HF 2738 (LSB 5707YH (5) 91)

HOUSE FILE 2738

BY  McBURNEY, BAGNIEWSKI, B. MEYER, WICHTENDAHL, KURTH, BROWN-POWERS, KONFRST, ZABNER, BAETH, WILSON, RAMIREZ, CROKEN, R. JOHNSON, KRESSIG, WESSEL-KROESCHELL, and JACOBY

A BILL FOR

An Act establishing a state-based health insurance subsidy, and making an appropriation.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  NEW SECTION.  135.196  Iowa benefit exchange fund —— enhanced premium credits —— appropriation.
   1.  As used in this section, “enhanced premium tax credit” means the advanced premium tax credit under 26 U.S.C. §36B(3)(A).
   2.  The department and the department of insurance and financial services shall cooperate and develop an internet site to be located on the internet site of the department to effectuate this section.
   3.  An Iowa benefit exchange fund is created in the state treasury under the control of the department. Moneys in the fund are to be used for the sole purpose of providing subsidies to persons whose applications have been approved pursuant to this section. Moneys in the fund are not subject to section 8.33. Notwithstanding section 12C.7, subsection 2, interest or earnings on moneys in the fund shall be credited to the fund.
   4.  The purpose of the fund is to provide funding for the establishment of a state-based health insurance subsidy to mitigate the impact of the reduction in the enhanced federal advanced premium tax credits after the 2025 tax year.
   5.  For the fiscal year beginning July 1, 2026, and ending June 30, 2027, there is appropriated from the general fund of the state to the department to be credited to the Iowa benefit exchange fund, an amount sufficient to implement this section until such time that the enhanced federal advanced premium tax credits are restored to a level equaling or exceeding the amount of the enhanced premium tax credit available to persons during the 2025 tax year.
   6.  Beginning July 1, 2026, in order to qualify for a subsidy to mitigate the impact of the reduction in enhanced federal advanced premium tax credits, a person who is a resident may submit an application to the department in a manner specified by the department. The application shall include identical information submitted by a person as if applying for health insurance coverage under the federal Patient Protection and Affordable Care Act, Pub. L. No. 111-148, including personal information, household income, immigration status, and any current or available health insurance coverage.
   7.  a.  For the tax year beginning on or after January 1, 2026, but before January 1, 2027, and upon approval of the application by the department, an amount equal to the enhanced premium tax credit the person would have received as if the enhanced premium tax credit did not expire shall be provided to the person to offset the cost of the health insurance coverage.
   b.  The amount provided shall be based upon the calculation for the enhanced premium tax credits during the 2025 tax year.
   c.  The amount provided may be retroactive to January 1, 2026, if the person qualified for such credits, or to the date the person would have qualified for enhanced premium tax credits in 2026, whichever is earlier.
   8.  The department shall adopt rules pursuant to chapter 17A to administer this section.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   This bill establishes a state-based health insurance subsidy to mitigate the impact of the reduction in federal health insurance subsidies.
   The federal enhanced premium tax credit under 26 U.S.C. §36B(3)(A) (federal credit) expired on January 1, 2026. The federal credit was an expansion of the subsidies provided under the federal Patient Protection and Affordable Care Act, also known as the ACA.
   For the 2026 tax year only, the bill replaces the expired federal credit with a state subsidy of equal value as the federal credit calculated during the 2025 tax year.
   The bill requires the department of health and human services (department) and the department of insurance and financial services to cooperate and develop an internet site to be located on the internet site of the department to effectuate the bill.
   Beginning July 1, 2026, a person who is a resident of this state may submit an application to the department in a manner specified by the department. The application shall include identical information submitted by a person as if applying for health insurance coverage under the federal Patient Protection and Affordable Care Act, Pub. L. No. 111-148.
   Upon approval of the application by the department, an amount equal to the enhanced premium tax credit the person would have received as if the enhanced premium tax credit did not expire shall be provided to the person to offset the cost of the health insurance coverage. The amount provided may be retroactive to January 1, 2026, if the person qualified for such credits, or to the date the person would have qualified for enhanced premium tax credits in tax year 2026, whichever is earlier.
   The bill creates an Iowa benefit exchange fund (fund) in the state treasury under the control of the department for the sole purpose of providing subsidies to persons whose applications have been approved pursuant to the bill.
   For FY 2026-2027, the bill appropriates from the general fund of the state an amount sufficient to implement the bill.