The ongoing U.S. government shutdown has brought attention to a critical issue affecting millions of Americans: the potential expiration of the enhanced premium tax credit, a subsidy that helps low- and middle-class households lower their health insurance costs when buying policies through the Affordable Care Act’s (ACA) marketplaces. This tax credit, authorized under the American Rescue Plan Act in 2021, has been instrumental in increasing the number of people enrolled in ACA marketplace health insurance plans by almost double, according to the health care publication KFF.
As the funding negotiations in Washington, D.C., remain uncertain, experts warn that the expiration of the premium health care credits could inflict significant financial pain on millions of Americans. Alex Jacquez, chief of policy at Groundwork Collaborative, a liberal economic advocacy group, and former White House economic official under former President Joe Biden, emphasized that “insurers are already preparing to send notices to households that they will see increases starting in January 2026.” This increase would be a substantial hit to the pocketbooks of many Americans, who are already concerned about the rising cost of living.
Impact on ACA Premiums
The cost of premiums for people who buy their insurance through the ACA marketplaces could more than double, rising from an average of $888 in 2025 to $1,904 in 2026, according to a September 30 analysis by KFF. This significant increase could lead to about 4 million people dropping their insurance coverage because they would no longer be able to afford the costs, as estimated by the Congressional Budget Office. The premium tax credit is aimed at people who earn too much to qualify for Medicaid and who cannot get affordable health care through an employer, with eligibility ranging from 100% to 400% of the poverty level.
With the expiration of the ACA coverage credit only months away, some policyholders have already received notices that their premiums are poised to surge next year. Insurers have sent out notices in nearly every state, with some proposing premium increases of as much as 50%. A Peterson KFF Health System Tracker survey published last month found that 312 insurers participating in ACA marketplaces are proposing median increases of 18% next year, about 11 percentage points higher than in 2025. This increase would represent the largest rate hike since 2018 and is driven by higher costs for medical care as well as the expiration of the premium tax credits.
Financial Fragility and Consumer Concerns
The potential hike in insurance costs comes as many Americans continue struggling with the cost of living. Rohit Chopra, former director of the Consumer Financial Protection Bureau, noted that “some people will need to drop their insurance altogether, but households with someone with a chronic illness will have to pay those big, big increases.” This would require some families to make tough financial choices, such as not paying other bills or accumulating debt to cover their expenses. Although inflation around the U.S. has eased significantly since its post-pandemic peak in 2022, costs continue to inch higher, and some consumers are showing signs of increasing financial stress.
Many Americans are not aware that the ACA enhanced premium tax credits will expire in a matter of months, according to a KFF survey. Louise Norris, a health policy analyst at insurance website Healthinsurance.org, advised that “consumers should not panic, but they do need to prepare.” People should compare various plans available to them on the marketplaces and explore options such as Health Savings Plans, which allow people to set aside money to pay for medical expenses. Being proactive will help minimize financial surprises, Norris emphasized.
The dispute over the enhanced premium tax credit has significant implications for the millions of Americans who rely on the ACA marketplaces for their health insurance. As the government shutdown continues, it is essential for consumers to stay informed and prepared for potential changes to their health insurance costs. For more information on the government shutdown and the Affordable Care Act, visit Here.
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