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Health Insurance Costs Will Rise Steeply if Premium Tax Credit Improvements Expire

Improvements to premium tax credits, enacted in the American Rescue Plan and extended by the Inflation Reduction Act, have helped millions of people afford health coverage in the Affordable Care Act (ACA) marketplaces. But the enhanced premium tax credits are set to expire after 2025. If Congress does not act, nearly all marketplace enrollees will face significantly higher premium costs and 3.8 million will become uninsured, according to Congressional Budget Office estimates.

Premium Tax Credit Improvements Save $700 on Average

A record 92 percent of marketplace enrollees, or 19.7 million people, qualified for premium tax credits (PTCs) in 2024.[1] These tax credits provide up-front financial assistance to help people afford the individual or family health insurance plans offered in their state through the ACA marketplaces.[2]

The PTC enhancements helped these enrollees by:

  • lowering the caps on premium contributions for people of all income levels;
  • allowing people with incomes between 100 and 150 percent of the poverty level to pay $0 in premiums for “benchmark” silver-level plans; and
  • extending eligibility for PTCs to people with incomes above 400 percent of the poverty level if their benchmark premiums would exceed 8.5 percent of household income.

The average enrollee saved an estimated $700 in 2024 because of the PTC enhancements. Average monthly premiums were 32 percent lower than in 2021, before the enhancements took effect.[3]

Improvements Spurred Record Coverage, Especially Among Black and Latino People

By making health insurance more affordable, the PTC enhancements helped drive a record 21.4 million people to sign up for marketplace coverage in 2024. This is nearly twice as many as in 2021, when only 12 million people enrolled.[4] (See Figure 1.)

The PTC enhancements have been especially critical for increasing enrollment among Black and Latino people. People of color made up the majority of marketplace enrollees for the first time in 2023. Between 2021 and 2023, marketplace enrollment among Black and Latino people each grew by over 80 percent, far outpacing the growth rates for other racial and ethnic groups.[5] Marketplace enrollment rates of Asian American people have long been higher than other racial and ethnic groups, potentially due to robust and language-specific enrollment assistance among non-profits and insurance brokers.[6]

The enhancements also helped spur enrollment among people with lower incomes — those just above the minimum income level for PTC eligibility. Between 2021 and 2024, marketplace enrollment among people with incomes between 100 and 200 percent of the federal poverty level more than doubled, with enrollment growing by 109 percent compared to 46 percent among those with other incomes.[7]

Many of these coverage gains will be lost if PTC enhancements are allowed to lapse. If the enhancements are not made permanent and instead are allowed to expire, the Congressional Budget Office projects that 3.8 million more people would be uninsured.[8]

If Improvements Expire, Premiums Will Rise in Every State for People of All Ages and Income Levels

If PTC enhancements expire, premium costs will increase for people across states, ages, and income levels. The initial impact would occur in the spring and summer of 2025, as insurers begin making premium rates public, and would intensify in the fall of 2025 when people begin shopping for 2026 plans. Among those with lower incomes who would see their subsidies reduced, for example:

  • A single individual making $21,000 (144 percent of the poverty level) would no longer be eligible for a zero-premium plan and would see their monthly marketplace premium rise from $0 to $66 — an annual increase of $792.
  • A single individual making $30,000 (205 percent of the poverty level) would see their monthly marketplace premium more than double, from $55 to $168 — an annual increase of $1,350.
  • A 60-year-old couple making $45,000 (228 percent of the poverty level) would see monthly marketplace premiums increase from $117 to $283 — an annual increase of almost $2,000.
  • A family of four making $60,000 (200 percent of the poverty level) would see their monthly marketplace premium increase from $100 to $326 — an annual increase of about $2,700. (See Figure 2 for a family of four at different income levels; Appendix Table 1 for premium increases among people of various family sizes, ages, and incomes; and Appendix Table 2 for premium increases at the state level.)

As a result of the enhancements, people with incomes above 400 percent of the federal poverty level became newly eligible for PTCs if their marketplace premiums would exceed 8.5 percent of household income. If the PTC enhancements are not extended, the premium increases for people in this group would be dramatic:

  • A typical 60-year-old couple making $80,000 (405 percent of the poverty level) would see monthly marketplace premiums more than triple, from $567 to $2,026 — an annual increase of roughly $17,500.
  • A typical family of four making $125,000 (416 percent of the poverty level) would see their monthly marketplace premium increase from $885 to $1,525 — an annual increase of about $7,700.

Premiums would rise the most:

  • in states with high underlying marketplace premiums, such as West Virginia and Wyoming;
  • for older enrollees, who pay higher premiums under ACA rules than younger people; and
  • for people with incomes above 400 percent of the poverty level, who would lose subsidies entirely if the enhancements expired.

For example, a 60-year-old West Virginia couple making $80,000 would see annual premiums for a benchmark silver plan increase more than sixfold, from $6,800 to over $43,000. (See Figure 3 and Appendix Table 2).

Appendix

APPENDIX TABLE 1
National Average Premium Increases if Enhancements Expire, by Income Level
 Annual marketplace premiums
 With enhancements (current)Without enhancementsPremium increase without enhancementsPercentage premium increase
45-year-old individual
$21,000 (144% FPL)$0$792$792N/A
$30,000 (205% FPL)$660$2,010$1,350205%
$45,000 (308% FPL)$2,790$4,424$1,63459%
$60,000 (411% FPL)$5,100$6,467$1,36727%
60-year-old couple
$29,000 (147% FPL)$0$1,147$1,147N/A
$45,000 (228% FPL)$1,404$3,390$1,986141%
$60,000 (304% FPL)$3,660$5,898$2,23861%
$80,000 (405% FPL)$6,800$24,311$17,511258%
Family of four
$45,000 (150% FPL)$0$1,863$1,863N/A
$60,000 (200% FPL)$1,200$3,912$2,712226%
$90,000 (300% FPL)$5,400$8,847$3,44764%
$125,000 (416% FPL)$10,625$18,301$7,67672%

Notes: FPL = federal poverty level. The FPL for these calculations is based on 2023 poverty guidelines, which are used to determine premium tax credits for 2024 marketplace coverage. Examples are illustrative and based on 2024 national average benchmark (second-lowest-cost silver plan) premiums with age adjustments. The example family includes two 40-year-old parents, a 10-year-old, and a 5-year-old. Estimates are applicable in all states except for those with different poverty level standards than the national standard and/or those that subsidize marketplace premiums beyond the federal subsidy. See Appendix Table 2 for state-specific estimates.

Source: CBPP calculations 

APPENDIX TABLE 2
State-by-State Premium Increases if Enhancements Expire
 45-year-old individual; $60,000 (411% FPL)60-year-old couple; $80,000 (405% FPL)Family of four; $125,000 (416% FPL)
StateWith enhance-ments
(current)
Without enhancementsPremium increase without enhancementsWith
enhancements (current)
Without enhancementsPremium increase without enhancementsWith enhance-ments (current)Without enhancementsPremium increase without enhancements
U.S. average  $5,100  $6,467  $1,367  $6,800  $24,311 $17,511  $10,625  $18,301  $7,676  
Alabama5,100 7,647 2,547 6,800 28,745 21,945 10,625 20,262 9,637 
Alaska6,362 12,054 5,692 8,482 45,310 36,828 13,260 34,108 20,848 
Arizona5,100 5,464 364 6,800 20,540 13,740 10,625 15,462 4,837 
Arkansas5,100 5,749 649 6,800 21,610 14,810 10,625 16,267 5,642 
California5,100 6,345 1,245 6,800 23,853 17,053 10,625 17,955 7,330 
Colorado5,100 6,115 1,015 6,800 22,986 16,186 10,625 17,303 6,678 
Connecticut5,100 8,962 3,862 6,800 33,689 26,889 10,625 25,360 14,735 
Delaware5,100 7,227 2,127 6,800 27,165 20,365 10,625 20,449 9,824 
District of Columbia5,100 7,733 2,633 6,800 27,487 20,687 10,625 21,332 10,707 
Florida5,100 6,630 1,530 6,800 24,923 18,123 10,625 18,761 8,136 
Georgia5,100 6,278 1,178 6,800 23,598 16,798 10,625 17,764 7,139 
Hawai'i5,859 6,345 486 7,808 23,853 16,045 12,199 17,955 5,756 
Idaho5,100 5,654 554 6,800 21,253 14,453 10,625 15,999 5,374 
Illinois5,100 6,413 1,313 6,800 24,107 17,307 10,625 18,147 7,522 
Indiana5,100 5,410 310 6,800 20,336 13,536 10,625 15,308 4,683 
Iowa5,100 6,115 1,015 6,800 22,986 16,186 10,625 17,303 6,678 
Kansas5,100 6,590 1,490 6,800 24,770 17,970 10,625 18,646 8,021 
Kentucky5,100 5,844 744 6,800 21,967 15,167 10,625 16,536 5,911 
Louisiana5,100 7,634 2,534 6,800 28,694 21,894 10,625 21,600 10,975 
Maine5,100 6,983 1,883 6,800 26,248 19,448 10,625 19,759 9,134 
Maryland4,691 4,691 6,800 17,635 10,835 10,625 13,275 2,650 
Massachusetts5,100 5,454 354 6,800 17,073 10,273 10,625 15,477 4,852 
Michigan5,100 5,166 66 6,800 19,418 12,618 10,625 14,618 3,993 
Minnesota4,651 4,651 6,800 17,482 10,682 10,625 13,965 3,340 
Mississippi5,100 6,576 1,476 6,800 24,719 17,919 10,625 17,424 6,799 
Missouri5,100 6,793 1,693 6,800 25,535 18,735 10,625 19,221 8,596 
Montana5,100 6,834 1,734 6,800 25,687 18,887 10,625 19,337 8,712 
Nebraska5,100 7,728 2,628 6,800 29,051 22,251 10,625 21,869 11,244 
Nevada5,100 5,247 147 6,800 19,724 12,924 10,625 14,848 4,223 
New Hampshire4,542 4,542 6,800 17,074 10,274 10,625 12,853 2,228 
New Jersey5,100 6,251 1,151 6,800 23,496 16,696 10,625 17,687 7,062 
New Mexico5,100 6,386 1,286 6,800 24,006 17,206 10,625 18,070 7,445 
New York5,100 8,832 3,732 6,800 17,664 10,864 10,625 25,171 14,546 
North Carolina5,100 6,712 1,612 6,800 25,229 18,429 10,625 18,991 8,366 
North Dakota5,100 6,590 1,490 6,800 24,770 17,970 10,625 18,646 8,021 
Ohio5,100 5,898 798 6,800 22,171 15,371 10,625 16,689 6,064 
Oklahoma5,100 6,888 1,788 6,800 25,891 19,091 10,625 19,490 8,865 
Oregon5,100 6,617 1,517 6,800 24,872 18,072 10,625 17,531 6,906 
Pennsylvania5,100 6,034 934 6,800 22,680 15,880 10,625 17,073 6,448 
Rhode Island5,100 5,423 323 6,800 20,387 13,587 10,625 15,346 4,721 
South Carolina5,100 6,671 1,571 6,800 25,076 18,276 10,625 18,876 8,251 
South Dakota5,100 8,352 3,252 6,800 31,396 24,596 10,625 23,634 13,009 
Tennessee5,100 6,793 1,693 6,800 25,535 18,735 10,625 19,221 8,596 
Texas5,100 6,440 1,340 6,800 24,209 17,409 10,625 18,224 7,599 
Utah5,100 7,191 2,091 6,800 24,682 17,882 10,625 18,692 8,067 
Vermont5,100 11,400 6,300 6,800 22,800 16,000 10,625 32,034 21,409 
Virginia5,030 5,030 6,800 18,909 12,109 10,625 14,234 3,609 
Washington5,100 5,627 527 6,800 21,151 14,351 10,625 15,922 5,297 
West Virginia5,100 11,484 6,384 6,800 43,169 36,369 10,625 32,496 21,871 
Wisconsin5,100 6,454 1,354 6,800 24,260 17,460 10,625 18,262 7,637 
Wyoming5,100 11,132 6,032 6,800 41,844 35,044 10,625 31,499 20,874 

Note: FPL = federal poverty level. The FPL for these calculations is based on 2023 poverty guidelines, which are used to determine premium tax credits for 2024 marketplace coverage. Examples are illustrative and based on 2024 state average benchmark (second-lowest-cost silver plan) premiums with age adjustments. The example family includes two 40-year-old parents, a 10-year-old, and a 5-year-old. Alaska and Hawai’i have state poverty levels that differ from the federal poverty level; estimates for Alaska and Hawai'i assume that the state poverty levels match the federal poverty levels depicted, which means that income levels in the examples differ from those depicted. Depending on the scenario, for a few states, premium payments under the enhancements do not exceed the income cap of 8.5 percent. In those cases, premium payments are equal with or without enhancements. Estimates do not account for any state subsidized marketplace premiums beyond the federal subsidy because such state policies may be dependent on the federal tax credit enhancements.

Source: CBPP calculations

End Notes

[1] Centers for Medicare & Medicaid Services (CMS), 2024 Marketplace Open Enrollment Period Public Use Files, https://www.cms.gov/data-research/statistics-trends-reports/marketplace-products/2024-marketplace-open-enrollment-period-public-use-files.

[2] CBPP, Beyond the Basics, “Key Facts: Premium Tax Credit”, updated August 2023, https://www.healthreformbeyondthebasics.org/premium-tax-credits-answers-to-frequently-asked-questions/

[3] CMS, “Health Insurance Marketplaces 2024 Open Enrollment Report,” March 22, 2024, https://www.cms.gov/data-research/statistics-trends-reports/marketplace-products/2024-marketplace-open-enrollment-period-public-use-files

[4] Ibid.

[5] Nearly half of enrollees’ races and ethnicities were unknown in 2024 marketplace enrollment data. The estimates cited here are limited to states that use the HealthCare.gov platform and include imputations of missing race and ethnicity data, which greatly improves the usefulness of the data but does not disaggregate beyond broad racial and ethnic categories. Anupama Warrier et al., “HealthCare.gov Enrollment by Race and Ethnicity, 2015-2023,” Office of the Assistant Secretary for Planning and Evaluation, HHS, March 22, 2024, https://aspe.hhs.gov/reports/marketplace-enrollment-race-ethnicity-2015-2023.

[6] CBPP analysis of American Community Survey. Rose Chu and Benjamin Sommers, “Health Insurance Coverage Changes Since Implementation of the Affordable Care Act: Asian Americans and Pacific Islanders,” Office of the Assistant Secretary for Planning and Evaluation, HHS, May 2021, https://aspe.hhs.gov/reports/health-insurance-coverage-changes-asian-americans-pacific-islanders.

[7] CMS, “Marketplace Open Enrollment Period Public Use Files,” March 22, 2024, https://www.cms.gov/data-research/statistics-trends-reports/marketplace-products/2024-marketplace-open-enrollment-period-public-use-files.

[8] Congressional Budget Office, “Budgetary Outcomes Under Alternative Assumptions About Spending and Revenues,” May 8, 2024, https://www.cbo.gov/publication/60114.