Recent updates to ACA benchmark plans and subsidy costs

1. How states are reshaping covered benefits—and why it matters

States have been granted greater flexibility to revise their EHB-benchmark plans, and since 2020 at least 11 states plus DC have obtained CMS approvals to add services such as opioid‑use‑disorder treatment, alternative pain therapies, hearing aids, and other benefits. These benchmark updates widen the menu of services insurers must cover in the individual and small-group markets, which can materially improve access to care for enrollees in those states. Importantly, updates made through the federal EHB process after the rule changes are not treated the same as state-mandated benefits for defrayal purposes, meaning states can expand coverage with federal technical assistance and without triggering the historical requirement that states pay the additional federal subsidy costs for new mandates ^{[1] [2]}.

2. The subsidy cliff: how temporary premium tax credits changed the market

Enhanced premium tax credits enacted in 2021 and reinforced by subsequent policy actions dramatically reduced premiums and capped enrollee contributions for many households. Those enhancements are statutorily set to sunset on December 31, 2025, creating the risk of a so-called “subsidy cliff.” Analysts project steep increases in both pre‑subsidy and post‑subsidy premiums if the enhancements lapse—weighted pre‑subsidy rates have been reported to rise by over 23% in some analyses, while average annual enrollee payments could more than double for subsidized consumers in scenarios where the enhanced credits expire ^{[5] [3] [4]}. The expiration would also revive the prior income‑based cost curves and reintroduce full subsidy cutoffs above 400% FPL for many enrollees ^[4].

3. Who gains and who faces higher bills under current trajectories

Benchmark revisions mainly benefit enrollees in states that adopt them by adding covered services, while the expiry of enhanced subsidies would harm enrollees nationwide, especially those above certain income thresholds. Some low-income and immigrant populations face distinct policy shifts—state programs and policies (for example, Colorado’s proposal to add abortion coverage to its benchmark) change covered services locally but do not offset broad federal subsidy reductions. Conversely, several states are preparing or adjusting state-funded subsidy programs to blunt federal cuts, and others may alter program designs or provider networks in response to insurer rate changes and market exits or entries ^{[6] [5]}.

4. Dollars and budgets: federal cost estimates and competing priorities

Extending enhanced premium tax credits carries measurable federal cost implications. Analysts have produced a range of estimates—from roughly $60 billion for a two‑year extension to several hundred billion over a decade—showing that the fiscal tradeoffs are substantial and politically salient. At the same time, benchmark updates implemented via the EHB update process can expand coverage without directly increasing federal subsidy obligations in the same way state-mandated benefits would, because CMS’s updated approach separates EHB revisions from traditional defrayal mechanics. Policymakers face a tradeoff between maintaining affordability through subsidy extensions and budgeting for those extensions versus allowing the market to revert to pre‑enhancement subsidy parameters ^{[7] [2]}.

5. Market mechanics and next steps for policymakers and consumers

Insurer behavior already signals responses to both benefit and subsidy dynamics: carriers are adjusting premiums—some substantially—entering or exiting marketplaces, and product designs (such as making certain bronze plans HSA‑eligible) are changing for 2026. If Congress does not act before the statutory sunset, consumers could encounter higher premiums, higher maximum out‑of‑pocket limits, and the return of repayment risk for excess APTC. States can use their EHB‑revision authority to improve covered services, but only federal legislative action can prevent the large-scale affordability shock tied to the expiration of enhanced premium tax credits. Consumers should monitor both state EHB proposals and federal legislative developments to understand how benefits and costs will change in their locales ^{[5] [1] [8]}.