H.R. 6316 — Tax Credit Extension Act

This section (1) extends the temporary enhanced premium tax credit—available during 2021-2025 under the American Rescue Plan Act and Inflation Reduction Act—through taxable years beginning before January 1, 2028 (from January 1, 2026, i.e., through 2025); and (2) modifies household income eligibility for the credit to up to 700% of the federal poverty level (from 400% and higher, with no upper limit). (The premium tax credit subsidizes premiums for qualified health plans purchased through Affordable Care Act Marketplace Exchanges; the temporary enhancements increased subsidy amounts, removed the subsidy cliff at 400% FPL, and allowed 0% premium contributions for those up to 150% FPL.) The amendments apply to taxable years beginning after December 31, 2025.

This section amends the advance payment provisions of the premium tax credit (PTC) under the ACA to allow payments, on an individual's election, to the health insurance issuer; or, for enrollees in bronze-level or catastrophic plans who so elect, to a personal HSA (as newly defined in IRC §223(h)); or, absent an election, directly to the individual—for determinations made after December 31, 2025. (The PTC subsidizes premiums for eligible lower-income individuals purchasing coverage through ACA Exchanges; advance payments currently reduce monthly premiums paid to issuers.) It further establishes personal HSAs, treated like health savings accounts except that they accept only PTC advances under ACA §1412(a)(3)(B) or rollovers from other personal HSAs, are exempt from standard contribution limits, and disregard the additional tax on certain nonqualified distributions—for taxable years ending after December 31, 2025.

This section limits premium assistance amounts under the premium tax credit to the excess of the applicable monthly benchmark premium over a uniform minimum premium responsibility amount to be prescribed annually by the Secretary of the Treasury, in consultation with the Secretary of Health and Human Services. (The premium tax credit subsidizes qualified health plans purchased on Affordable Care Act marketplaces based on income relative to the federal poverty level and the second-lowest-cost silver plan benchmark; thus, all subsidy recipients must pay at least this minimum amount monthly.) The amendment applies to taxable years beginning after December 31, 2025.

This section authorizes appropriations, as determined necessary by the Secretary of the Treasury in consultation with the Secretary of Health and Human Services, for cost-sharing reduction payments under section 1412 of the Patient Protection and Affordable Care Act. (Cost-sharing reductions reimburse qualified health plans in ACA Marketplaces for reduced deductibles, copayments, and other out-of-pocket costs for enrollees with household incomes between 100% and 250% of the federal poverty level.)

This section directs the Secretary of the Treasury and the Secretary of Health and Human Services, in consultation with the Secretary of Homeland Security, to assist Exchanges (i.e., Affordable Care Act health insurance marketplaces) with determining whether alien individuals are lawfully present in the United States for premium tax credit eligibility under the Internal Revenue Code, and, for taxable years beginning after December 31, 2026, whether such individuals are eligible aliens. The requirement applies to taxable years beginning after December 31, 2025.

This section states the sense of Congress that no premium tax credit is allowed under section 36B of the Internal Revenue Code (i.e., the refundable tax credit subsidizing health insurance premiums purchased through Affordable Care Act Marketplaces) for any alien not lawfully present in the United States, and, for taxable years beginning after December 31, 2026, also for any lawfully present alien who is not an eligible alien (i.e., a qualified immigrant such as a lawful permanent resident, refugee, or asylee).