Pandemic-era subsidies that have lowered health insurance costs for millions of people are set to expire on December 31, 2025.
If they do, then those who bought plans through the federal and state health insurance marketplaces could see their monthly premiums rise as much as $2,050 a month (or $24,604 annually) in some cases, according to research firm KFF..
Subsidy protection has become a flashpoint for consumers as they struggle with rising health care costs, and beyond.
The expiring subsidies are at the heart of a fierce battle in Congress, with Democrats trying to keep the subsidies strengthened and Republicans wanting to eliminate them.
On Wednesday, four House Republicans – who face fraught battles in the 2026 Midterms – agreed with Democrats to force a vote on the Affordable Care Act (aka “Obamacare”) rather than discuss the alternative health care proposal put forward by Speaker of the House Mike Johnson, which did not provide subsidies.
Subsidy protection has become a flashpoint for consumers as they struggle with rising costs beyond health care. Individuals earning the median salary in the United States – about $63,000 – will lose their Obamacare subsidies if the enhanced premium tax credits expire (Getty Images)
Why subsidies are important
Marketplace plans require a monthly premium payment in exchange for coverage, similar to employer-sponsored plans. These plans are designed for individuals who do not receive health care from their employer, making them suitable for freelancers and contract workers.
Most of those who have marketplace coverage are eligible for premium tax credits that lower how much they pay each month for coverage.
Credits are based on factors such as income and family size. For example, a marketplace plan may have a monthly premium of $1,000, but tax credits can reduce that cost to $500.
In 2021, with the pandemic still ongoing and economic uncertainty looming, the Biden administration improved the premium tax credits in two ways, according to the health care research firm KFF:
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Increase in credit amounts for those who are already receiving them;
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It makes eligible those earning more than 400 percent of the federal poverty level of $15,650 – so those over about $62,600.
As a result, premiums were lower for some of those insured by Obamacare, and others who were previously locked out of the tax credits became eligible. The KFF noted that market registration has more than doubled due to enhanced tax credits.
House Speaker Mike Johnson, pictured Wednesday, saw some of his party side with Democrats over health care subsidies (REUTERS)
It is these enhanced credits that are on the verge of going down, and their demise will mean premium increases for many – and loss of all subsidies for a projected 7.3 million people, according to the research firm Urban Institute.
The institute estimated that the changes will leave 4.8 million people uninsured. And in eight states – Georgia, Louisiana, Mississippi, Oregon, South Carolina, Tennessee, Texas, and West Virginia – enrollment in the marketplace will likely decline by more than 50 percent, researchers found.
So how much more can you pay?
If Congress does not extend the enhanced premium tax credit, consumers from all income levels will feel the sting, according to KFF, but those earning more than 400 percent of the federal poverty level will be hurt the most.
For example, someone with a low annual income of $18,000, sees health care premiums increase $378 per year. Those earning $45,000 a year would see their costs rise $1,836 a year.
Individuals without children who earn around the median annual US salary – $63,128 – or higher, lose their enhanced tax credits because they make more than 400 percent above the poverty level.
A 45-year-old couple with no children earning $85,000 a year together would pay $561 more a month – $6,753 a year – by losing their enhanced tax credits.
Older couples fare worse. For example, a 60-year-old couple without children earning $85,000 would see their monthly premiums rise $2,050 a month, or $24,604 a year, according to KFF.