Proposed rules issued by the Treasury Department and the IRS on Wednesday are aimed at ensuring that taxpayer-funded healthcare subsidies go only to Americans who qualify under federal law.
Officials say the proposed regulations implement Trump administration reforms to the premium tax credit, a refundable tax credit designed to help eligible individuals and families with low or moderate income afford health insurance purchased through the health insurance marketplace.
“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. “Today’s proposed rules implement the common-sense reforms enacted by the Working Families Tax Cuts to close eligibility loopholes and ensure taxpayer-funded Premium Tax Credits are reserved for eligible Americans. 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.”
Last month, the Trump administration announced a plan to remove 760,000 Affordable Care Act enrollees from public healthcare exchanges, alleging that the individuals were fraudulently enrolled in the program or didn’t exist.
Vice President JD Vance said the discovery and canceled subsidy payments for hundreds of thousands of people from the exchanges, part of an administration-wide crackdown on fraud, would result in $2.2 billion in cost savings.
The administration recently sent nearly 1 million Americans $500 each who officials say had been overcharged for their Obamacare coverage by the Biden administration.
Approximately 19.2 million Americans are actively enrolled in ACA marketplace health plans as of early 2026, according to the Department of Health and Human Services website. The number of enrollees increased during the COVID-19 pandemic when enhanced subsidies became accessible through the American Rescue Plan Act and Inflation Reduction Act, both signed into law by former President Joe Biden.
The enhanced ACA premium tax credits, made available by legislation passed during the pandemic, expired at the end of last year after the Republican-led Congress didn’t extend them.
As a result, the Kaiser Family Foundation found that the average monthly premium payment for Marketplace enrollees rose 58% in 2026, from $113 to $178, including people who didn’t receive premium tax credits.
In a December 2025 report, the Government Accountability Office said fraud risks exist in the advance premium tax credit, but the report says it’s unclear at what scale. The GAO conducted covert testing using fictitious ACA applicants enrolled in 2024 and 2025. The report showed that the federal marketplace approved subsidized coverage for almost all of the GAO’s 24 fake enrollees.
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“The proposed rules protect eligible taxpayers while strengthening the integrity of the Premium Tax Credit,” IRS CEO Frank Bisignano said in a statement on Wednesday. “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 rules put the reforms enacted by the Working Families Tax Cuts—what Republicans are now calling the One Big Beautiful Bill Act—into effect, strengthening eligibility checks, closing gaps in the verification process, and ensuring taxpayer-funded subsidies go only to eligible American taxpayers, officials say.
According to the Treasury Department and the IRS, the proposed regulations:
- Strengthen eligibility standards: Beginning in 2027, taxpayer-funded health insurance subsidies would go only to Americans who qualify under federal law.
- Protect taxpayer benefits for eligible Americans: Restricts premium tax credit eligibility to U.S. citizens, U.S. nationals, and certain lawfully present noncitizens.
- Close verification gaps: Applies premium tax credit eligibility checks and adds new verification criteria for any advance tax credit payments.
“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 & Medicaid Services Administrator Dr. Mehmet Oz said in a 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. With today’s proposed rules, the Treasury Department is taking another step forward in our collaborative effort to protect taxpayer dollars by shutting down waste and fraud before a single dollar leaves the building.”
— Tribune News Service contributed to this article.
Photo credit: Unsplash
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