The Internal Revenue Service has started the process for redefining who will be eligible for future health insurance premium tax credits for Affordable Care Act health exchange insurance policies.

In a recently published notice, the IRS proposes bringing access to those premium tax credits into line with changes adopted in the FY 2025 reconciliation law that introduced major changes in Medicaid eligibility, Affordable Care Act health insurance premium subsidies, and other aspects of federal health care policy.

The proposed rule would establish stricter eligibility and enrollment requirements for health premium subsidies – including work/community engagement requirements, income criteria, and immigration status; introduce stricter eligibility verification practices; reduce access to premium tax credits for non-citizens; redefine what constitutes a “qualified health plan” for purposes of applying premium tax credits; and introduce other changes as well.

How the federal government ultimately implements the Affordable Care Act-related provisions of the FY 2025 budget reconciliation law has significant potential implications for community safety-net hospitals.  Those hospitals care for more lower-income patients than the typical American hospital and therefore face a far greater risk of finding that today’s insured patients may be tomorrow’s uninsured patients – and tomorrow’s increase in uncompensated care.

Learn more about the proposed regulation from this Treasury Department news release and this formal IRS notice.