Which states offer additional state subsidies above federal ACA rules and how do they work?
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Executive summary
A minority of states have stepped in to replace or supplement the federal premium tax credits that expired at the end of 2025, using a mix of direct cash backfill, monthly add‑ons, revamped cost‑sharing programs and regulatory “premium alignment” tactics; the most prominent actors include New Mexico, California, Washington, Connecticut and Colorado, with other states using different tools or planning changes (KFF [1]; Becker’s [2]; HealthInsurance.org p1_s5). The programs vary widely: some fully replace the enhanced federal subsidy for 2026, others target narrowly defined income bands or convert cost‑sharing assistance into extra premium help, and several states can act only because they operate their own state-based marketplaces (KFF [1]; HealthInsurance.org p1_s5).
1. New Mexico: a full backfill for 2026 — the closest thing to replacement
New Mexico has advanced measures intended to “backfill” the expired federal enhanced premium tax credits in full for 2026, using state dollars to replicate both enhanced premium support and cost‑sharing assistance so that consumers see little to no net change in marketplace help for the year (KFF [1]; Becker’s p1_s6). Reporting identifies New Mexico as the only state explicitly committing to fully replace those federal enhancements in 2026, funded through a state package estimated in the millions (KFF [1]; Becker’s p1_s6).
2. California: partial, targeted refill focused on lower incomes
California — which received roughly $2 billion annually in federal enhanced credits before their lapse — is allocating state funds to fully replace the enhanced credits for enrollees up to about 150% of the federal poverty level and to partially replace credits through roughly 165% FPL for 2026, meaning the state will blunt but not erase the premium increases for many low‑income consumers (KFF [1]; Becker’s [2]; CoveredCA [3]4). Covered California’s outreach and state budget allocations reflect an explicit tradeoff: protect the lowest‑income enrollees while accepting that higher‑income households will face larger cost increases without federal action (KFF [1]; CoveredCA [3]4).
3. Washington, Connecticut and Colorado: program redesigns and capped relief
Washington is retooling its Cascade Care Savings program to set fixed monthly maxima ($55 per member per month for those receiving federal credits and $250 per member per month for the unsubsidized) to provide predictable relief in 2026 rather than mirroring federal enhancements (KFF p1_s2). Connecticut committed roughly $70 million to offset the lapse so many individuals and families will see little change, while Colorado is shifting from state‑funded cost‑sharing reductions to extra premium subsidies — for example, providing fixed dollar amounts per enrollee on top of federal credits (Becker’s [2]; HealthInsurance.org p1_s5). Each approach reflects different state priorities: maximizing enrollment, stabilizing insurer participation, or targeting who gets the biggest protection (KFF [1]; Becker’s p1_s6).
4. Regulatory tools and “premium alignment”: Arkansas, Texas, Wyoming and others
Some states without sizable direct subsidy appropriations or that lack full state marketplaces have used regulatory maneuvers called “premium alignment” to shift plan design and rating practices so remaining federal subsidies cover more people or blunt out‑of‑pocket spikes; Arkansas, Texas and Wyoming have implemented such tactics rather than straight cash backfills (Becker’s p1_s6). These are less generous than direct state subsidies and rely on insurer cooperation and state regulatory authority to reshape the distribution of premiums across metal tiers; they do not create new dollars for consumers the way legislative subsidies do (Becker’s p1_s6).
5. How and why the ability to add state subsidies differs by state — limits and open questions
A state generally must run its own exchange (a State‑Based Marketplace) to administer state‑funded premium subsidies because the federal HealthCare.gov platform is not set up to layer additional state dollars into advance payments in practice, which is why states with SBMs are the ones able to create targeted state subsidies or cost‑sharing adjustments (HealthInsurance.org [4]; KFF p1_s2). Reporting signals important caveats: no state action fully substitutes for a long‑term federal fix, many state programs are one‑year stopgaps for 2026 only, and details vary by income bands, family size and ZIP code — specifics enrollment systems must publish — so consumers should consult their state exchange for exact eligibility and amounts (KFF [1]; HealthInsurance.org [4]; CoveredCA [3]4).