Which ACA premium tax credits are scheduled to expire at the end of 2025 and how will that affect 2026 premiums?
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Executive summary
Enhanced Affordable Care Act premium tax credits (the ARPA/“enhanced” PTCs) that expanded eligibility and increased subsidy amounts are scheduled to expire after tax year 2025 (effectively December 31, 2025) unless Congress acts, while the underlying ACA credit itself continues [1] [2]. Analysts and advocacy groups project that expiration would sharply raise 2026 out‑of‑pocket marketplace premiums — KFF estimates average premium payments would rise about 114% and many reports model benchmark premium increases in the high teens to 20% driven both by insurer rate filings and the subsidy loss [3] [4] [5].
1. What is expiring: the “enhanced” PTCs, not the PTC law itself
Congress created the premium tax credit in the ACA and later temporarily expanded it under the American Rescue Plan Act; those enhanced rules were extended through 2025 by subsequent reconciliation action and carry a sunset of January 1, 2026 — meaning the extra eligibility and larger subsidy amounts end after 2025, though the baseline PTC authority remains in law [1] [6].
2. Who gained from the enhancement — and who stands to lose
The enhanced PTC widened eligibility (including households above prior income thresholds) and increased subsidies for many lower‑ and middle‑income households; by 2025 roughly 92–93% of marketplace enrollees were receiving advance premium tax credits, and enrollment climbed to about 24 million — meaning the bulk of marketplace consumers benefited from the enhancement and would be exposed if it lapses [7] [6].
3. How expiration translates into higher 2026 premiums for consumers
Multiple analysts model two separate effects for 2026: (A) insurers’ underlying premium rate increases — driven by medical cost trends, drug prices and other factors — which are already pushing benchmark premiums up roughly 18–20% on average in filings [4]; and (B) the loss of enhanced subsidies that raises the share of those premiums consumers must pay out of pocket. KFF’s calculator and analyses estimate that without the enhanced PTCs the average marketplace enrollee’s premium payment would increase roughly 114% (about $1,016 annually in KFF’s mid‑October/November modeling), and other KFF work shows average out‑of‑pocket premium payments more than doubling for many enrollees [3] [8] [5].
4. Why insurers and state filings already baked in subsidy expiration
Insurers’ 2026 rate filings commonly cite both medical cost trends and the scheduled expiration of the enhanced PTCs as reasons for higher requested rates; analyses of filings show median requested increases near 18% nationally, with substantial state variation and some individual rate requests exceeding 20–30% [9] [4]. Insurers assume a different enrollee composition and less federal offset if enhancements lapse, which feeds into their pricing decisions [9].
5. Variability by income, age, household and state
The size of any premium spike depends on income, household size, ages and geography because the PTC formula caps required contribution by income and uses local benchmark premiums. KFF’s interactive tool and data notes illustrate that middle‑income people above prior thresholds and those in higher‑cost states face the steepest increases, while very low‑income groups previously aided by ARPA rules could also become ineligible in some cases unless policy changes occur [3] [10].
6. Scope: millions at risk of much higher payments or dropping coverage
Reporting and surveys warn that tens of millions of marketplace enrollees would face sharply higher monthly bills and that significant numbers may drop coverage or select skimpier plans. KFF and press accounts project that roughly 22 million people who received enhanced subsidies in 2025 would see their monthly payments rise substantially if enhancements expire, and surveys suggest a meaningful share would consider forgoing coverage or shifting to plans with higher cost‑sharing [8] [5].
7. Budget and political tradeoffs are central to the debate
Policymakers face a tradeoff: making the ARPA enhancements permanent or extending them reduces household premiums but has nontrivial federal cost implications (analysts like Swagel and CBO estimates cited in reporting show substantial budget effects), while allowing the sunset reduces federal outlays but raises consumer costs and may reshape employer and marketplace coverage choices [11] [1].
8. What reporters and the public should watch next
Watch congressional action (or inaction) on extending the enhancements, updated insurer rate approvals by states, and final IRS guidance on required‑contribution tables for 2026 — these will determine the practical impact next year. Analysts’ modeling already assumes a mix of higher base rates and subsidy loss; absent legislative extension, expect finalized consumer bills in 2026 that reflect both effects [1] [4] [3].
Limitations: available sources do not provide exact, universally applicable dollar impacts for every household — projections vary by model and assume different 2026 underlying premium growth rates; readers should consult KFF’s calculator and local rate notices for personalized estimates [3] [4].