Enhanced premium tax credits under the Affordable Care Act (ACA) are set to expire at the end of 2025, potentially causing out-of-pocket premiums for Marketplace enrollees to more than double next year. A new analysis estimates that average annual premium payments for subsidized enrollees would rise from $888 in 2025 to $1,904 in 2026 if Congress does not renew the credits.
The enhanced tax credits were introduced in 2021 and extended through 2025 under the Inflation Reduction Act. They lowered premium costs for millions of ACA Marketplace enrollees and expanded eligibility to middle-income households with incomes above 400 percent of the federal poverty level.
Affordable Care Act Expiration set for Dec. 31
If Congress does not act before Dec. 31, the enhanced credits will end. That change would leave many enrollees paying a greater share of their income for health coverage. Others—particularly middle-income families—would lose all eligibility for financial assistance.
The ACA limits how much subsidized enrollees must contribute toward premiums, using a sliding scale tied to income. The federal government covers the remainder through tax credits. Enhanced tax credits lowered those required contributions even further.
For example, under the current rules, an individual earning $28,000 pays about 1 percent of income, or $325 annually, for a benchmark plan. Without enhanced credits, the same individual would pay nearly 6 percent, or $1,562. That represents a $1,238 annual increase. Families earning $65,000 would lose eligibility entirely and face full premium costs.
Impact on middle-income families
Enrollment in the ACA Marketplace has grown from 11 million in 2020 to more than 24 million in 2025, largely due to the enhanced credits. The vast majority of enrollees currently receive this form of assistance.
According to the new estimates, subsidized enrollees saved an average of $705 annually in 2024, lowering their yearly premium payment to $888. Without the enhanced credits, payments that year would have averaged $1,593. The report concludes that if the program is not extended, costs in 2026 will climb by 114 percent.
The expiration would have an especially sharp effect on middle-income households. Currently, their payments are capped at 8.5 percent of income. Without assistance, they would face both the loss of tax credits and rising premiums, leaving them to cover the full cost of plans.
Rising premiums add pressure
The expected increase in costs reflects not only the expiration of tax credits but also higher underlying premiums. Insurers have proposed median rate hikes of 18 percent for 2026, the largest since 2018. Companies cite rising health care costs and uncertainty around federal policy as reasons for the increases.
The analysis also points to changes finalized under the Trump administration that alter how tax credits are calculated. Under the ACA Marketplace Integrity and Affordability rule, required contribution levels in 2026 will be higher than they would have been under earlier methodology. As a result, enrollees will pay a larger share of income toward benchmark plans.
The combination of higher premiums and the loss of enhanced tax credits could create significant affordability challenges for millions of families. While lower-income enrollees would continue receiving some level of assistance, middle-income households would be left with no protection from premium increases.
Outlook
The decision on whether to extend enhanced tax credits rests with Congress. Lawmakers will need to act before the end of the year to prevent the increases from taking effect in January.
If extended, the credits are expected to save subsidized enrollees more than $1,000 on average in 2026. If not, millions of households will face sharply higher costs, and the gains in Marketplace enrollment since 2021 may be reversed.
