Marketplace Pulse: What if Enhanced Premium Tax Credits Expire in 2026?
Marketplace Enrollees Will Have to Choose Between Record Premium Increases or Less Coverage
The Marketplace Pulse series provides expert insights on timely policy topics related to the health insurance marketplaces. The series, authored by RWJF Senior Policy Adviser Katherine Hempstead, analyzes changes in the individual market; shifting carrier trends; nationwide insurance data; and more to help states, researchers, and policymakers better understand the pulse of the marketplace.
Updated August 2025
The recently-passed budget reconciliation bill contained a number of provisions that collectively pose a major threat to health insurance coverage, with the CBO estimating that 12 million will become uninsured as a result of policies directed at Medicaid and the ACA Marketplace. In addition to that, the pending expiration of the enhanced Premium Tax Credits at the end of this year will cause a major increase in premiums and is forecast to cause another 4.2 million Marketplace enrollees to become uninsured. The net effect of all of these policy changes could reshape the Marketplace, making it much smaller and more expensive. A recent estimate suggests that the aggregate impact could be a 47% to 57% decline in enrollment.
The enhanced premium tax credits increased the range of incomes of people who were eligible for tax credits and also increased the size of the tax credits. They have been especially beneficial to older adults, people with higher incomes, and residents of rural areas, where healthcare costs are high and many people are self-employed. Given the uncertainty surrounding the tax credits, many insurance regulators required two sets of rates be submitted for the 2026 plan year, and as the process of rate review unfolds, it will be increasingly clear how much premiums will increase for enrollees if the tax credits are not extended. One estimate suggests that on average marketplace consumers will pay 75% more in 2026 if the tax credits are not extended.
2026 Second-Lowest Silver Plan with and without Enhanced Premium Tax Credits
When premium tax credits are applied, the second-lowest-silver plan’s (SLS) monthly premium in most states is identical nationwide for subsidized consumers at the same Federal Poverty Level (FPL).1 Table 1 compares the maximum monthly premiums for the SLS plan with the enhanced premium tax credit (IRA) versus the Affordable Care Act (ACA) only tax credits. In 2026, for an enrollee at 250% FPL, the monthly premium for the SLS plan will be$130 per month with enhanced premium tax credits but would be $275 per month with just the ACA’s tax credits, a 111% increase. Premium increases will be even higher for consumers enrolled in plans besides the benchmark silver plan in 2026 when next year’s premiums reflect insurer uncertainty and adverse selection.
Applying IRA and ACA Tax Credits to the Lowest Silver Plan
For a 40-year-old at 250% FPL currently enrolled in the lowest cost silver plan, premiums without enhanced premium tax credits in 2025 would be anywhere from 93% to 409% higher. For example, the lowest 2025 silver premium is currently $29 per month for a 40-year-old 250% FPL enrollee in Contra Costa County, California, but without the enhanced premium tax credits, that same plan would be $146. Moving from a silver plan to a lower cost bronze plan for consumers at or below 250% FPL is unideal, as they would no longer qualify for cost-sharing reductions and would significantly increase their copay and coinsurance costs.
Many Renewing Consumers Would Pay Higher Premiums Even After Moving to a Bronze Plan
Even moving down from a silver plan to a bronze plan does not guarantee that a subsidized consumer will avoid sharp monthly premium increases if the enhanced premium tax credits end. Figure 2 shows the current 2025 difference in premiums for a silver plan with enhanced premium tax credits (IRA) and a bronze plan with the ACA’s original tax credit amounts. A 40-year-old consumer at 300% FPL switching from the lowest cost silver plan in 2025 (IRA tax credits) to the lowest cost bronze plan (ACA only tax credits) would save $69 per month in Laramie County, Wyoming. However, the same 40-year-old enrollee at 300% FPL in Minnehaha County, South Dakota would pay $124 more per month for the lowest premium 2025 bronze plan with ACA tax credits than the lowest premium 2025 silver plan with IRA tax credits. And even in cases where the bronze premium is lower, the higher out-of-pocket costs and deductible would more than offset the difference.
Congressional districts colored blue in Figure 2 below highlight where the lowest bronze premium without enhanced premium tax credits (ACA) would be higher than the lowest silver premium with enhanced premium tax credits (IRA). Using premiums for a 40-year-old enrollee at 300% FPL, consumers would pay more for a bronze plan with the ACA’s tax credit structure than a silver plan with enhanced premium tax credits in the largest county in 70% of congressional districts, with an average increase of $38 per month for those who would pay more. This difference is likely to be even more pronounced in 2026 if pricing reflects the expected smaller and less healthy market.
If the enhanced premium tax credits’ are not extended, the impact on coverage will be significant. Along with CBO, the Urban Institute has estimated that at least 4 million people will become uninsured, with adverse health and economic consequences for individuals and families, and also for health systems and state governments, who will bear the costs of increased demand for charity care. Congress has recently extended a number of tax credits in the reconciliation bill, most of which benefit wealthier taxpayers and businesses. Yet they have thus far chosen not to extend the enhanced premium tax credits, which make affordable coverage possible for millions of low and middle income people.
In a letter to Congress, the executives of the State Based Marketplaces compare the impact of the enhanced premium tax credits with other tax credits that incentivize investment and make it clear that the stakes are high: “In much the same way other federal income tax credits incentivize Americans to invest in economic development, the updated premium tax credit structure has succeeded in catalyzing millions of Americans to invest in their health and futures. A record 24 million individuals are now enrolled in coverage through the marketplaces. These are hardworking Americans who rely on access to affordable coverage through the individual market: early retirees, small business owners and employees, students, individuals balancing multiple jobs, and families whose employer-sponsored coverage is not affordable.”
1 AK and HI have different FPL guidelines; NM and MA have state subsidies
About the co-author
Matthew Valeta is a data analyst with prior experience working for the California and Colorado marketplaces. At Covered California he led the development of the California Health Coverage Survey which continues to be conducted annually by NORC. Then at Connect for Health Colorado he led the relaunch of the marketplace's public website and implemented their 2020 open enrollment email and social media outreach campaigns. He currently works as a Health Plan Trainer for Denver Health Medical Plan. The data and findings in this article do not reflect the views of Denver Health Medical Plan. Matthew studied Political Science and Religion at Colorado College and received a Masters of Public Policy from the University of California, Berkeley in 2017.
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