New Health Care Bill Removes Income Cap for Insurance Tax Credits, Starting 2026

The Health Care Affordability Act of 2025 is shaking up how people get help paying for health insurance. The core change? Starting after December 31, 2025, the bill, SEC 2, scraps the old income limit for getting tax credits to help pay for insurance premiums. Before, if you made more than 400% of the federal poverty level, you were on your own. This bill throws that rule out the window. The bill changes the rules by removing the income cap, that means those that were not eligible before due to higher incomes are now eligble.

Breaking Down the Changes

The bill adjusts the way premium tax credits are calculated. SEC. 2 lays out a sliding scale, so the percentage of your premium covered by the tax credit changes based on your income. Lower-income individuals will see a bigger boost in their tax credits, making coverage more affordable. The idea is to make sure everyone, especially those with lower incomes, can actually afford their health insurance.

Real-World Impact

Imagine a freelance graphic designer who has a decent year and makes more than the old 400% poverty level limit. Previously, they wouldn't qualify for any help with their premiums. Under this new law, they could get a tax credit, making their monthly insurance costs more manageable. Or consider a family of four with a lower income – they'll likely see a bigger tax credit, meaning less money out of their pocket each month for health coverage.

Potential Roadblocks

While the goal is to make health insurance more accessible, there are always practical challenges. The bill doesn't directly address the rising costs of healthcare itself. More people having access to insurance could potentially drive those costs up further if there aren't other measures to keep spending in check. Also, while not explicitly stated in the bill, there is the potential for individuals to misrepresent their income to get a bigger tax credit. The bill's language in SEC. 2. focuses on adjusting the percentages and removing the income cap, but the enforcement mechanisms are not detailed within this section. The bill is designed to integrate with the existing structure of the Affordable Care Act (ACA), aiming to enhance rather than overhaul it. By expanding tax credit eligibility, the bill builds on the ACA's framework to reach a broader segment of the population.