Projected Rise in Affordable Care Act Premiums
Next year could see a significant hike in Affordable Care Act (ACA) premiums unless Congress steps in. This is primarily due to the expiration of enhanced subsidies, designed to reduce costs for many buyers in recent years, after 2025.
The loss of these premium tax credits, often referred to as “subsidy cliffs,” is expected to raise average premiums by about 75%. KFF, a nonpartisan health policy research organization, estimates that this change will result in over $700 in additional yearly premium payments for many consumers.
It’s worth noting that about 22 million individuals are covered through the ACA Marketplace. “For these 22 million people, if these tax credits expire, it will be a huge premium shock on New Year’s Day,” said Larry Levitt, KFF’s vice president of health policy.
Generally, ACA insurance is aimed at those lacking access to employer-provided plans, including students, young retirees, freelancers, self-employed individuals, and the unemployed.
Legislative Context
In 2021, Democrats introduced enhanced grants through the American Rescue Plan Act as part of pandemic relief, which were later extended by the Inflation Reduction Act signed by former President Biden in 2022. However, the current Republican-controlled Congress has not indicated whether these grants will be renewed.
The GOP did not include such extensions in their “Big Beautiful Bill,” a substantial tax and spending proposal projected to cost around $4 trillion over ten years. This bill could potentially leave an additional 11 million Americans without insurance due to changes affecting Medicaid and the ACA.
Despite some Republican lawmakers advocating for the continuation of these enhanced subsidies during the midterm elections, it’s evident that budget constraints are a concern. According to Kriskruger from TD Cowen’s Washington Research Group, there are only 11 legislative days remaining before a potential government shutdown, and Democrats may need to flex their political influence to extend these subsidies.
Interestingly, Kruger noted that many Congressional Republicans might actually support the subsidies, wary of the backlash from voters facing high premiums come November 2026.
Potential Impact of Expiring Credits
The Premium Tax Credit, which was part of the ACA, was initially available to households with incomes ranging from 100% to 400% of the federal poverty level. Temporary increases under the American Rescue Plan Act extended eligibility beyond this range, allowing more families to benefit. For example, a family of four with an income exceeding $128,600 in 2025 would still be eligible.
If the enhanced subsidies were to expire, those earning up to 150% of the federal poverty line would likely see their average premiums jump from $0 to around $387 annually—a substantial increase from what they currently pay. This change affects families whose incomes vary between $32,150 and $48,225.
For those earning at 200% of the poverty line, premiums could rise to $905 a year—a staggering increase compared to previous amounts. Additionally, families making over 400% of the poverty line would be ineligible for ACA subsidies, with their premiums potentially soaring from approximately $3,576 to $6,490 annually.
Current Trends in Premium Rates
The open enrollment period for ACA Marketplace Plans is set to begin on November 1. If Congress doesn’t act on extending the enhanced subsidies by then, consumers may face steep premium increases when selecting their insurance plans, according to Levitt.
Some insurance companies are already anticipating this change, proposing significant premium hikes in their filings. For instance, a typical insurer has suggested an 18% rise for 2026, marking the most considerable increase since 2018 and higher than the previous year’s adjustments.
