The U.S. Treasury Department building in Washington. Treasury and its Internal Revenue Service jointly issued the proposed premium tax credit rule. U.S. Department of the Treasury photo (U.S. government work, public domain).
The IRS and the Treasury Department have proposed a new rule that spells out how immigrants will lose government help paying for health insurance bought on HealthCare.gov or a state marketplace. Under the rule, which carries out changes Congress passed in 2025, many immigrants living in the U.S. legally, including H-1B workers, will no longer receive the premium tax credit starting in 2027. The rule also confirms that anyone who gets more help than they qualify for, starting with the 2026 tax year, will have to pay back the full amount when they file their taxes. This does not impact immigrants who are enrolled in health insurance through their employers.
How the help works
The help is called the premium tax credit. It lowers your monthly insurance bill. The amount depends on your income and the size of your family.
It works in two steps:
- During the year: When you sign up, you estimate your income for the year. Based on that estimate, the government pays part of your insurance bill every month, straight to the insurance company. You pay the rest.
- At tax time: You check whether the estimate was right. The marketplace sends you a form (Form 1095-A) showing how much help you got. If you got too little, you get money back. If you got too much, you owe it back.
What happened
In 2025, Congress passed a big tax and spending law (called the “One Big Beautiful Bill Act”). It changed who can get this help. On Oct. 15, 2026, the IRS and the Treasury Department proposed detailed rules explaining how those changes will work when families file their taxes.
Who can get the help starting in 2027
Only these people will qualify:
- U.S. citizens
- Green card holders
- Cuban and Haitian entrants
- Citizens of three Pacific island nations that have a special agreement with the U.S. (the Compact of Free Association countries)
These people can still buy insurance, but must pay the full price:
- H-1B and other visa holders (including H-4 family members)
- Refugees and asylum holders
- People with Temporary Protected Status (TPS)
- People waiting for a green card decision
The marketplaces have already been told how to apply these rules when sign-up season opens Nov. 1.
The three biggest changes
1. Families where some members qualify and others don’t (starts 2027)
The help will only cover the people who qualify. Example: a family has two people, each with a $500 monthly insurance bill. One is a citizen; the other is here legally but doesn’t qualify. The family gets help based on $500, not $1,000.
2. You must pay back all extra help (starts with 2026 taxes)
Before, lower-income families who got too much help only had to pay back part of it, up to a set limit. That limit is gone. If you got $2,000 too much, you owe the full $2,000. The government expects about 3.7 million tax returns to owe money back in 2028.
3. Month-by-month checks (starts 2028)
A month will only count toward your help if the marketplace has confirmed your information for that month, such as where you live, your citizenship or immigration status, your income, and your family size.
The rule also officially ends an older exception that let some legal immigrants with very low incomes get the help if their immigration status kept them out of Medicaid. That ended in 2026.
Why this matters
Mistakes now cost more. If the marketplace has the wrong immigration status on file, or your status changes and you don’t tell them, you could get help you’re not allowed to have. Before, the payback limit softened that. Now the full amount becomes a tax bill.
People who should be especially careful:
- People whose green card is approved partway through the year
- Families who let their insurance renew automatically without updating their information
For H-1B workers
If you get insurance through your employer: Nothing changes. These rules only affect insurance bought on your own through a marketplace.
If you buy your own insurance on the marketplace:
- For 2026: H-1B holders can still get the premium tax credit if they otherwise qualify.
- Starting in 2027: H-1B holders and H-4 family members will no longer qualify. You can still buy a marketplace plan, but at full price.
- Paying back extra help: Starting with your 2026 taxes, any extra help you received must be repaid in full.
What to do now:
- Check your 2027 cost. Open enrollment starts Nov. 1. If you were getting help before, your price may jump. Don’t let your plan renew automatically without looking.
- Compare with your employer’s plan. If your employer offers insurance, it is often cheaper than a full-price marketplace plan, partly because your employer pays some of the cost and your share usually comes out of your paycheck before taxes.
- Keep your information current. If your status changes during the year, such as getting a green card, tell the marketplace. Green card holders still qualify for help.
- Talk to your tax preparer if you had marketplace coverage in 2026 and received help, so you’re not surprised by a bill.
Common questions
Do I have to take my employer’s insurance?
No. You can decline your employer’s plan and buy a marketplace plan instead. At the federal level, there is no penalty for being uninsured; the federal mandate tax ended in 2019. But some places have their own rule: as of 2026, California, Massachusetts, New Jersey, Rhode Island, and Washington, D.C. enforce a mandate with a financial penalty. If you live in one of those places, you need some coverage, but it doesn’t have to be your employer’s plan. joingeraldfreemarkethealthcareblog
Even before the new rules, if your employer’s plan was “affordable,” you couldn’t get the marketplace credit. For plans starting in 2026, employer coverage counts as affordable if your share for employee-only coverage is no more than 9.96% of your household income. From 2027, this matters less for H-1B workers, since they can’t get the credit either way. cbiz
Which employers have to offer insurance?
Only larger ones. Employers with 50 or more full-time and full-time-equivalent employees must offer affordable, minimum-value coverage to full-time employees and their dependents, or risk tax penalties. Full-time means 30 or more hours a week. Technically this is “offer coverage or pay a penalty,” not an absolute requirement. Employers with fewer than 50 employees don’t have to offer insurance at all. Also, employers aren’t required to offer coverage to spouses, only to employees and their children. wtwcoassuredpartners
What each side says
The congressional committee that wrote these changes says they stop billions of dollars in help from going to people whose immigration status was, in its view, stretched and misused under the previous administration. The National Immigration Law Center, an immigrant-rights group, says the changes will make insurance harder to afford for families living here legally, and wants Congress to reverse them.
The IRS rule can only fine-tune how the changes work. It can’t cancel them, because they are written into the law itself. Public comments are most likely to affect how information gets checked and how family amounts are calculated.
Key dates
- Nov. 1, 2026: Open enrollment begins for 2027 plans
- Nov. 29, 2026 (45 days after Oct. 15): Last day to send comments (docket REG-101576-26 on regulations.gov) or ask to speak at the public hearing
- Dec. 4, 2026: Last day to sign up to attend the hearing
- Dec. 8, 2026: Public hearing by phone (canceled if nobody asks to speak)
This article is for general information and is not legal or tax advice.
Sources
- IRS and Treasury, Premium Tax Credit proposed rule, Federal Register Doc. 2026-21056 (Oct. 15, 2026)
- CMS guidance on noncitizen eligibility for plan year 2027 (Oct. 5, 2026)
- Law360, “IRS Proposes To Block Immigrants From Premium Tax Credit” (Oct. 14, 2026)
- House Ways and Means Committee statement (June 2, 2025)
- National Immigration Law Center
- IRS Revenue Procedure 2025-25 (2026 affordability percentage)
- EY Tax News: ACA affordability percentage increases for 2026
- WTW: IRS announces 2026 ACA affordability percentage
- CBIZ: ACA affordability percentage and employer penalties for 2026
- AssuredPartners: ACA Affordability Rates Announced for 2026
- Free Market Healthcare Blog: Is health insurance required in 2026?
- Gerald: Is it against the law to not have health insurance?
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