What happens to ACA tax credits after the ARPA enhancements expire?

1. What legally happens on January 1, 2026: the temporary enhancements end

The American Rescue Plan Act (ARPA) originally expanded and increased PTCs and the Inflation Reduction Act/FY2022 reconciliation law extended those enhancements only through the end of 2025; without new legislation, the PTC structure reverts to the ACA’s original rules — including the 400% FPL cap and smaller subsidy amounts — starting in 2026 ^{[1] [6] [2]}.

2. Who loses eligibility and who sees smaller subsidies

If enhancements expire, people with incomes above 400% FPL would generally become ineligible for credits and many current recipients at lower incomes would get smaller credits because ARPA reduced the percent of income expected to pay premiums ^{[7] [2]}. Multiple analyses show that a large share of current enrollees — about 92% in 2025 — were receiving enhanced credits, so the policy shift affects a broad swath of marketplace consumers ^{[6] [3]}.

3. How much more would people pay — average increases and uneven geography

Estimates vary, but studies and modeling show dramatic increases in out‑of‑pocket premiums: KFF reports average increases of about 114% for enrollees’ net premiums and predicts much larger percentage jumps for older adults in many states ^[3]. Other analyses put average out‑of‑pocket premium increases above 75% and show tens of thousands‑to‑many‑thousands‑dollar annual increases for older enrollees in high‑cost states ^{[8] [3]}.

4. The coverage fallout: millions could lose subsidies or coverage

Forecasts differ by method but consistently point to large coverage losses: Oliver Wyman, Robert Wood Johnson Foundation and RWJF‑linked analysis estimate millions could lose subsidized coverage and several million could become uninsured if enhancements lapse — examples include projections of roughly 4–4.8 million newly uninsured and larger totals ^{[9] [10] [5]}. The specific estimates vary across groups and models; available sources show multiple plausible ranges rather than a single agreed number ^{[9] [5] [10]}.

5. Market and insurer reactions: higher rates and adverse selection

Insurers and actuaries expect that higher post‑subsidy premiums will lead healthier people to drop coverage, leaving a sicker risk pool and prompting insurers to increase rates preemptively; filings and modeling assume enrollment declines and apply loadings to 2026 rates in anticipation ^{[8] [4]}. That behavior can magnify premium increases beyond the direct effect of reduced subsidies ^[8].

6. Fiscal and provider impacts: shifts in federal outlays and provider revenue

When the enhancements were in effect federal spending on PTCs rose compared with ACA‑only rules; if enhancements expire, CBO and JCT estimated earlier that federal outlays for PTCs would decrease and enrollment in subsidized plans would fall ^[1]. Health‑system analyses project billions in lower medical spending and increased uncompensated care if people lose coverage — e.g., RWJF estimated tens of billions in lower provider revenue and billions more in uncompensated care in 2026 scenarios ^[5].

7. Political choices and the available levers

Congress can extend, modify, or make permanent parts of the ARPA/IRA changes; advocates urge renewal to avoid premium shocks and coverage loss while some policy groups have proposed targeted reforms or cost offsets. Proponents of extension point to enrollment gains and affordability improvements, while opponents or skeptical analysts emphasize fiscal cost and long‑term budget tradeoffs — the sources document both the policy options and the political debate around cost and coverage ^{[6] [11] [2]}.

8. Limitations, disagreements and what is not settled

Estimates of how many will lose coverage, how large premium hikes will be, and downstream fiscal effects differ across models and depend on behavioral responses (who drops coverage, plan switching, insurer pricing), so available studies show ranges rather than a single certain outcome ^{[9] [5] [8]}. Available sources do not mention final congressional action after the 2025 extensions — they uniformly frame the outcome as contingent on whether Congress intervenes ^{[2] [1]}.

Bottom line: absent congressional action, the ARPA/IRA PTC enhancements lapse after 2025, returning subsidy rules to pre‑ARPA norms, with multiple independent analyses warning of steep premium increases, millions affected in subsidy eligibility or coverage, insurer rate‑setting changes, and sizable effects on federal and provider finances ^{[1] [3] [5]}.