What legislative proposals in 2025–2026 could extend or make permanent the ACA premium tax credit expansions?
Executive summary
Congressional action in late 2025 and into 2026 could take several legislative paths to extend or make permanent the ACA’s enhanced premium tax credits (PTCs): Democrats have proposed a clean, permanent extension and one-year extensions while Republicans have floated replacements that convert credits into Health Savings Account (HSA)-style payments or shift the benchmark to lower-tier plans [1] [2]. If no action occurs, authoritative trackers project sharp premium increases and enrollment losses—KFF estimates average monthly premium payments would more than double in 2026 without the enhanced credits (114% increase), and the CBO and others project lower enrollment and higher premiums under lapse scenarios [3] [4] [5].
1. Two basic legislative options: permanent extension versus short-term patch
Legislators are debating either making the enhanced PTCs permanent via standalone legislation or temporary fixes such as one-year extensions tied to budget or continuing resolutions; Democrats have proposed a permanent, clean extension and also short-term one-year measures, while Senate Democrats proposed a one-year extension as part of negotiations to end a recent shutdown [1]. Congressional staff and CRS materials explain the enhanced PTCs are currently temporary provisions covering tax years 2021–2025 and thus need statutory action to continue [6].
2. Republican alternatives: convert subsidies into HSA-like accounts or change benchmarks
Several Republican proposals would replace the mid-tier Silver-based subsidy structure. Senator Tim Scott’s proposal would allow states to convert ACA premium tax credits into HSA-style accounts usable to buy any plan, and Sen. Rick Scott has pushed a “Trump Health Freedom Account” with cash deposited to HSAs for premiums and expenses [1] [2]. Sen. Bill Cassidy proposed shifting the benchmark from Silver to Bronze plans and crafting subsidies to offset Bronze deductibles, effectively changing how and for whom federal dollars reduce costs [2] [1].
3. Policy tradeoffs tied to different designs
A clean, permanent extension preserves broader eligibility (including those over 400% FPL) and the current contribution caps that have driven enrollment growth to roughly 24 million by 2025; analysts tie the enhanced credits to lower premiums and healthier risk pools, with CBO estimating that permanence would lower benchmark gross premiums by about 7.6% annually from 2026–2035 [5] [4]. By contrast, converting credits to HSA cash or narrowing benefits would likely reduce federal spending visibility but could raise out-of-pocket costs for many and shrink enrollment—KFF and Commonwealth Fund analyses warn that expiration or weakening would sharply raise premiums and reduce coverage [3] [7].
4. Political dynamics and the path to a vote
Senate leaders have repeatedly signaled willingness to bring competing proposals to the floor. Senator Thune committed to scheduling a vote on a Democratic PTC proposal by mid-December 2025, even as Republicans refused prior Democratic offers and some GOP lawmakers pushed alternate replacement bills; negotiations have been embedded in broader appropriations and shutdown-avoidance talks [8]. The White House has been reportedly preparing its own proposal while facing intra-party and inter-branch pressure; Urban Institute and Health Affairs trackers show significant contention over any deal that restructures or reduces the existing enhancements [9] [1].
5. Administrative and legal frictions that could alter outcomes
Beyond Congress, HHS regulatory actions and recent litigation create additional uncertainty: CMS marketplace rule changes were partially paused by a federal judge following challenges alleging APA violations, and states and cities are suing over aspects of marketplace regulation—any legal rulings could complicate implementation of changes or make regulatory fixes harder [4]. Available sources do not mention a definitive administrative workaround that could replace statutory extensions without congressional legislation.
6. What to watch in 2025–2026 (key signals for markets and families)
Watch three indicators: Whether a clean permanent-extension bill is scheduled for floor votes as promised (Sen. Thune’s commitment), inclusion of any short-term extension in must-pass CRs or appropriations deals, and whether any GOP HSA-style replacement gains enough bipartisan support to pass—each route has clear, documented impacts on premiums and enrollment according to KFF, CBO-linked analyses, and policy think tanks [8] [3] [4].
Limitations and competing perspectives: analyses agree that enhanced PTCs increased enrollment and reduced premiums, but they diverge on fiscal framing and targeting—Republican sponsors argue that HSA-style conversions return dollars to consumers and limit federal obligations, while Democratic and neutral analysts warn such shifts would raise out-of-pocket costs and shrink coverage [2] [7] [5]. All factual assertions here are drawn from the cited reporting and policy briefs; available sources do not mention any enacted 2026 statute that permanently extends the enhanced credits as of these reports.