Looming Expiration of Federal Subsidies for ACA Plans Frightens Millions

By: David Ostrowsky

For many Americans—millions, in fact—October projects as being a no-pun-intended rather frightening month.

As you’re reading this blog at the onset of fall foliage season, enrollees in the Affordable Care Act (ACA) marketplace across America are opening their mail and experiencing a severe case of sticker shock upon reading that  next year’s monthly premiums are expected to rise astronomically, as in by hundreds of dollars.

First, some background as to why this catastrophic situation is unfolding: Among the many features of the American Rescue Plan Act, signed into law by then-President Joe Biden in 2021, were tax credits that enhanced the amount of financial aid available to purchasers of insurance via ACA marketplaces. Prior to 2021, premium tax credits were only available to people making between 100-400% of the federal poverty limit; the enhanced tax credits were expanded to households with incomes over 400% of the federal poverty limit, and were also made more robust for all enrollees. The credit enhancement was a pandemic-era relief measure that ultimately triggered record enrollment in the ACA marketplace—of the approximately 24 million Americans who receive health insurance through the ACA, over 90 percent qualify for the enhanced subsidies. Initially intended to be administered on a temporary basis, the subsidies were extended through 2025 by the Inflation Reduction Act of 2022. With 2025 soon drawing to a close, however, it appears that those subsidies will soon be expiring as an extension was not included in President Trump’s One Big Beautiful Bill Act (OBBBA) earlier this summer and Congress—at least for the time being—doesn’t seem inclined to extend.

Politics aside, the impending expiration of subsidies in conjunction with higher premiums is causing tremendous stress and anxiety for families bracing for healthcare costs that, according to an analysis of insurance filings by the nonpartisan health research organization KFF, could escalate by as much as 75% come January. Some states have even forecasted more dramatic rate spikes while there are healthcare policy experts who predict that premium rates could even double in the new year. According to a KFF article published on September 30, if the enhanced tax credits do in fact expire on December 31, many ACA Marketplace enrollees will still be able to qualify for a smaller tax credit, while others will lose eligibility altogether and be burdened by a “double whammy” of losing their entire tax credit and being saddled with rising premiums.

In practical terms, the prospect of millions being compelled to pay hundreds of dollars more for their health insurance premiums in 2026 will mean many, many Americans will have to, quite frankly, choose between receiving life-saving or life-prolonging medical care and other basic necessities, such as food, heating bills (winter’s coming), and car repairs. Without question, it will be a nationwide problem, but one that promises to be especially acute in states such as Mississippi, Florida, West Virginia, Oklahoma, Louisiana, Utah, and Alabama where at least 96% of ACA enrollees receive enhanced subsidies.

And that’s just from a short-term perspective. According to the Congressional Budget Office, the termination of the enhanced tax credits is estimated to increase the number of uninsured Americans by 4.2 million over the next decade. Meanwhile, the uninsured population is further expected to mushroom in the years ahead due to impending Medicaid cuts.

All that being said, with open enrollment for next year’s ACA plans beginning on November 1, there’s still a sliver of hope for those who receive insurance through the ACA marketplace. It is indeed still possible that Congress could extend the enhanced subsidies—either as part of a government funding package or in a separate bill. (As many are aware, the latest government spending bill just expired on September 30.) Senate Majority Leader John Thune, R-S.D., told NBC News in September that he is in fact keeping the door open to a potential extension, but many Republicans in Congress remain opposed to extensions. Conversely, most Democrats are advocating for Congress to extend the enhanced premium tax credits. Subsequently, this point of contention remains one of the major driving forces behind the lingering government shutdown.