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What happens to premium tax credits after 2025 if the American Rescue Plan provisions expire?
Executive summary
If Congress allows the American Rescue Plan’s enhanced premium tax credits (ePTCs) to expire after December 31, 2025, the law returns to pre‑ARPA subsidy rules and millions would face higher premiums and reduced marketplace enrollment—analysts project average benchmark premiums would jump (CBO: +4.3% in 2026 and larger over time) and KFF estimates average premium payments could rise about 114% (about $1,016 a year) for marketplace enrollees [1] [2] [3]. Policymakers are debating extensions, temporary fixes, or making enhancements permanent; Congress’s choices and timing will shape insurer rates, enrollment notices, and how quickly consumers feel “rate shock” [4] [5].
1. What “expires” and what the statutory fallback looks like
The ePTCs are the temporary expansion of the Affordable Care Act’s premium tax credit enacted in the American Rescue Plan and extended by the Inflation Reduction Act through plan year 2025; if not renewed, the temporary ARPA/IRA formulas expire and the PTC calculations revert to the prior law [4] [1] [6]. That means income thresholds and the caps on household premium contributions that were lowered under ARPA would return to their earlier, less generous levels for 2026 plan year rules unless Congress acts [1] [6].
2. Immediate and short‑term effects insurers and consumers will see
Analysts warn that expiration will prompt insurers and regulators to use higher subsidy assumptions when setting 2026 rates, producing earlier “rate shock” in the spring and concrete premium increases for consumers by open enrollment in November 2025. The Center on Budget and Policy Priorities and others say that insurers’ rate filings and renewal notices would reflect the change in timeframes that insurers already use—meaning consumers could see higher premiums for 2026 plans posted and mailed well before coverage takes effect [5] [7].
3. How large the premium and enrollment impacts could be
Different nonpartisan analyses present a range: the Congressional Budget Office projected gross benchmark premiums would increase 4.3% in 2026 (and larger increases in later years) if the enhancements lapse [1]. KFF’s modeling estimates average marketplace premium payments could rise by about 114% (roughly $1,016 annually) when comparing 2025 with a no‑extension 2026 scenario, and that millions could lose subsidies that keep coverage affordable [2] [3]. Commonwealth Fund and other analysts project marketplace enrollment declines—CBO scenarios cited by Commonwealth Fund anticipate enrollment falling from about 22.8 million in 2025 to 18.9 million in 2026 without extensions [8].
4. Who would be hit hardest
Lower‑income enrollees who currently pay tiny or zero premiums (for example, those at or below 150% FPL) and middle‑income households newly eligible above 400% FPL under ARPA would face the steepest increases; some groups that gained eligibility under ARPA would simply lose that help if enhancements expire [3] [4]. Analyses warn states that have not expanded Medicaid could experience larger uninsured gains, and that coverage losses would be geographically uneven [8].
5. Political choices and timing matter
Congress has three broad options in play: make the ARPA/IRA rules permanent, extend them temporarily, or let them lapse back to pre‑ARPA law. Multiple advocacy and policy groups stress that to avoid insurer rate changes that lead to higher premiums being locked into 2026 plans, an extension or permanent fix needs to be in place while insurers set rates—effectively by spring/summer 2025—though exact windows vary by state regulatory processes [4] [5] [7].
6. Disagreement among analyses and limits of projections
Projections differ by model: CBO focuses on benchmark premium effects and long‑run averages, whereas KFF provides an estimate of consumer out‑of‑pocket premium increases based on 2026 premiums and IRS guidance; both agree expiration raises costs but quantify that impact differently [1] [2]. Available sources do not mention any alternative federal rules automatically backfilling subsidies beyond the statutory reversion—Congressional action is the lever to change outcomes [1] [8].
7. Bottom line for consumers and what to watch
If enhancements expire at the end of 2025, many families will see higher premiums and some may lose eligibility for credits; analysts expect significant increases in premium costs and declines in marketplace enrollment unless Congress intervenes [2] [8]. Watch spring 2025 insurer rate filings, Congressional floor action on subsidy language, and official IRS/HC.gov guidance—those are the near‑term signals that will determine whether consumers face a subsidy “cliff” or an extension [5] [4].