New bill to extend ACA subsidies could be a test for employer health tax protection

Kiggans noted in an announcement about the bill introduction that she's a nurse practitioner and has seen how important the expanded tax credit program is to families in Virginia.

"While the enhanced premium tax credit created during the pandemic was meant to be temporary, we should not let it expire without a plan in place," Kiggans said.

For employers and benefits advisors, the biggest takeaway could be that Kiggans has rounded up a team of cosponsors that includes 11 Republicans as well as five Democrats.

Kiggans' ability to form a bipartisan group of cosponsors for her bill could bode well for employer and insurer efforts to protect the current federal income tax exclusion for employer health benefits.

The history: The ACA originally made premium tax credit subsidies available only to people with income from about 100% to 400% of the federal poverty level who had no access to affordable major medical coverage from an employer.

Originally, many Republicans were strong advocates for ACA repeal.

When the COVID-19 pandemic hit, Congress passed the American Rescue Plan Act, which provided "enhanced premium tax credits."

The act and a later extension bill made health insurance premium subsidies available to any individuals who have no access to affordable employer health coverage.

The Urban Institute has predicted that letting ACA premium tax credit subsidies return to the original 2014 rules would lead to 4 million people becoming uninsured.

The bill cosponsors: ProgressivePunch.org has given all House members "progressive scores" for 2025-2026.

The group's chart shows that many of the Republican cosponsors of Kiggans' bill have relatively progressive scores, but some — Maria Salazar of Florida, Jeff Van Drew of New Jersey and Jeff Hurd of Colorado — rank in the middle of the Republican pack in terms of conservatism levels.

The employer health benefits tax exclusion: The United States has a big and growing budget deficit.

Some conservative Republicans in Congress have considered the idea of saving money by taxing health benefits or by capping or eliminating the employer health benefits tax exclusion.

Related: Cap on employer health tax exclusion? New House bill coming soon

The Center for Retirement Research at Boston College drew attention to the idea last week by posting a brief article with the headline, "How Much Could Taxing Health Benefits Help Social Security?"

The authors described one benefits taxation strategy and suggested the strategy could increase the tax burden for some low-wage workers, "but perhaps could be part of a larger package of reforms."

What the Kiggans' cosponsor list means: Traditionally, Republicans and Democrats have often worked together on health care and health finance legislation.

Conservative Republicans in the House recently led an effort to try to save most of the funding for the National Institutes of Health, the organization that manages most government-sponsored medical research.

Republicans and Democrats have also worked together on pharmacy benefit manager oversight bills.

In the past, Republican support for the employer group health tax exclusion has been much stronger than Republican support for ACA premium tax credit subsidies.

Kiggans' ability to attract Republican cosponsors for a bill extending the current ACA premium tax credit level suggests that lawmakers may also be able to round up strong bipartisan support for efforts to keep the current employee health benefits tax exclusion rules in place.