Millions Risk Losing Health Insurance if Key Tax Credit Expires Next Year

There has been a lot of concern about the impending end of the Tax Cuts and Jobs Act in late 2025. Yet, another significant tax provision is also set to expire that could impact millions of Americans: the enhanced premium tax credit, or PTC.

Should Congress fail to extend the enhanced credit next year, insurance premiums are expected to increase significantly, becoming unaffordable for most people who are currently enrolled, according to experts.

The PTC was significantly expanded during President Joe Biden’s tenure to make health insurance more accessible through the Affordable Care Act (ACA) Marketplace. This expansion allowed Americans earning more than 400% of the Federal Poverty Line (FPL) to qualify for the credit, while also increasing the subsidy for those earning below 400%. Furthermore, the administration adjusted the ACA rule that caps health plan premiums at no more than 8.5% of an individual’s income to include those earning above 400% of the FPL. The Inflation Reduction Act, however, set the end of the enhanced PTC for the close of 2025.

What’s the Impact if Enhanced PTC Isn’t Renewed?

“Almost all of the 21 million Marketplace enrollees will face higher premiums, which could force them to make tough choices or even drop their health coverage entirely,” stated Claire Heyison, a senior policy analyst at the nonpartisan Center on Budget and Policy Priorities (CBPP). She predicts that around 4 million people could lose their insurance coverage and become uninsured.

The CBPP noted that the average enrollee saved about $700 in 2024 due to the temporary enhancements to the PTC.

Is Medicaid an Option for Those Who Can’t Afford Marketplace Plans?

Access to Medicaid as an alternative is only possible in states that have expanded the program. Otherwise, individuals may find themselves in the so-called Medicaid gap, where their income is too high to qualify for Medicaid but too low to receive marketplace subsidies.

As of May, there are ten states that have not expanded Medicaid. These include Alabama, Florida, Georgia, Kansas, Mississippi, South Carolina, Tennessee, Texas, Wisconsin, and Wyoming, as per the nonprofit healthcare research organization KFF. Wisconsin, however, does not have a coverage gap, as its Medicaid program covers all legally residing individuals below the poverty line.

In April, KFF reported that over 1.6 million people were already caught in the Medicaid gap.

What is Congress’s Deadline to Extend Enhanced PTC?

While it might seem that Congress has until the end of 2025 to address this issue, that isn’t exactly the case. The peer-reviewed journal Health Affairs clarifies that to prevent premium hikes and coverage losses in 2026, Congress needs to act by spring 2025. This timeline is crucial as most consumers will be making their 2026 coverage decisions in the fall of 2025, influenced by earlier actions such as insurance rate-setting, updates to eligibility systems, and communications from the Marketplace to enrollees.

What Can Citizens Do?

Americans are ultimately dependent on Congress’s actions, and the political makeup of Congress post-election will greatly influence the fate of the enhanced PTC. There are already proposed bills to address this issue. In September, U.S. Senators Jeanne Shaheen (D-NH) and Tammy Baldwin (D-WI) introduced the Health Care Affordability Act to make the enhanced PTC permanent. Similarly, U.S. Congresswoman Lauren Underwood (D-IL) introduced identical legislation in the House.

Vice President Kamala Harris has voiced support for making the enhanced PTC permanent, whereas former President Donald Trump has not publicly stated his position.

If the enhanced PTC expires and premiums surge, Rob Burnette, a financial advisor at Outlook Financial Center in Troy, Ohio, recommends considering alternatives like Medi-Share. This program isn’t traditional health insurance but a healthcare sharing alternative where members assist each other with medical expenses. Participants contribute a monthly amount into a collective fund used for paying members’ medical bills, with an Annual Household Portion (AHP) acting like a deductible.