ACA Marketplace Premium Payments: What To Do if Your Enhanced Premium Tax Credits Expire

Enhanced premium tax credits on the Health Insurance Marketplace are set to expire at the end of 2025, potentially making Affordable Care Act (ACA) health plans significantly more expensive for low- to middle-income Americans. If you lose access to ACA Marketplace enhanced premium tax credits, consider shopping around or switching to a different type of health insurance, like employer-sponsored or government-funded health care coverage.

Continue reading to learn more about tax credit subsidies and what to do after an ACA Marketplace premium payment increase.

On This Page

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  What Are ACA Marketplace Enhanced Premium Tax Credits?

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  When Do ACA Marketplace Enhanced Premium Tax Credits End?

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  What Happens if Enhanced Premium Tax Credits Expire Next Year?

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  How Much Will ACA Premiums Increase in 2026?

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  What To Do if Your Enhanced Premium Tax Credits Expire

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  ACA Marketplace Alternatives

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  FAQs

What Are ACA Marketplace Enhanced Premium Tax Credits?

An ACA Marketplace enhanced premium tax credit is a subsidy designed to make health coverage more affordable for lower- and middle-income Americans who shop on the Marketplace. If you qualify for and choose to use a premium tax credit, the federal government makes a direct, upfront payment to your health insurance company, lowering the amount you are responsible for paying toward your monthly health insurance bill.^[1]

Basic premium tax credits were first established by the ACA and became available in 2014. The American Rescue Plan Act of 2021 (ARPA) established enhanced premium tax credits, raising the benefit amount for people with incomes between 100% and 400% of the federal poverty level (FPL) and extending eligibility to individuals with incomes above 400% of the FPL for the first time.^[2]

How Do Enhanced Premium Tax Credits Work?

Tax credits are calculated by subtracting a certain percentage of your income from the cost of your state’s benchmark plan — the second-lowest-cost plan available in the silver tier. The difference determines how much financial assistance you receive.

See the table below for an overview of what percentage of your income you must contribute toward the benchmark plan premium before your tax credit takes effect — based on both the ACA’s original tax credit standards and the ARPA’s enhanced tax credit standards.^[2]

For example, suppose you have an annual household income of $64,300 for a family of four — which is 200% of the FPL.^[3] In this case, your mandatory out-of-pocket contribution toward your premiums would be $4,243.80 per year under the ACA or $1,286 per year under the ARPA. As a result, if the benchmark plan in your state costs $7,200 per year, you would be eligible for a basic tax credit of $246.35 per month or an enhanced tax credit of $492.83 per month.

Although tax credits are calculated based on the benchmark plan, you can apply them to any bronze, silver, gold or platinum plan on the Marketplace.^[4] For example, if your income is 125% of the FPL, enhanced premium tax credits would cover the entire cost of your state’s benchmark plan. However, if you were to instead enroll in a higher-tiered gold plan, you would simply have to pay the difference between its premium and your enhanced tax credit out of pocket.

When Do ACA Marketplace Enhanced Premium Tax Credits End?

The ACA Marketplace’s enhanced premium tax credits are scheduled to expire at the end of 2025 — in which case, they would not apply to plans purchased during the 2025-26 open enrollment period. This expiration date only applies to the tax credit enhancements established by the ARPA; the ACA’s original tax credits are slated to continue indefinitely.^[2]

Keep in mind that the enhanced premium tax credits were originally supposed to expire at the end of 2022 but were extended through the end of 2025 by the Inflation Reduction Act.^[2] Congress could ultimately extend the enhanced premium tax credits again, but it has yet to do so amid the ongoing government shutdown as of the beginning of open enrollment.

What Happens if Enhanced Premium Tax Credits Expire Next Year?

The removal of enhanced premium tax credits will naturally make coverage more expensive for individuals whose premiums are currently subsidized. As many Americans are priced out of Marketplace coverage, the Congressional Budget Office estimates that the number of uninsured people in the United States will grow by more than 2 million people in 2026 — barring another extension of the enhanced tax credits.^[2]

Young, healthy individuals who are less likely to need medical services may be the most likely to cancel their health plans going into next year. This exodus of low-risk policyholders could drive prices even higher, as the remaining pool would be more likely to need health care reimbursement, leading insurance companies to raise premiums further to continue making a profit.^[5]

How Much Will ACA Premiums Increase in 2026?

In 2026, out-of-pocket health insurance premium costs are expected to more than double on average for people who currently receive premium tax credits — which includes more than 90% of Marketplace enrollees.^[5][6] Even before taking tax credits into account, annual benchmark plan premiums are projected to rise by more than $1,500 on average in 2026.^[7] The increase will be even more dramatic for people who no longer qualify for financial assistance.

What To Do if Your Enhanced Premium Tax Credits Expire

If you lose access to premium tax credits, it’s crucial to shop around and compare health insurance quotes from multiple insurance companies. Even if your current plan becomes significantly more expensive, you may be able to find a different insurer that can cover you at a cheaper rate. You can shop around through either a government-run health exchange or an independent marketplace, such as SmartFinancial.

People with minimal expected health care needs may want to switch to catastrophic health insurance. Plans in this category have the lowest premiums and highest deductibles, but you normally can’t join one unless you are under the age of 30.^[8] However, new rules issued by the Trump administration should make it easier to qualify for an income-based hardship exemption, enabling you to join a catastrophic health insurance plan even if you’re over 30.^[5]

ACA Marketplace Alternatives

The most popular alternative to Marketplace coverage is employer-sponsored group health insurance, which covered 10 times as many Americans as Marketplace health insurance in 2023. If you can obtain health insurance through work, your employer will generally cover the majority of your premium, so it will likely be your cheapest private health insurance option if you become ineligible for premium tax credits.^[9]

You may also be able to buy a private health plan directly from an insurer, though plans sold outside the Marketplace may not meet the ACA’s minimum essential coverage standards.^[10]

In addition, public health insurance programs may offer affordable coverage — but only if you meet their eligibility requirements. For example, Medicare Part A is free for most Americans over the age of 65 and anyone who joins Medicare early due to a disability or other qualifying condition.^[11] Meanwhile, the Children’s Health Insurance Program (CHIP) and Medicaid offer free or cheap coverage for eligible low-income children and families.^[12]