Bad news for Obamacare enrollees: Your plan could cost more next year

Later this year, certain healthcare subsidies introduced during the pandemic will expire, and experts are warning that this could lead to higher healthcare costs for some.

As part of the American Rescue Plan—one of the first major pieces of legislation passed under the Biden administration in 2021—Congress expanded subsidies for healthcare plans available through the Affordable Care Act. Since these enhanced subsidies took effect, enrollment in the ACA Marketplace has increased year over year, with over 21 million sign-ups recorded in 2024. Southern states have seen the most growth in ACA Marketplace enrollment.

First enacted in 2021 under the American Rescue Plan Act, the enhanced subsidies were extended through the end of 2025 by the Inflation Reduction Act. The subsidies are provided in the form of tax credits that help lower monthly healthcare premiums.

Who was eligible to claim the credits?

The subsidies are provided in the form of tax credits that help lower monthly healthcare premiums. To qualify, individuals must have an income ranging from 100% to 400% of the federal poverty level, allowing those with lower incomes to pay little to nothing for a healthcare plan. However, individuals who are eligible for Medicaid cannot claim these credits, as the subsidies are specifically intended to assist households that do not have access to healthcare through that government program

The tax credits capped premiums at 8.5 percent of income for households earning up to 400% of the federal poverty level, which varies depending on household size. For a family of four in 2021, that threshold was approximately $104,800. According to the Kaiser Family Foundation, the legislation resulted in average annual savings of roughly $705 for those who benefited, thanks to enhanced tax credits that reduced overall spending on insurance premiums.

When will the subsidies expire?

The enhanced subsidies are set to expire on December 31, 2025. With no extension currently included in the GOP-led spending bill under negotiation, premiums could rise by as much as 70% for some households. The expiration of these subsidies is expected to result in a significant decline in coverage, potentially increasing the number of uninsured Americans by millions. The Congressional Budget Office has estimated that if the subsidies are allowed to expire, the number of people purchasing insurance through the ACA Marketplace could fall to 15.4 million by 2030.

Without affordable options, some individuals may forgo health insurance altogether, which can lead to worse health outcomes as people delay care until emergencies arise and miss out on preventive services that could have addressed issues earlier.

Get your game on! Whether you’re into NFL touchdowns, NBA buzzer-beaters, world-class soccer goals, or MLB home runs, our app has it all. Dive into live coverage, expert insights, breaking news, exclusive videos, and more – plus, stay updated on the latest in current affairs and entertainment. Download now for all-access coverage, right at your fingertips – anytime, anywhere.