Senators Moreno and Collins propose legislation to prolong ACA subsidies with an income limit and minimum premium.

Washington – New Bill Proposed on ACA Subsidies

As the enhanced premium subsidies under the Affordable Care Act approach their expiration at the year’s end, Republican Senators Bernie Moreno from Ohio and Susan Collins from Maine are presenting a new bill. This proposal aims to prolong the tax credit for an additional two years but also introduces restrictions on eligibility.

The Consumer Affordability and Responsibility (CARE) Act sets income limits for subsidy eligibility at $200,000 per household, mandates that all enrollees pay at least $25 monthly in premiums, and removes zero-premium plans that low-income Americans can currently access.

This CARE Act marks one of the initial Republican responses to the looming end of subsidies, although its potential to garner sufficient congressional support remains uncertain as the deadline nears.

With the termination of these subsidies, premiums for those with Affordable Care Act plans could drastically increase—impacting over 500,000 residents in Ohio alone.

Moreno criticized former President Barack Obama and his Democratic colleagues, suggesting their policies led to rising healthcare costs that disproportionately affect average Americans. He expressed a desire to collaborate with others to lower costs for everyone.

Collins endorsed the CARE Act, advocating for practical solutions that elevate affordability without causing sudden disruptions. She believes the proposals could stave off staggering premium hikes that many families may find difficult to manage.

The Looming Expiration of Subsidies

The enhanced premium tax credits, which first appeared in the American Rescue Plan Act in 2021 and were extended through 2025 by the Inflation Reduction Act, have notably lowered costs for those enrolled in marketplace insurance. Enrollment surged from about 11 million to over 24 million, according to estimates.

If Congress does not act, these enhanced subsidies will end in 2025, potentially doubling premiums for numerous enrollees. Projections indicate that without an extension, the number of uninsured could rise significantly in the coming years.

Currently, subsidized enrollees pay an average of $888 annually in premiums, but with the expiration of the enhanced tax credit, this could jump to an estimated $1,904 in 2026—a staggering 114% increase. The proposed extension could save these members around $1,016 each year.

Middle-income earners, especially those above 400% of the federal poverty level, will feel the pinch of the renewal of what has been dubbed the “subsidy cliff.” Under the current structure, premium payments are capped at 8.5% of household income, protecting many from huge cost increases. Without this safeguard, many could see their costs soar.

Main Features of the CARE Act

The primary aspects of the Moreno-Collins approach are as follows:

Two-Year Subsidy Extension. The bill suggests a temporary extension of enhanced insurance premium tax credits until 2027, serving as a bridge from the pandemic-era subsidies.

Income Cap. Eligibility for subsidies would be capped at a household income of $200,000, cutting out credits for those above this level.

Minimum Premium Payment. All participants must contribute at least $25 monthly, effectively eliminating any zero-premium plans.

Wider Context

The impending expiration of these subsidies coincides with insurance companies proposing significant rate hikes for 2026. Health policy experts warn that if subsidies lapse, the consequences will extend beyond individual affordability issues.

Rising rates of uninsured individuals could increase the financial strain on hospitals and safety net systems, particularly in rural areas and states that have not expanded Medicaid coverage.