Lower Health Care Costs Act
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This bill would extend through 2028 expanded eligibility and increased tax credit amounts for health insurance premiums.
What it does
This bill would extend for three years, through 2028, temporary tax credit expansions originally established by the American Rescue Plan Act and the Inflation Reduction Act. It proposes to maintain the removal of the income cap for premium tax credit eligibility and continue using lower percentage rates to calculate how much individuals must contribute toward health insurance premiums. These measures are intended to expand eligibility for and increase the financial value of credits used to purchase health insurance through federal and state exchanges.
Who is affected
This bill affects taxpayers who purchase health insurance through health insurance exchanges and seek to claim the premium tax credit. It specifically impacts individuals with household incomes exceeding 400% of the federal poverty level by extending their eligibility for the credit through 2028. Additionally, taxpayers with household incomes at or above 100% of the federal poverty level are affected by the extension of lower applicable percentages used to calculate their credit amounts.
Key provisions
- Extension of expanded premium tax credit eligibility. The bill extends through 2028 the removal of the 400% federal poverty level maximum income limit for the premium tax credit. This allows taxpayers with household incomes above that threshold to remain eligible for assistance with health insurance exchange premiums.
- Extension of increased tax credit amounts. The legislation maintains lower applicable percentages used to calculate the premium tax credit through 2028. By keeping these percentages reduced, the bill generally increases the total amount of the credit available to eligible taxpayers.
- Suspension of inflation adjustments for credit calculations. The bill continues the elimination of inflation-based adjustments for the applicable percentages through 2028. This extension prevents the scheduled return to higher percentage rates that would otherwise occur after 2025.
Fiscal impact
- Estimated Budgetary Effects of S. 3385, the Lower Health Care Costs Act· As introduced in the Senate on December 8, 2025
Effective dates
The bill extends existing health care premium tax credit expansions for three years, through 2028, preventing the scheduled expiration of these provisions at the end of 2025.
Relationship to existing law
This bill extends for three years temporary modifications to the premium tax credit originally enacted under the American Rescue Plan Act of 2021 and the Inflation Reduction Act of 2022. Specifically, it maintains expanded eligibility and increased credit amounts by continuing the suspension of the maximum income limit and the use of lower applicable percentages through 2028.
Stated purpose
The bill aims to lower health care costs by extending through 2028 temporary provisions that expand eligibility for and increase the amount of the premium tax credit used to obtain health insurance through exchanges.