Health care credit expands eligibility

Summary#

The Health Care Affordability Act of 2025 would amend the Internal Revenue Code of 1986. Its stated goal is to expand eligibility for the refundable tax credit for coverage under a qualified health plan. The bill has been introduced and referred to the Senate Finance Committee; it is not law.

  • It would remove the current 400%-of-poverty-line income limit identified in the bill, so income above that level would not by itself rule out eligibility.
  • It would set a new sliding-scale schedule for the “applicable percentage” used in calculating the credit. The percentage would be 0 up to 150% of the poverty line, rise across income tiers to 8.5% at 400%, and stay at 8.5% above that.
  • It would also remove three specified Code provisions that the bill labels as related to affordability of coverage. The supplied materials do not show their full current wording or effect.
  • The changes would apply to taxable years beginning after December 31, 2025.

What it means for you#

  • People seeking the credit: If you have coverage under a qualified health plan, income above 400% of the poverty line would no longer automatically exclude you. Other eligibility rules would still apply.
  • People whose income is within the listed tiers: The bill would set the applicable-percentage schedule used in the credit calculation. Within each tier, the percentage would rise linearly from the listed starting figure to the ending figure.
  • People with other types of coverage: The bill concerns a credit for qualified health plan coverage. It does not itself require anyone to enroll, change insurance plans, or provide new health services.

Money#

The bill would expand eligibility for a refundable federal tax credit, but no cost estimate is included in the supplied materials. No publicly available information.

  • The bill gives no estimate of federal spending, savings, or tax-credit amounts for particular households.
  • It does not set a new fee or fine.

What is unclear#

  • The Internal Revenue Code provisions being amended were not supplied, so the full current rules and the exact effect of the three deletions could not be checked.
  • The bill does not state how the changes would interact with other eligibility rules that remain in place.
  • It gives no examples showing how the new percentages would affect a household’s credit.
  • The bill’s passage is uncertain; it has not yet become law.

Case for#

  • The bill appears intended to remove an income ceiling that can block people above 400% of the poverty line from qualifying for the credit.
  • A possible argument for the new schedule is that it sets a gradual increase in the applicable percentage across income tiers, rather than ending eligibility at the 400% line.
  • The bill uses a single 8.5% applicable percentage for incomes at or above 400%, which could make the schedule easier to apply at those income levels.

Case against#

  • The bill could make some people with incomes above 400% of the poverty line eligible for refundable credits, but the materials give no estimate of the resulting federal cost.
  • The bill removes three provisions described only as related to affordability of coverage. Without their full text, it is unclear what protections or rules those changes would remove.
  • The bill does not explain how the new schedule would affect individual credit amounts or how it would work alongside other eligibility rules.