Subsidies that help lower costs for Affordable Care Act health plans are set to expire at the end of the year, and without congressional action, premiums are expected to rise in 2026.
The enhanced premium subsidies have been in the spotlight in recent weeks as the shutdown of the federal government drags on.
Democrats are pushing for another extension of the subsidies in order to secure their votes on a bill that would reopen the government and end the monthlong shutdown. But many Republicans see it as government bloat and want to at least address the issue separately from government funding. Premium increases are slated to go into effect next year if the tax credits lapse after Dec. 31.
The uncertainty over the tax credits coincides with the beginning of open enrollment to purchase plans for next year on the state’s insurance exchange, Access Health CT. Open enrollment for plans that take effect at the start of next year began Nov. 1 and runs through Dec. 15. Residents have until Jan. 15 to enroll in plans that begin in February.
Here’s what you need to know:
What are the subsidies and why are they expiring?
The enhanced premium subsidies were created under the American Rescue Plan Act, the 2021 federal legislation that congressional Democrats passed to provide relief during the COVID-19 pandemic.
Enrollees can qualify for various subsidies to reduce health care costs based on their income. Households earning between 100% to 400% of the federal poverty level are eligible for getting financial help to afford plans.
The 2021 bill expanded eligibility to those who make more than 400% of the federal poverty level, capping the cost of a benchmark plan at 8.5% of that household’s annual income.
To qualify for any subsidies, you must be a U.S. citizen or have legal residency. You also need to file taxes jointly if married.
Under the American Rescue Plan, the enhanced subsidies would have sunset one year later in 2022. But Congress was able to extend them for another three years under Democrats’ Inflation Reduction Act. That piece of legislation set the expiration of the tax credits for Dec. 31, 2025.
Will I see an increase in my premiums if they expire?
You are likely to see an increase in your premium if Congress takes no action before the end of the year. For those who earn less than 400% of the federal poverty level, you’re likely to get less assistance. But those over the 400% will see their relief go away completely.
Letters recently went out telling people who have plans through Access Health CT how much more they might have to pay when the credits expire.
If the subsidies lapse at the end of December, Connecticut residents could see their premiums rise by an average of $2,380 per year — or about $198 a month — according to mid-October estimates provided by Access Health CT. A household of four would see premiums rise by an average of over $10,000 per year.
The state health exchange attributes these premium hikes to the expiration of the enhanced subsidies in addition to overall rate increases for 2026 plans.
Access Health CT said it uses two factors to determine premiums: age and county. For older people, premium rates are usually higher because there’s an expectation health services will be used more often.
Who will be affected in CT?
The expiration of these subsidies would affect those who purchase health plans through Access Health CT. It does not affect those who get coverage through employer-provided plans, Medicare or Medicaid.
But not everyone will lose out entirely on financial support and other subsidies that help lower costs for people who shop on the state’s insurance marketplace.
About 143,000 enrollees in Connecticut receive some sort of subsidy to help defray the costs of premiums. Of that number, nearly 32,000 enrollees qualify for the enhanced subsidy, and would thus completely lose their financial assistance by next year. The remaining 111,000 will still receive financial support, but it will decrease.
A total of nearly $105 million each month currently goes toward premium relief for enrollees in the state.
Older Americans and early retirees could experience some of the highest increases in their premiums, according to KFF. Of those in Connecticut at risk of losing all financial help, a little more than one third are between the ages of 55 and 64.
Will Congress extend the subsidies before the end of the year?
Congress is currently locked in a prolonged battle over how and when to address the subsidy expiration, which is at the heart of the shutdown fight.
It is unclear whether Congress will vote to extend them or if they will lapse next month. There’s debate over the length of any renewal — or whether to renew them at all. Some Democrats want to make them permanent. But some Republicans amenable to their renewal only want a temporary extension and income limits.
Democrats want to tackle the extension of the tax credits at the same time as short-term funding, known as a continuing resolution, to keep the government open. In their own version of the funding bill, Democrats are seeking to make the subsidies permanent, among other health care-related provisions related to Medicaid.
Republicans counter that they should be dealt with separately. GOP leadership hasn’t been supportive of extending the subsidies, but some in the party have supported them. There’s a GOP-led bill that would extend them for another year, which has been largely rejected by Democrats.
And because of the uncertainty of what Congress will do and the ongoing shutdown, officials in Connecticut have recommended holding off on immediately enrolling in 2026 plans to see if things resolve.
“If you could, wait a little bit longer,” Access Health CT CEO James Michel said in late October. “Instead of enrolling on Nov. 1, give it more time, because I know there’s conversations going on right now to try to get the subsidies resolved.”
CT Mirror reporter Katy Golvala contributed to this story.
The Connecticut Mirror/Connecticut Public Radio federal policy reporter position is made possible, in part, by funding from the Robert and Margaret Patricelli Family Foundation.
This story was originally published by the Connecticut Mirror.
