Sponsors (2)
The bill increases health coverage affordability for many families with working dependents—especially trainees and apprentices—by excluding some dependent earnings from household income, but the gains are limited by caps and state Medicaid rules and will add reporting complexity and modest federal costs.
Low- and middle-income families with working dependents (including those with dependent wages or self-employment income) will generally qualify for larger premium tax credits because certain dependent earnings are excluded from household income.
Young dependents in job‑training, apprenticeship, or WIOA-defined workforce programs can keep more of their family's eligibility for subsidized health coverage while they work or train.
Clarifies Exchange reporting so taxpayers and the IRS can apply the exclusion and reconcile advance premium tax credit payments more accurately.
People in Medicaid non-expansion States may receive a smaller or no exclusion because the rule prevents household income from falling below 100% of the federal poverty level, limiting subsidy gains for the lowest-income households.
The 15% aggregate cap on excluded dependent income can limit benefits for families with multiple working dependents, leaving some dependent earnings counted toward eligibility and reducing credit gains.
New or clarified reporting requirements for Exchanges may increase administrative burden and the risk of errors, potentially causing later reconciliations or incorrect advance payments to taxpayers.
Based on analysis of 2 sections of legislative text.
Excludes certain dependent wages and self‑employment income from MAGI when calculating the premium tax credit, subject to age, student/training, aggregate cap, and poverty‑line rules.
Introduced June 5, 2025 by Steven Horsford · Last progress June 5, 2025
Excludes certain dependent wages and self-employment income from a household's modified adjusted gross income (MAGI) when calculating the premium tax credit (PTC). The exclusion applies to dependents under age 18, and to dependents under 24 who meet student/training/apprenticeship criteria for at least five months, but the total excluded dependent income cannot exceed 15% of the taxpayer's MAGI and cannot push household income below 100% of the federal poverty line in non‑Medicaid‑expansion States. Exchanges must collect and transmit information about whether the exclusion applies and each applicable dependent's employment income. The change applies to taxable years beginning after enactment and to related advance credit payments.