Impending Expiry of Premium Tax Credits: Implications for Businesses and Employees

Industry Insights

As of December 31, 2025, the temporary enhancement of premium tax credits is poised to expire, pending further legislative action. Initially established in 2021 during the pandemic era, these credits were subsequently extended by the Inflation Reduction Act. Without new legislation, they face potential expiration in 2025. The cessation of these tax credits could lead to a sharp increase in average premiums for subsidized enrollees, rising from an estimated $888 in 2025 to approximately $1,904 in 2026, according to the Kaiser Family Foundation.

On December 18, 2025, a significant development occurred when the U.S. House of Representatives supported a procedural motion to potentially vote on legislation that would extend these subsidies for an additional three years. Although a vote might occur in January 2026, the outcome remains uncertain. The potential lapse of these subsidies could heavily impact individuals obtaining coverage through the ACA marketplaces, especially those without access to employer-sponsored insurance due to part-time work, small business employment, or self-employment.

Small businesses that do not offer health benefits, along with larger companies employing many part-time workers, might experience shifts if employees seek alternative employment to secure employer-sponsored coverage. This situation underscores the need for businesses to assess how changes to premium tax credits could alter their workforce dynamics.

Future Considerations

Under existing ACA regulatory compliance requirements, firms with a workforce of fifty or more full-time employees must offer health coverage that meets affordability and minimum value standards or face potential penalties. The potential cessation of enhanced subsidies could sway employee decisions about health coverage, prompting businesses to analyze these impacts on their workforce.

Organizations such as Ogletree Deakins continue to monitor legislative and regulatory updates that affect employee benefits and healthcare practices. By keeping abreast of this evolving insurance industry landscape, businesses can navigate changes in employee benefits regulations more effectively, ensuring they meet regulatory compliance and effectively manage risk.