ACA subsidies that lower monthly insurance premiums for millions of Americans set to expire

As the year 2025 comes to a close, millions of Americans are facing the expiration of crucial insurance subsidies that have helped them afford health coverage. The Affordable Care Act (ACA) subsidies, also known as premium tax credits, play a vital role in reducing or eliminating the out-of-pocket costs of monthly premiums for individuals who purchase coverage through the health insurance marketplace.

Eligibility for these subsidies is determined based on factors such as household income and geographic location. Originally part of the ACA passed during the Obama administration, these subsidies were further enhanced during the COVID-19 pandemic to provide additional financial assistance to eligible individuals and expand eligibility to more people.

Currently, an estimated 22 million out of 24 million ACA marketplace enrollees are benefiting from enhanced premium tax credits to lower their monthly premiums. However, as the subsidies are set to expire, many individuals are bracing themselves for a significant increase in premiums in 2026.

The issue of extending these subsidies became a point of contention during the recent government shutdown. Republicans argued that the expansions from the pandemic era had gone too far and attempted to pass a temporary spending bill without addressing the expiring ACA subsidies. On the other hand, Democrats insisted on including the extension of premium tax credits in the bill to end the shutdown, highlighting the potential negative impact on millions of American families if the subsidies were allowed to lapse.

In early November, a bipartisan deal was reached in the Senate to end the shutdown, but it did not include any Democratic demands regarding health care. Despite promises from Republican leadership to allow a vote on a bill related to the ACA in December, competing health care-related bills failed to advance in the Senate.

As the clock struck midnight on the expiration date for ACA tax credits, House Minority Whip Katherine Clark (D-Mass.) expressed disappointment in Republicans’ inaction, emphasizing the need to lower costs for American families. In response, Democrats are planning to introduce a bill in January that would extend the enhanced premium tax credits for an additional three years.

Estimates from the Congressional Budget Office suggest that without an extension of the subsidies, gross benchmark premiums for marketplace plans could increase by 4.3% in 2026 and by 7.7% in 2027. A recent analysis by the Kaiser Family Foundation found that individuals receiving financial assistance through the marketplace could see their premiums rise by an average of 114% from 2025 to 2026.

For individuals like Doug Butchart from Illinois, the looming increase in premiums poses a significant financial burden. With his wife battling ALS, monthly premiums exceeding $2,000 are simply unaffordable. Despite switching to a cheaper plan, the Butcharts are struggling to cover the costs, unsure of how they will manage in the coming year.

The expiration of these crucial subsidies underscores the ongoing challenges faced by many Americans in accessing affordable health care. As lawmakers continue to debate the future of health care policy, the impact of these decisions on individuals and families across the country remains a pressing concern.