Federal · IRS proposed rule, REG-101576-26

IRS proposed rule on the premium tax credit: full repayment of excess subsidies, new verification rules, and what it means before open enrollment

Proposed Oct. 15, 2026

Published October 18, 2026 · Last updated October 18, 2026

What it does

This is a proposed rule. It would amend the IRS regulations under Internal Revenue Code section 36B to reflect sections 71119 and 71301–71305 of Public Law 119-21 (July 4, 2025). (Proposed rule, “Authority”) The main pieces:

• No more repayment caps. Before 2026, people with household income below 400% of the federal poverty level (FPL) had a cap on how much excess advance credit (APTC) they had to repay. The law removed that cap for tax years beginning after December 31, 2025. “Thus, for taxable years beginning after December 31, 2025, a taxpayer’s tax liability for the taxable year of the coverage is increased by the full amount of the excess APTC.” (Proposed rule, section VII; IRS Q&A on the PTC, Q31)
• Income-based special enrollment periods. For plan years after 2025, a plan you enroll in during a special enrollment period based only on your expected household income as a percentage of FPL (not tied to a life event or other change HHS specifies) is not a “qualified health plan” for the credit. (Proposed rule, Explanation of Provisions, section I)
• Lawfully present immigrants below 100% FPL. The law ended a rule that let some lawfully present immigrants with income below 100% of FPL, who were ineligible for Medicaid because of immigration status, qualify for the credit. That change applies for tax years after 2025. Starting in tax years after 2026, lawfully present family members who are not “eligible aliens” as defined in the law are excluded from the credit calculation. (Proposed rule, Background II; Special Analyses)
• Medicaid work (“community engagement”) requirements. If you are found ineligible for Medicaid solely because you did not meet the new community-engagement requirement, you are treated as eligible for Medicaid for PTC purposes. Those months would not qualify for the credit. (Proposed rule, Explanation of Provisions, section III)
• Verification (starting with tax years after 2027). A month counts for the credit only if the Marketplace verifies your residence and citizenship, national status or lawful presence. If advance payments are made, it must also verify household income, family size, that you have no other qualifying coverage, and eligible-alien status where relevant. Marketplaces must also offer pre-enrollment verification starting by August 1 of the prior year. Some family-size changes, such as a birth, divorce or death, can be exempt. (Proposed rule, sections I and IV; Special Analyses)

Who it affects

People who buy individual health insurance through a Marketplace and get, or may claim, the premium tax credit. The IRS estimates the rules would affect about 15.6 million Marketplace enrollees, including 13.5 million potentially eligible for the credit. (Proposed rule, Special Analyses, “Affected Entities and Taxpayers”) South Carolina uses the federally facilitated Marketplace, HealthCare.gov. (SC Department of Insurance)

What it means for you

• Report changes promptly. Because repayment caps are gone starting with 2026, the IRS urges enrollees to report changes such as income, address, job, coverage, birth, marriage or divorce to the Marketplace, “to avoid a balance due or reduced refund.” (IRS, “Repayment caps eliminated”)
• Open enrollment dates. On HealthCare.gov, open enrollment for 2027 coverage starts November 1. Enroll by December 15 for coverage that starts January 1. Open enrollment ends January 15. (HealthCare.gov, Dates and deadlines)
• Comment if you want to. Submit comments at regulations.gov (REG-101576-26) by November 30, 2026. (Proposed rule, “Dates” and “Addresses”)

Current status

Published as a proposed rule October 15, 2026. A telephone public hearing is set for December 8, 2026, at 10 a.m. ET. It will be cancelled if no outlines of topics are received by November 30. (Proposed rule, “Dates”) The IRS notes that although some of the proposed regulations would apply to years beginning on or after October 15, 2026, “the related statutory provisions are effective for tax years and plan years beginning on or after December 31, 2025.” (Proposed rule, “Applicability Dates”)

What happens next

The IRS will review comments before issuing final rules. Treasury says HHS is expected to issue parallel proposed rules on the Marketplace procedures needed for the verification requirements. (IRS news release IR-2026-121)

Sources

• Federal Register: “Premium Tax Credit,” proposed rule, FR Doc. 2026-21056 (Oct. 15, 2026)
• IRS news release IR-2026-121 (Oct. 14, 2026)
• IRS: Repayment caps eliminated for excess advance payments of the Premium Tax Credit
• IRS: Questions and answers on the Premium Tax Credit
• HealthCare.gov: Dates and deadlines
• SC Department of Insurance: Affordable Care Act

Every statement above is drawn from the official source text linked here; section references are shown in grey. This is a plain-English summary, not legal advice. Spot an error? Tell us.