The vast majority of Affordable Care Act (ACA) Marketplace enrollees receive a tax credit that lowers enrollees’ monthly payment for health insurance. Established as part of the ACA, premium tax credits were originally available for enrollees making between 100%-400% of poverty. More recently, the American Rescue Plan Act introduced enhanced premium tax credits that increased the amount of these tax credits and also expanded eligibility to households with an annual income over 400% of the federal poverty limit ($103,280 for a family of three signing up for coverage in 2025), capping their out-of-pocket premiums for a benchmark plan at 8.5% of income. Since the introduction of the enhanced premium tax credits, enrollment in the ACA Marketplaces has soared, more than doubling from 11.4 million people in 2020 to 24.3 million people in 2025. The enhanced premium tax credits were originally set to expire at the end of 2022 but were then extended as part of the Inflation Reduction Act.
The enhanced premium tax credits are now set to expire at the end of 2025. Unless the premium tax credits are extended, consumers can expect increases in both the net premium payments and gross premiums:
- Net premiums are the amount paid by individuals, after accounting for the premium tax credit. The expiration of enhanced tax credit will mean the federal government pays less of the total premium and the enrollee pays more than they otherwise would. On average, the expiration of the enhanced tax credits will result in an over 75% increase in enrollee premium payments. The impact will vary depending on income and family composition.
- There will also be gross premium increases as healthier people are expected to drop their coverage in larger numbers as a result of increases in their net premium payments. The Congressional Budget Office (CBO) projects that, on average, gross benchmark silver premiums will ultimately be 7.9% higher than they would otherwise be as the risk pool becomes sicker, on average, and that many enrollees will become uninsured.
Every summer, health insurers submit rate filings to state regulators detailing expectations and justifying premium rate changes for ACA-regulated health plans for the coming year. Vermont, Oregon, Washington, and Washington, DC have recently released 2026 filings for their Marketplace insurers. While insurers in other states may make different assumptions, the 23 insurer filings in these three states and DC include an additional 4 percent increase in premiums, on average, due to the expected expiration of the enhanced premium tax credits.
This 4-percentage point impact of the expiring tax credits comes in addition to other factors that will drive premiums in 2026. For example, BridgeSpan of Oregon is raising premiums by an average of 12.6% in 2026, and they say 4 to 5 percentage points of this is attributable to the expiration of the enhanced premium tax credits, whereas the other 7 to 8 percentage points are due to other factors (such as rising health care prices).
What are Insurers Saying?
All 23 insurers from DC and the three states that have posted their proposed rates reference the expiration of the enhanced premium tax credits. Over half of the insurers stated that the expiration of enhanced tax credits will cause premiums to increase and have publicly quantified the expiration’s effects. Among the insurers that publicly quantified the impact of the expiration of the premium tax credits, the projected increases on top of expected annual premium increases range from about 1% to 7%, with the average projected premium impact being about 4%.
Related Content:
The expiration of enhanced premium tax credits is expected to increase gross premium rates (the amount insurers charge before accounting for the financial help most enrollees receive) by changing the composition of enrollees in the Marketplace. Younger and healthier enrollees will likely disenroll due to the higher costs, making the Marketplace sicker, on average.
“The expiration of these federal benefits increases premium costs for individuals and families and is expected to result in more people deciding to forego insurance coverage. This will shrink the population with coverage and worsen the risk pool requiring higher premiums for the remaining members” – Blue Cross Blue Shield of Vermont (VT)
“In this filing, ARPA premium subsidy is projected to be discontinued in 2026, and projected membership is then projected to have higher morbidity than the base. Thus, the morbidity adjustment is modified to reflect the deterioration in the projected population’s morbidity” – Kaiser Foundation Health Plan of the Northwest (OR)
The variety in projected premium increases is likely due to the composition of their current risk pool. Both of Vermont’s insurers, MVP Health Care of Vermont and Blue Cross Blue Shield of Vermont, expect the expiration of enhanced premium tax credits to cause gross premiums to increase in 2026 by about 7% more than they otherwise would (7.1% and 6.6%, respectively). They expect that these enrollees are healthier, on average.
“The enhanced premium subsidies are set to expire at the end of 2025. We expect that some healthy individuals with lower claims than average will forego health insurance due to the decrease in subsidies, this will cause the premiums to increase by 6.6 percent.” – Blue Cross Blue Shield of Vermont (VT)
Insurers in Washington report similar expectations.
“We anticipate the remaining risk pool in 2026 to have higher healthcare needs, on average, as healthier consumers are more likely to lapse coverage. Given these considerations, we apply a morbidity adjustment of 1.016 to reflect anticipated changes in statewide average morbidity in 2026 relative to the manual rate experience.” – Wellpoint Washington, Inc. (WA)
“With the expiration of the enhanced advanced premium tax credits in 2026 … we expect deterioration of our experience as heathy people exit the market…” – LifeWise Health Plan of Washington (WA)
Some insurers in Oregon expect the expiration of the enhanced premium tax credits will have less impact on premium increases, with some reporting an increase as small as 1%, and several others reporting ranges between 3% and 5%.
“Due to discontinuation of enhanced subsidies, the individual market is expected to shrink. This will lead to an increase in market average morbidity as relatively healthier members will choose not to pursue coverage… Had Regence assumed that enhanced subsidies were not ending, proposed rates would be 3%-4% lower.” – Regence Blue Cross Blue Shield of Oregon (OR)
In addition to the impact on premiums, some insurers have also noted the number of people who will potentially drop coverage altogether.
“We expect about 6.4% members to exit the individual market due to the end of the American Rescue Plan Act [and its enhanced premium tax credits]…” – PacificSource Health Plans (OR)
“The overall disenrollment [from enhanced tax credit expiration] would be 17% of MVP’s total individual market membership (which is in line with the estimates from the CBO and the carrier survey).” – MVP Health Plan of Vermont (VT)
These insurer premium filings show early insights of how insurers are expecting premiums to change for 2026, but they are far from a complete picture. These states have circumstances that might lessen the impact of the expiration of these tax credits on ACA marketplace premiums. For example, Vermont has state-funded enhanced subsidies. Additionally, Washington, DC has a high Medicaid eligibility threshold, and Oregon has a Basic Health Plan, which is coverage offered to low-income residents making between 133%-200% of poverty who’d otherwise be eligible for an ACA Marketplace plan.
Congress is currently considering a budget reconciliation package that includes some provisions that could have a downward effect on gross ACA Marketplace premiums. However, even if the House bill passes, most Marketplace enrollees would still pay more than they do today if the enhanced premium tax credits are not extended. The vast majority of ACA Marketplace enrollees receive subsidies and can expect an average increase of over 75% in their net premium payments.
The Peterson Center on Healthcare and KFF are partnering to monitor how well the U.S. healthcare system is performing in terms of quality and cost.
