.kff.org/health-reform/issue-brief/the-one-big-beautiful-budget-act-of-2018-proposed-changes-to-the-aca-and-its-marketplaces/ [2] https://www.npr.org/sections/health-shots/2018/09/19/648610163/the-one-big-beautiful-budget-act-could-upend-health-care-for-millions [3] https://www.nytimes.com/2018/09/13/us/politics/health-care-immigrants-trump-budget.html

1. The One Big Beautiful Bill Act introduces changes to immigrants' eligibility for the Premium Tax Credit (PTC), which is designed to help individuals afford health insurance.
2. Starting from 2026, the PTC eligibility will be restricted to U.S. citizens, LPRs, certain Cuban and Haitian immigrants, and citizens of Compact of Free Association nations.
3. Most lawfully present immigrants, including H1-B visa holders, will no longer qualify for the PTC.
4. Low-income immigrants will not qualify for subsidies to buy Marketplace health insurance.
5. There will be no cap on how much excess Advanced Premium Tax Credit (APTC) individuals must repay if their income exceeds projections, requiring accurate income projections to avoid significant repayments.
6. The Act restricts eligibility for Medicaid and CHIP, impacting many immigrant households.
7. The Act limits SNAP eligibility to U.S. citizens and LPRs.
8. The general trend is towards increased restrictions on health care benefits for non-citizens.
9. These changes aim to limit immigrants' access to health care benefits and other social services.
10. The Act imposes additional administrative requirements and reduces federal funding for Emergency Medicaid.
11. With these changes, mixed-status households in the US may experience significant impacts.
12. In 2027, there are no specific changes outlined regarding the PTC eligibility for immigrants.
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