The U.S. Department of the Treasury and the Internal Revenue Service (IRS) proposed rules that would limit the Premium Tax Credit to U.S. citizens, U.S. nationals, and certain lawfully present noncitizens.

The agencies announced the proposed regulations in a press release on Wednesday, noting that the rules implement President Donald Trump's Working Families Tax Cuts reforms to the credit. The credit helps eligible taxpayers afford health insurance bought through the Health Insurance Exchanges.

What the Proposed Rules Do

Beginning in 2027, the proposed rules would ensure taxpayer-funded health insurance subsidies go only to Americans who qualify under federal law, the agencies said. They also apply eligibility checks and add new verification criteria for any advance Premium Tax Credit payments.

Treasury Secretary Scott Bessent said, "Hardworking American taxpayers should not be forced to subsidize health care for people who are ineligible under federal law."

Meanwhile, IRS CEO Frank Bisignano said the "enhanced verification measures are designed to curb improper claims."

Trump Administration's Anti-Fraud Work

The agencies said the Trump Administration's Task Force to Eliminate Fraud exposed the need for stronger safeguards. It said the Centers for Medicare & Medicaid Services (CMS) announced the removal of more than 760,000 unverified "phantom" enrollees from Affordable Care Act rolls, resulting in $2.2 billion in savings.

In August, CMS said it canceled about 315,000 unauthorized enrollments covering more than 760,000 people as of Aug. 31. In July, it said it estimated roughly 35% of Marketplace enrollments may be illegitimate. The task force is chaired by Vice President JD Vance.

CMS Administrator Dr. Mehmet Oz said on Wednesday that Treasury "is taking another step forward in our collaborative effort to protect taxpayer dollars."

Changes to Exchange procedures needed for the verification requirements are expected in parallel with HHS proposed regulations, the agencies noted.