Impact of Enhanced Premium Tax Credits Expiration on ACA Marketplace Enrollees
The expiration of enhanced premium tax credits under the Affordable Care Act (ACA) Marketplace, effective after December 31, 2025, will significantly impact premium payments for many enrollees. Individuals who previously benefited from these tax credits should anticipate their premium costs doubling for the same plans. This shift notably impacts older adults, aged 50 to 64, who make up a substantial segment of ACA Marketplace participants. In 2023, approximately one-third of 8 million enrollees were in this age group, where premiums typically increase with age.
Older enrollees with annual incomes exceeding 400% of the federal poverty level (FPL) will face the steepest premium hikes. The discontinuation of enhanced subsidies will leave these individuals without federal assistance. The ACA Marketplace plays a crucial role for this demographic, often due to the lack of employer-sponsored health insurance or early retirement before Medicare eligibility. Many work in jobs without health benefits, are self-employed, or are part of small businesses. With only 27% of large firms offering retiree coverage to pre-Medicare retirees in 2025, ACA plans remain vital for insurance coverage until Medicare eligibility is reached.
Subsidized enrollees are expected to see average premium payments more than double in 2026 due to the phasing out of enhanced tax credits. While many have the option to shift to lower premium plans with higher deductibles, this poses a challenge for middle- to upper-income individuals. Those aged 50-64 form a significant portion of this market and face the dual impact of losing tax credits and encountering higher premiums—up to three times more than younger adults.
The majority of older enrollees had already opted for lower-cost bronze plans, offering limited room for further cost reduction. Forecasts for 2026 predict average deductibles of $1,722, $5,304, and $7,476 for gold, silver, and bronze plans, respectively. Without enhanced tax credits, these plans' cost burden intensifies, claiming a more substantial portion of annual income.
Geographic discrepancies will also influence premium variances, with the most significant increases predicted in states like Wyoming, West Virginia, and Alaska. Conversely, states such as Maryland, New York, and Massachusetts might experience smaller hikes. In specific locations, premium expenses for a silver benchmark plan could consume as much as 25% of the annual income of a 60-year-old earning just above 400% FPL.
The analysis incorporated ACA Marketplace enrollee data from CMS and the Current Population Survey, illustrating the policy changes' profound effect on healthcare affordability for middle-aged adults. These insights underscore the necessity for insurers and stakeholders to explore benefit design adjustments and enhanced communication strategies to support enrollees impacted by these changes.