Health Care Affordability Act of 2025

Bill Number: H.R. 247
Origin Chamber: House
Congress: 119th Congress, Session 1
Policy Area: Taxation
Status: Introduced
Latest Action: 2025-01-09: Referred to the House Committee on Ways and Means.
Last Updated: 2026-05-14T21:23:19Z

AI-Generated Summary

Purpose of the Legislation

The Health Care Affordability Act of 2025 aims to make health insurance more accessible and affordable for more Americans by expanding who qualifies for a tax credit that helps pay for premiums on qualified health plans (like those offered through the Affordable Care Act's marketplaces). This credit, known as the premium tax credit, reduces out-of-pocket costs for coverage.

Key Provisions

Expanded Eligibility: Removes the income limit that previously restricted the premium tax credit to households earning up to 400% of the federal poverty level (FPL). Now, households above 400% FPL can also qualify.
Revised Subsidy Tiers: Updates the "applicable percentage" used to calculate the credit amount. This creates a sliding scale of premium contributions based on income as a percentage of the FPL, divided into tiers:
Up to 150% FPL: 0% initial to 0% final (full subsidy).
150% to 200% FPL: 0% to 2.0%.
200% to 250% FPL: 2.0% to 4.0%.
250% to 300% FPL: 4.0% to 6.0%.
300% to 400% FPL: 6.0% to 8.5%.
400% FPL and higher: Fixed at 8.5%.

These percentages determine how much of the premium the taxpayer pays after the credit; the credit covers the rest up to a benchmark plan's cost.

Conforming Changes: Eliminates certain rules in the tax code related to "affordability" thresholds that previously limited or adjusted subsidies based on the 400% FPL cap.
Effective Date: Applies to tax years starting after December 31, 2025.

Significant Changes to Existing Law

Under current law (from the Affordable Care Act), the premium tax credit is only available for households with incomes between 100% and 400% of the FPL, and those above 400% may have to repay subsidies if their income rises unexpectedly. This bill eliminates the upper income cap entirely, allowing subsidies for higher earners while capping their required premium contribution at 8.5% of income. It also simplifies the subsidy calculation by removing repayment cliffs and affordability tests tied to the old limit, making the system more predictable.

Potential Impacts

On Citizens: More middle- and upper-middle-income families (above 400% FPL) could receive subsidies, potentially reducing uninsured rates and lowering premium costs for millions. This might encourage more people to buy marketplace plans without fear of subsidy cliffs.
On Government Agencies: The Internal Revenue Service (IRS) will process more claims and refunds, increasing administrative workload. The Department of Health and Human Services (HHS) may see higher enrollment in marketplaces, boosting federal spending on subsidies (estimated to rise significantly, though exact figures depend on implementation).
On International Relations: No direct impacts, as this is a domestic tax and health policy change.

Main Stakeholders Affected

Individuals and Families: Primarily low- to higher-income households (up to and beyond 400% FPL) seeking health coverage, especially those in the individual insurance market.
Health Insurers and Marketplaces: Companies offering qualified health plans may see increased enrollment, stabilizing risk pools and potentially lowering overall premiums.
Government Entities: IRS (for tax credit administration), HHS (for marketplace oversight), and Congress (for budgeting subsidy costs).
Employers: Indirectly affected, as expanded subsidies might reduce reliance on employer-sponsored plans for some workers.

Notable Legal, Constitutional, or Political Implications

Legal: As an amendment to the Internal Revenue Code, it builds directly on the Affordable Care Act without altering its core structure. It could face challenges if viewed as an unfunded expansion of entitlements, but it aligns with Congress's taxing and spending powers under the Constitution.
Constitutional: No major issues; the bill uses established tax credit mechanisms, avoiding separation-of-powers concerns.
Political: This expands access to a key Affordable Care Act benefit, potentially reducing health disparities but increasing federal deficits. It may spark debate over fiscal responsibility, with supporters highlighting affordability gains and opponents citing costs. The bill's referral to the House Ways and Means Committee signals a focus on tax policy implications.

This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.

Sponsor

Rep. Underwood, Lauren [D-IL-14]

Cosponsors (165)

Rep. Castor, Kathy [D-FL-14], Rep. Schakowsky, Janice D. [D-IL-9], Rep. DeGette, Diana [D-CO-1], Rep. Grijalva, Raúl M. [D-AZ-7], Rep. Pettersen, Brittany [D-CO-7], Rep. Barragán, Nanette Diaz [D-CA-44], Rep. Panetta, Jimmy [D-CA-19], Rep. Hoyer, Steny H. [D-MD-5], Del. Norton, Eleanor Holmes [D-DC], Rep. Titus, Dina [D-NV-1], Rep. Morelle, Joseph D. [D-NY-25], Rep. Tonko, Paul [D-NY-20], Rep. Moore, Gwen [D-WI-4], Rep. Stevens, Haley M. [D-MI-11], Rep. DelBene, Suzan K. [D-WA-1], Rep. Hoyle, Val T. [D-OR-4], Rep. Johnson, Henry C. "Hank" [D-GA-4], Rep. Budzinski, Nikki [D-IL-13], Rep. Pocan, Mark [D-WI-2], Rep. Beyer, Donald S. [D-VA-8], Rep. Horsford, Steven [D-NV-4], Rep. Amo, Gabe [D-RI-1], Rep. Scanlon, Mary Gay [D-PA-5], Rep. Omar, Ilhan [D-MN-5], Rep. Craig, Angie [D-MN-2], Rep. Schneider, Bradley Scott [D-IL-10], Rep. Turner, Sylvester [D-TX-18], Rep. Waters, Maxine [D-CA-43], Rep. Davids, Sharice [D-KS-3], Rep. Garcia, Robert [D-CA-42], Rep. McIver, LaMonica [D-NJ-10], Rep. Schrier, Kim [D-WA-8], Rep. Brownley, Julia [D-CA-26], Rep. Frost, Maxwell [D-FL-10], Rep. Bonamici, Suzanne [D-OR-1], Rep. Mrvan, Frank J. [D-IN-1], Rep. McClellan, Jennifer L. [D-VA-4], Rep. Jackson, Jonathan L. [D-IL-1], Rep. Lee, Susie [D-NV-3], Rep. Bishop, Sanford D. [D-GA-2], Rep. Salinas, Andrea [D-OR-6], Rep. Ansari, Yassamin [D-AZ-3], Rep. Lofgren, Zoe [D-CA-18], Rep. Frankel, Lois [D-FL-22], Rep. Dexter, Maxine [D-OR-3], Rep. Cisneros, Gilbert Ray, Jr. [D-CA-31], Rep. Matsui, Doris O. [D-CA-7], Rep. Levin, Mike [D-CA-49], Rep. Sherman, Brad [D-CA-32], Rep. Chu, Judy [D-CA-28] and 115 more