Health Care Affordability Act of 2025
Key claim: The Health Care Affordability Act of 2025 would permanently eliminate the 400% FPL income cap on premium tax credit eligibility and lock in the lower, non-inflation-adjusted applicable percentages that increase credit amounts.
Abstract
(S46 · 119th Congress) Health Care Affordability Act of 2025 This bill makes permanent temporary changes enacted by the American Rescue Plan Act of 2021 (ARPA) and the Inflation Reduction Act of 2022 (IRA) that generally expand eligibility for and increase the amount of the premium tax credit. Currently, eligible taxpayers may be able to claim the premium tax credit, which applies toward the cost of obtaining health insurance through health insurance exchanges. To be eligible for the premium tax credit, a taxpayer’s household income must meet or exceed 100% of the federal poverty level (FPL) and, after 2025, may not exceed 400% of the FPL (maximum income limit). For 2021-2025, the ARPA and IRA eliminated the maximum income limit, which generally expands eligibility for the premium tax credit. Further, under current law, the amount of the premium tax credit is (1) generally the plan premium (conditions apply), minus (2) the taxpayer’s household income multiplied by the applicable percentage. The applicable percentage is a specific percentage that varies depending on which of six income ranges (adjusted for inflation after 2025) the taxpayer’s household income falls within. For 2021-2025, the ARPA and IRA lowered the applicable percentages and eliminated the adjustment of the applicable percentages for inflation, which generally increases the amount of the premium tax credit. The bill makes permanent the elimination of the 400% maximum income limit, the lower applicable percentages, and the elimination of the inflation adjustment for the applicable percentages. Latest action (2025-01-09): Read twice and referred to the Committee on Finance.
Why this matters
The 400% FPL ‘subsidy cliff’ and the applicable-percentage schedule are the two levers that determine who qualifies for ACA premium tax credits and how much they pay. Making the ARPA/IRA expansions permanent would shift the PTC from a temporary pandemic-era boost to a structural feature of the tax code, with ongoing distributional effects favoring middle-income marketplace enrollees and older buyers in high-premium areas, while raising long-run federal outlays.