Center on Budget & Policy Priorities: Health Insurance Costs Will Rise Steeply If Premium Tax Credit Improvements Expire
Improvements to premium tax credits, enacted in the American Rescue Plan and extended by the Inflation Reduction Act, have helped millions of people afford health coverage in the Affordable Care Act (ACA) marketplaces. But the enhanced premium tax credits are set to expire after 2025. If
Premium Tax Credit Improvements Save
A record 92 percent of marketplace enrollees, or 19.7 million people, qualified for premium tax credits (PTCs) in 2024.[1] These tax credits provide up-front financial assistance to help people afford the individual or family health insurance plans offered in their state through the ACA marketplaces.[2]
The PTC enhancements helped these enrollees by:
* Lowering the caps on premium contributions for people of all income levels;
* Allowing people with incomes between 100 and 150 percent of the poverty level to pay
* Extending eligibility for PTCs to people with incomes above 400 percent of the poverty level if their benchmark premiums would exceed 8.5 percent of household income.
The average enrollee saved an estimated
Improvements Spurred Record Coverage, Especially Among Black and Latino People
By making health insurance more affordable, the PTC enhancements helped drive a record 21.4 million people to sign up for marketplace coverage in 2024. This is nearly twice as many as in 2021, when only 12 million people enrolled.[4] (See Figure 1.)
[View figure in the link at bottom]
The PTC enhancements have been especially critical for increasing enrollment among Black and Latino people. People of color made up the majority of marketplace enrollees for the first time in 2023. Between 2021 and 2023, marketplace enrollment among Black and Latino people each grew by over 80 percent, far outpacing the growth rates for other racial and ethnic groups.[5] Marketplace enrollment rates of Asian American people have long been higher than other racial and ethnic groups, potentially due to robust and language-specific enrollment assistance among non-profits and insurance brokers.[6]
The enhancements also helped spur enrollment among people with lower incomes -- those just above the minimum income level for PTC eligibility. Between 2021 and 2024, marketplace enrollment among people with incomes between 100 and 200 percent of the federal poverty level more than doubled, with enrollment growing by 109 percent compared to 46 percent among those with other incomes.[7]
Many of these coverage gains will be lost if PTC enhancements are allowed to lapse. If the enhancements are not made permanent and instead are allowed to expire, the
If Improvements Expire, Premiums
If PTC enhancements expire, premium costs will increase for people across states, ages, and income levels. The initial impact would occur in the spring and summer of 2025, as insurers begin making premium rates public, and would intensify in the fall of 2025 when people begin shopping for 2026 plans. Among those with lower incomes who would see their subsidies reduced, for example:
* A single individual making
* A single individual making
* A 60-year-old couple making
* A family of four making
As a result of the enhancements, people with incomes above 400 percent of the federal poverty level became newly eligible for PTCs if their marketplace premiums would exceed 8.5 percent of household income. If the PTC enhancements are not extended, the premium increases for people in this group would be dramatic:
* A typical 60-year-old couple making
* A typical family of four making
[View figure in the link at bottom]
Premiums would rise the most:
* In states with high underlying marketplace premiums, such as
* For older enrollees, who pay higher premiums under ACA rules than younger people; and
* For people with incomes above 400 percent of the poverty level, who would lose subsidies entirely if the enhancements expired.
For example, a 60-year-old
[View figure in the link at bottom]
* * *
Appendix
APPENDIX TABLE 1: National Average Premium Increases if Enhancements Expire, by Income Level
APPENDIX TABLE 2: State-by-State Premium Increases if Enhancements Expire
* * *
End Notes
[1]
[2] CBPP, Beyond the Basics, "Key Facts: Premium Tax Credit", updated
[3] CMS, "Health Insurance Marketplaces 2024 Open Enrollment Report,"
[4] Ibid.
[5] Nearly half of enrollees' races and ethnicities were unknown in 2024 marketplace enrollment data. The estimates cited here are limited to states that use the HealthCare.gov platform and include imputations of missing race and ethnicity data, which greatly improves the usefulness of the data but does not disaggregate beyond broad racial and ethnic categories.
[6] CBPP analysis of
[7] CMS, "Marketplace Open Enrollment Period Public Use Files,"
[8]
* * *
Original text here: https://www.cbpp.org/research/health/health-insurance-costs-will-rise-steeply-if-premium-tax-credit-improvements-expire
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