The Trump administration proposed new regulations on Oct. 14 that would implement new eligibility standards and prevent some noncitizens from receiving refundable tax credits used for health insurance premiums.
The Treasury Department and the Internal Revenue Service said on Oct. 14 that proposed regulations for the premium tax credit would close verification gaps for payments; strengthen eligibility standards; and restrict taxpayer benefits to U.S. citizens, U.S. nationals, and certain lawfully present noncitizens.
The premium tax credit is a refundable credit that helps cover health insurance premiums purchased through the health insurance marketplace by individuals and families. The proposed regulations, which would take effect in 2027, are part of the Trump administration’s stated efforts to prevent fraud and abuse.
“Hardworking American taxpayers should not be forced to subsidize health care for people who are ineligible under federal law,” Treasury Secretary Scott Bessent said in a statement on Oct. 14. He added that the regulations would close “eligibility loopholes.”
The proposed regulations would remove a provision that previously allowed lawfully present immigrant taxpayers with household incomes below 100 percent of the federal poverty level for their family’s size to be treated as an applicable taxpayer for premium tax credits.
While Medicaid typically covers most people with households under the poverty level, many lawfully present immigrants are not eligible for Medicaid health care coverage. As a result, low-income immigrants lawfully present in the United States have been eligible for premium tax credits.
Lawfully present immigrants excluded from Medicaid include asylum applicants, asylum seekers, individuals with temporary protected status, people with nonimmigrant visas, deferred action recipients, and U-visa holders, according to the National Immigration Law Center.
However, under the new regulations, eligibility for premium tax credits would be restricted to U.S. citizens, U.S. nationals, and only certain lawfully present noncitizens.
Bessent said the proposed rules would implement reforms included in the Working Families Tax Cuts, which was enacted in July 2025.
“Under President Trump, this Administration is cracking down on fraud and corruption; holding bad actors accountable; lowering health care costs for Americans; and restoring integrity to our tax code and health care system,” Bessent said.
‘Enhanced Verification’
IRS CEO Frank Bisignano said the new premium tax credit rules would strengthen the refundable credit’s integrity and protect eligible taxpayers.
“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,” he said.
The Trump administration said the need for additional safeguards for premium tax credit eligibility and verification was exposed by the work of the Task Force to Eliminate Fraud, which President Donald Trump established with an executive order in March 2026.
As part of the task force’s efforts, the Centers for Medicare and Medicaid Services announced last month that more than 760,000 “phantom” accounts were being removed from the rolls of the Affordable Care Act. Officials said the accounts were created for people who did not exist or did not meet the eligibility requirements, and that the action will save an estimated $2.2 billion.
Last month, the administration also announced that the government would be sending $500 payments to nearly 1 million Americans who were previously overcharged for Obamacare coverage.
In addition, the Centers for Medicare and Medicaid Services announced on Oct. 14 that 189,000 people were improperly enrolled in subsidized coverage under the Affordable Care Act while also being enrolled in government insurance coverage programs, or were dead at the time.
People with duplicate health coverage will be notified and given 30 days to provide evidence and resolve the issue.
“The Trump Administration’s whole-of-government approach to fighting fraud, waste, and abuse is built on the idea that an ounce of prevention is worth a pound of cure,” Centers for Medicare and Medicaid Services Administrator Dr. Mehmet Oz said in the Oct. 14 statement.
“Ensuring health programs serve only those who are eligible is one of the most effective ways to protect these programs and the taxpayers who support them.”
The rule change proposed by the Treasury Department and the IRS is scheduled for publication in the Federal Register on Oct. 15. The public will then have 45 days to submit comments on the change. A telephonic public hearing has also been scheduled for Dec. 8, 2026.
The Treasury and the IRS typically review the public comments before considering potential revisions and issuing a final rule change.
Other Tax Credit Proposals
In August, the Treasury and IRS proposed new regulations intended to prevent illegal immigrants from receiving refundable individual income tax credits funded by American taxpayers, such as the child, adoption, earned income, and American opportunity tax credits.
A group of Democratic lawmakers sent a letter to Bessent and Bisignano on Oct. 1, asking the Trump administration to abandon the August proposals.
“The Administration has no legal authority to change congressionally enacted tax law via regulation,” the lawmakers wrote. “The proposed rule is clear regulatory overreach that would have disastrous impacts for lawfully present immigrants and their families who are legally eligible for refundable tax credits.”
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