ACA Premium Tax Credit Expiration to Raise Insurance Costs for Millions in 2026

The impending expiration of the Affordable Care Act (ACA) enhanced premium tax credits at the end of 2025 poses significant financial challenges for approximately 22 million Americans who currently rely on these subsidies to afford health insurance. Without the tax credits, average out-of-pocket premiums are expected to more than double, increasing by 114% on average and adding an annual cost of over $1,000 for many households. This change threatens to push some individuals and families to reduce coverage or forego insurance entirely, potentially leading to higher medical debt and increased reliance on emergency care services. The Congressional Budget Office anticipates that around 4 million people may drop their ACA coverage due to the premium hikes, amplifying concerns about market instability and uncompensated care costs that could reverberate across the healthcare industry, affecting providers and insurer pricing. Small business owners and self-employed individuals, who represent about half of ACA enrollees, are among those most vulnerable to the subsidy expiration. These groups often lack access to employer-sponsored insurance and depend heavily on ACA plans. Efforts in Congress to extend the enhanced premium tax credits have stalled, with votes on extension and alternative proposals failing in the Senate. The political impasse follows a series of legislative negotiations linked to a recent government shutdown. While some lawmakers remain hopeful for a bipartisan solution, any extension is likely to incorporate reforms addressing subsidy eligibility and gradual phase-outs to mitigate fraud and cap issues. Industry experts warn that the removal of premium subsidies will not only create affordability challenges for individuals but could also negatively impact the broader health economy. Increased uninsured rates may lead to more uncompensated care in emergency rooms, driving up costs for hospitals, providers, and insurance companies alike. This scenario underscores systemic risks associated with sudden policy changes affecting health coverage affordability. The ACA premium tax credits, initially introduced during the COVID-19 pandemic and extended under the Inflation Reduction Act, have been instrumental in reducing healthcare costs for millions during recent years. Their expiration marks a critical juncture for policymakers, insurers, and consumers as the U.S. healthcare system confronts potential financial strain and increased access challenges.