Millions may lose health insurance if expanded premium tax credit expires next year

Much handwringing has been made over the looming expiration of the Tax Cuts and Jobs Act at the end of 2025, but there’s another tax change scheduled to disappear that millions of Americans should also eye: the enhanced premium tax credit, or PTC.

If Congress doesn’t extend the enhanced credit next year, insurance premiums will rise or become too unaffordable for nearly every enrollee, analysts said.

PTC was expanded, or enhanced, during President Joe Biden’s administration to help individuals afford health insurance on the Affordable Care Act (ACA) Marketplace.

It opened the credit to Americans with incomes above 400% of the Federal Poverty Line (FPL) and offered a more generous subsidy for those below 400%. The administration also expanded the ACA requirement that a health plan premium not be more than 8.5% of an individual’s income to those with incomes above 400% of the FPL.  The Inflation Reduction Act put an expiration on the enhanced PTC at the end of 2025.

How many people will be affected if enhanced PTC isn’t extended?

“Nearly all 21 million Marketplace enrollees will face higher premium costs, forcing them to grapple with impossible trade-offs or the prospect of dropping health insurance altogether,” said Claire Heyison, senior policy analyst at the nonpartisan Center on Budget and Policy Priorities (CPBB). She estimates 4 million people would lose health coverage and become uninsured.

The average enrollee saved an estimated $700 in 2024 because of the temporary PTC enhancements, CPBB said.

Can people who can’t afford Marketplace plans get Medicaid?

Only people who live in a state that has expanded Medicaid may be able to get healthcare through that program, analysts said. Otherwise, people may fall into what’s dubbed as the Medicaid gap, meaning their incomes are too high for Medicaid but too low for marketplace subsidies.

As of May, ten states hadn’t expanded Medicaid. They are Alabama, Florida, Georgia, Kansas, Mississippi, South Carolina, Tennessee, Texas, Wisconsin and Wyoming, according to the nonprofit health care researcher KFF. However, Wisconsin has no coverage gap because its Medicaid program already covers all legally present residents with incomes under the poverty level.

KFF estimated in April more than 1.6 million people were already in the Medicaid gap.

When would Congress have to act to extend enhanced PTC?

Most people might think Congress has until the end of 2025 to act since that’s when the enhanced PTC expires, but that’s not true, according to the peer-reviewed Health Affairs journal.  

“Congress’s real deadline to avert 2026 premium increases and coverage losses is in the spring of 2025,” it said. “That’s because most consumers will make 2026 coverage decisions in the fall of 2025, with their options determined by steps that come months earlier: insurance rate-setting, eligibility system updates, and Marketplace communications with enrollees.”

What can people do?

Americans are at the mercy of Congress, and no one knows yet how Congress will be divided politically until after the election next week.

But there are already bills on the table to consider for whomever is elected. 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.

U.S. Congresswoman Lauren Underwood (D-IL) introduced identical legislation in the U.S. House of Representatives.

Vice President Kamala Harris wants to make the enhanced PTC permanent, but former President Donald Trump hasn't stated a position.

If the enhanced PTC expires and your premium jumps, Rob Burnette, investment adviser at Outlook Financial Center in Troy, Ohio, said he's recommended clients consider Medi-Share.

Medi-Share isn't health insurance. It's a "health care sharing alternative" that allows members to share in one another’s medical expenses. Consumers pay their own medical bills but get help paying them.

Users contribute a monthly amount, or share that's like an insurance premium, that goes into a collective account to pay other members' medical bills. There's an Annual Household Portion (AHP), similar to a deductible, that is the amount a household pays out-of-pocket before medical bills are eligible for sharing, Medi-Share's website said.

Medora Lee is a money, markets, and personal finance reporter at USA TODAY. You can reach her at mjlee@usatoday.com and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday morning.