Health Premiums Will Rise Steeply for Millions if Rescue Plan Tax Credits Expire

Temporary enhancements to premium tax credits, included in the American Rescue Plan, have played a critical role in helping more people afford health coverage in the Affordable Care Act (ACA) marketplaces. But the enhancements are set to expire at the end of the year. If Congress does not act this summer, the large majority of the 14.5 million people who signed up for marketplace coverage this year, including those in low- and moderate-income households, will either lose coverage or pay much more for premiums in 2023.

The Rescue Plan increased the size of health insurance premium tax credits available through the ACA marketplaces for 2021 and 2022, eliminating or reducing out-of-pocket premiums for millions of people. In addition, the Rescue Plan made more people eligible for the tax credits, ensuring that enrollees with moderate incomes pay no more than 8.5 percent of their incomes toward premiums. These affordability improvements also increased health coverage, prompting a record 14.5 million people to select marketplace plans during the 2022 open enrollment period, up from 12 million in 2021 and 11.4 million in 2020. Nearly one-third of enrollees selected a plan for $10 per month or less, and average monthly premiums fell 23 percent compared to the year before the enhancements.[1]

Expiration of the credit improvements would cause a steep rise in the average amount that those who remain covered must pay toward premiums, at a time when many people are already struggling with increased costs for food, housing, and other basics. And it would lead some to forgo coverage given the higher cost. Without congressional action this summer, people shopping for marketplace coverage will be notified of these looming premium hikes this fall and an estimated 3.1 million people will lose coverage and become uninsured in 2023.[2] Moreover, the sudden increase in marketplace premium costs may coincide with the expected end of the federal public health emergency declaration, when many Medicaid enrollees no longer eligible under the “continuous coverage” requirement will be seeking new sources of affordable coverage. Extending the tax credit improvements, while also closing the coverage gap in the 12 states that have not adopted the ACA Medicaid expansion, are critical steps to protect people from becoming uninsured and to ensure affordable health coverage for people of all incomes.[3]

Millions Would Lose Coverage or Face Premium Hikes

If the Rescue Plan premium tax credit enhancements expire, 3.1 million people are projected to lose coverage and become uninsured in 2023, based on research by the Urban Institute.[4] Coverage losses would occur broadly across demographic and income groups. The largest percentage declines in coverage would occur among those with low and moderate incomes: the number of uninsured people between 138 and 400 percent of the federal poverty level would increase by over 17 percent. All age groups would experience significant increases in the number of people uninsured, including older people. For example, the number of 55- to 64-year-olds who are uninsured would increase by over 12 percent. The tremendous, recent gains in marketplace enrollment would be reversed.

Of those who remain in marketplace coverage, an estimated 8.9 million would see their premium subsidies reduced. Another 1.5 million people would keep some source of coverage, most of them individual market coverage on or off the marketplace, but lose their subsidies entirely, research by the Department of Health and Human Services projects.[5] The amounts people would have to pay for coverage would increase sharply. Subsidy losses would average $406 a year for those who see reductions but remain in marketplace coverage and $3,277 a year for those who lose their subsidies entirely but keep some source of coverage.[6] Premium increases would also occur broadly across income groups, age groups, and races and ethnicities. For example, the Urban Institute estimates that those with subsidized marketplace coverage and incomes between 150 and 400 percent of the federal poverty level (about $20,000-$54,000 for an individual in 2022) would pay over $1,000 more per person in annual premiums.[7]

Expiration of the premium tax credit enhancements could come at a particularly difficult time for the potentially 15 million people estimated to lose Medicaid coverage after the federal public health emergency ends and states are no longer required to maintain continuous coverage for Medicaid enrollees.[8] These Medicaid enrollees who lose coverage, due for example to slight income increases, will be seeking other forms of coverage, and the far higher marketplace premiums that would result if the Rescue Plan enhancements expire could be the deciding factor in whether they obtain marketplace coverage or become uninsured.

Premiums Would Rise in Every State for Individuals and Families Across Ages, Income Levels

Premium costs would increase for marketplace enrollees of all ages and across income levels if the Rescue Plan expansions expire, and would come on top of inflation that is straining family budgets. Among those with lower incomes who would see their subsidies reduced, for example:

  • A single individual making $18,000 (139 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 $52 — an annual increase of $624.
  • A single individual making $30,000 (232 percent of the poverty level) would see their monthly marketplace premium more than double, from $82 to $192 — an annual increase of $1,320.
  • A 60-year-old couple making $45,000 (258 percent of the poverty level) would see monthly marketplace premiums increase from $162 to $321 — an annual increase of roughly $1,900.
  • A family of four making $60,000 (226 percent of the poverty level) would see their monthly marketplace premium increase from $152 to $373 — an annual increase of about $2,650.[9] (See Appendix Table 1 for the costs facing people of various family sizes, ages, and incomes, and Figure 1 for a family of four at different income levels.)

The Rescue Plan also made those with incomes above 400 percent of the federal poverty level newly eligible for premium tax credits if their premiums are high enough. This has helped many people who do not have low incomes but do face high premium burdens to afford coverage. The Rescue Plan limited marketplace premiums to no more than 8.5 percent of income for this group; if the enhancements expire, this protection would be eliminated, and many would face dramatic premium hikes. For example:

  • A typical 60-year-old couple making $75,000 (430 percent of the poverty level) would see monthly marketplace premiums more than triple, from $531 to $1,860 — an annual increase of roughly $16,000.
  • A typical family of four making $120,000 (452 percent of the poverty level) would see their monthly marketplace premium increase from $850 to $1,400 — an annual increase of about $6,600.
figure 1

Residents in Some States Face Particularly High Premium Increases

Residents in all states would see higher premiums, but in some states more than others. (See Appendix Table 2.) For example, due to the Rescue Plan enhancements, West Virginia’s 2022 enrollees saved an average of $1,536 in annual premiums, more than any other state using the HealthCare.gov platform.[10] If the enhancements are not extended, many in West Virginia would no longer be protected from the state’s high average marketplace premiums; at $752 per month for benchmark premiums (the second-lowest-cost silver plan), they are the second highest among all states and far higher than the national average of $438.[11]

As a result, residents in many states will face skyrocketing out-of-pocket cost increases. Part of the reason for West Virginia’s high average marketplace premiums could be that their marketplace enrollees tend to be older than those in other states. Older enrollees, particularly those with incomes above 400 percent of the poverty level who would lose subsidies entirely, would likely face the largest premium hikes if the Rescue Plan enhancements expire. For example, a 60-year-old West Virginia couple making $75,000 would see annual marketplace premiums increase from $6,375 to over $38,000. Families with moderate incomes would also face steep increases in West Virginia. For example, a family of four making $120,000 would see their annual marketplace premium increase from $10,200 to almost $29,000. Cost spikes like this are likely to drive up the number of people forgoing coverage entirely.

Similarly, Wyoming marketplace enrollees saved $1,392 in annual premiums thanks to the Rescue Plan, second only to West Virginia. Wyoming enrollees who lose their subsidies will be exposed to the state’s high premiums, which at an average of $762 per month for benchmark coverage are higher than any other state. In Wyoming, a 60-year-old couple making $75,000 would see annual marketplace premiums increase from $6,375 to nearly $39,000, and a family of four making $120,000 would see their annual marketplace premium increase from $10,200 to over $29,000.[12]

Appendix

APPENDIX TABLE 1
Premiums Will Increase for Individuals, Couples, and Families at Various Income Levels if Premium Tax Credit Enhancements Expire
  Annual marketplace premiums
  With Rescue Plan enhancements (current law) Rescue Plan enhancements expire Premium increase if enhancements expire Percentage premium increase
45-year-old individual
$18,000 (139% FPL) $0 $624 $624 N/A
$30,000 (232% FPL) $984 $2,304 $1,320 134%
$45,000 (349% FPL) $3,251 $4,424 $1,173 36%
$60,000 (465% FPL) $5,100 $5,939 $839 16%
60-year-old couple
$30,000 (172% FPL) $264 $1,556 $1,292 489%
$45,000 (258% FPL) $1,944 $3,857 $1,913 98%
$60,000 (344% FPL) $4,260 $5,898 $1,638 38%
$75,000 (430% FPL) $6,375 $22,324 $15,949 250%
Family of four
$45,000 (169% FPL) $342 $2,270 $1,928 564%
$60,000 (226% FPL) $1,824 $4,477 $2,653 145%
$90,000 (339% FPL) $6,278 $8,847 $2,569 41%
$120,000 (452% FPL) $10,200 $16,804 $6,604 65%

Note: FPL = federal poverty level. Examples are illustrative and based on 2022 benchmark (second-lowest cost silver plan) premiums with age adjustments and pre-ARPA contribution percentages. 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 subsidize marketplace premiums beyond the federal subsidy. See Appendix Table 2 for state-specific estimates.

Source: CBPP calculations

APPENDIX TABLE 2
Annual Premiums Will Increase for Individuals, Couples, and Families at Various Income Levels if Premium Tax Credit Enhancements Expire
  45-year-old individual; $60,000 (465% FPL) 60-year-old couple; $75,000 (430% FPL) Family of four; $120,000 (452% FPL)
State With Rescue Plan enhance­ments
(current law)
Rescue Plan enhance­ments expire Premium increase if enhance­ments expire With Rescue Plan enhance­ments (current law) Rescue Plan enhance­ments expire Premium increase if enhance­ments expire With Rescue Plan enhance­ments (current law) Rescue Plan enhance­ments expire Premium increase if enhance­ments expire
U.S. average $5,100 $5,939 $839 $6,375 $22,324 $15,949 $10,200 $16,804 $6,604
Alabama 5,100 8,095 2,995 6,375 30,427 24,052 10,200 21,447 11,247
Alaska 6,371 9,654 3,283 7,967 36,289 28,322 12,752 27,317 14,565
Arizona 5,100 5,288 188 6,375 19,877 13,502 10,200 14,963 4,763
Arkansas 5,100 5,247 147 6,375 19,724 13,349 10,200 14,848 4,648
California 5,100 5,654 554 6,375 21,253 14,878 10,200 15,999 5,799
Colorado 4,854 4,854 0 6,375 18,246 11,871 10,200 13,735 3,535
Connecticut 5,100 7,878 2,778 6,375 29,612 23,237 10,200 22,291 12,091
Delaware 5,100 7,430 2,330 6,375 27,930 21,555 10,200 21,025 10,825
District of Columbia 5,100 5,625 525 6,375 19,995 13,620 10,200 15,518 5,318
Florida 5,100 6,183 1,083 6,375 23,241 16,866 10,200 17,495 7,295
Georgia 5,100 5,342 242 6,375 20,081 13,706 10,200 15,116 4,916
Hawai'i 5,868 6,562 694 7,334 24,668 17,334 11,732 18,569 6,837
Idaho 5,100 6,251 1,151 6,375 23,496 17,121 10,200 17,687 7,487
Illinois 5,100 5,668 568 6,375 21,304 14,929 10,200 16,037 5,837
Indiana 5,100 5,396 296 6,375 20,285 13,910 10,200 15,270 5,070
Iowa 5,100 6,806 1,706 6,375 25,586 19,211 10,200 19,260 9,060
Kansas 5,100 6,101 1,001 6,375 22,935 16,560 10,200 17,265 7,065
Kentucky 5,100 5,247 147 6,375 19,724 13,349 10,200 14,848 4,648
Louisiana 5,100 7,335 2,235 6,375 27,573 21,198 10,200 20,756 10,556
Maine 5,100 5,790 690 6,375 21,763 15,388 10,200 16,382 6,182
Maryland 4,447 4,447 0 6,375 16,717 10,342 10,200 12,584 2,384
Massachusetts 5,063 5,063 0 6,375 15,850 9,475 10,200 14,369 4,169
Michigan 4,610 4,610 0 6,375 17,329 10,954 10,200 13,045 2,845
Minnesota 4,434 4,434 0 6,375 16,666 10,291 10,200 13,313 3,113
Mississippi 5,100 6,074 974 6,375 22,833 16,458 10,200 16,094 5,894
Missouri 5,100 5,993 893 6,375 22,527 16,152 10,200 16,958 6,758
Montana 5,100 6,549 1,449 6,375 24,617 18,242 10,200 18,531 8,331
Nebraska 5,100 8,067 2,967 6,375 30,325 23,950 10,200 22,828 12,628
Nevada 5,100 5,193 93 6,375 19,520 13,145 10,200 14,694 4,494
New Hampshire 4,190 4,190 0 6,375 15,749 9,374 10,200 11,855 1,655
New Jersey 5,100 5,749 649 6,375 21,610 15,235 10,200 16,267 6,067
New Mexico 5,100 5,274 174 6,375 19,826 13,451 10,200 14,924 4,724
New York 5,100 7,104 2,004 6,375 14,208 7,833 10,200 20,246 10,046
North Carolina 5,100 6,834 1,734 6,375 25,687 19,312 10,200 19,337 9,137
North Dakota 5,100 6,739 1,639 6,375 25,331 18,956 10,200 19,068 8,868
Ohio 5,085 5,085 0 6,375 19,113 12,738 10,200 14,387 4,187
Oklahoma 5,100 6,752 1,652 6,375 25,382 19,007 10,200 19,106 8,906
Oregon 5,100 6,020 920 6,375 22,629 16,254 10,200 15,951 5,751
Pennsylvania 5,100 5,288 188 6,375 19,877 13,502 10,200 14,963 4,763
Rhode Island 4,895 4,895 0 6,375 18,399 12,024 10,200 13,850 3,650
South Carolina 5,100 6,020 920 6,375 22,629 16,254 10,200 17,035 6,835
South Dakota 5,100 8,149 3,049 6,375 30,631 24,256 10,200 23,058 12,858
Tennessee 5,100 6,034 934 6,375 22,680 16,305 10,200 17,073 6,873
Texas 5,100 5,749 649 6,375 21,610 15,235 10,200 16,267 6,067
Utah 5,100 6,467 1,367 6,375 22,199 15,824 10,200 16,812 6,612
Vermont 5,100 8,988 3,888 6,375 17,976 11,601 10,200 25,256 15,056
Virginia 5,100 6,101 1,001 6,375 22,935 16,560 10,200 17,265 7,065
Washington 5,100 5,369 269 6,375 20,183 13,808 10,200 15,193 4,993
West Virginia 5,100 10,196 5,096 6,375 38,327 31,952 10,200 28,851 18,651
Wisconsin 5,100 5,817 717 6,375 21,865 15,490 10,200 16,459 6,259
Wyoming 5,100 10,332 5,232 6,375 38,837 32,462 10,200 29,235 19,035

Note: FPL = federal poverty level. Examples are illustrative and based on 2022 benchmark (second-lowest cost silver plan) premiums with age adjustments and pre-ARPA contribution percentages. The example family includes two 40-year-old parents, a 10-year-old, and a 5-year-old. Poverty levels for Alaska and Hawai'i are higher than the federal levels. Depending on the scenario, for a few states premium payments under the Rescue Plan enhancements do not exceed the income cap of 8.5 percent under the Rescue Plan. In those cases, premium payments are equal with or without Rescue Plan enhancements. Source: CBPP calculations

End Notes

[1] Gideon Lukens, Jennifer Sullivan, and Farah Erzouki, “COVID Relief Provisions Stabilized Health Coverage, Improved Access and Affordability,” CBPP, March 10, 2022, https://www.cbpp.org/research/health/covid-relief-provisions-stabilized-health-coverage-improved-access-and.

[2] Matthew Buettgens, Jessica Banthin, and Andrew Green, “What If the American Rescue Plan Act Premium Tax Credits Expire?” Urban Institute, April 7, 2022, https://www.urban.org/research/publication/what-if-american-rescue-plan-act-premium-tax-credits-expire.

[3] Laura Guerra-Cardus and Laura Harker, “Congress Needs to Act Now to Reduce Coverage Losses When Public Health Emergency Ends,” CBPP, April 26, 2022, https://www.cbpp.org/blog/congress-needs-to-act-now-to-reduce-coverage-losses-when-public-health-emergency-ends.

[4] Buettgens, Banthin, and Green, op cit.

[5] D. Keith Branham et al., “Projected Coverage and Subsidy Impacts If the American Rescue Plan’s Marketplace Provisions Sunset in 2023,” Office of the Assistant Secretary for Planning and Evaluation (ASPE), Department of Health and Human Services, March 23, 2022, https://aspe.hhs.gov/reports/impacts-ending-american-rescue-plan-marketplace-provisions.

[6] Ibid.

[7] Buettgens, Banthin, and Green, op. cit.

[8] Matthew Buettgens and Andrew Green, “What Will Happen to Medicaid Enrollees’ Health Coverage after the Public Health Emergency?” Urban Institute, March 9, 2022, https://www.urban.org/research/publication/what-will-happen-medicaid-enrollees-health-coverage-after-public-health-emergency.

[9] CBPP calculations using 2022 benchmark (second-lowest cost silver tier plan) premiums with age adjustments and pre-Rescue Plan contribution percentages. Examples are not projections but rather illustrate the magnitude of the shift in costs that typical individuals and families under these scenarios would experience if the premium tax credit enhancements expire. Actual costs will be determined by future premiums, contribution percentages, and other unknown factors. These national estimates are applicable in all states except for a small number that have state-specific poverty levels and/or provide additional premium subsidies. The family of four includes two 40-year-old parents, a 10-year-old, and a 5-year-old. See Appendix Table 2 for state-specific estimates.

[10] Centers for Medicare and Medicaid Services (CMS), “2022 Open Enrollment Report,” https://www.cms.gov/files/document/health-insurance-exchanges-2022-open-enrollment-report-final.pdf.

[11] Kaiser Family Foundation, Marketplace Average Benchmark Premiums, https://www.kff.org/health-reform/state-indicator/marketplace-average-benchmark-premiums/?currentTimeframe=0&sortModel=%7B%22colId%22:%22Location%22,%22sort%22:%22asc%22%7D. The ACA establishes metal tiers — bronze, silver, gold, and platinum — to organize plans for consumers and set standards for what deductibles and other charges insurers can include. See CBPP, “Cost-Sharing Charges in Marketplace Plans, Answers to Frequently Asked Questions,” updated August 2020, http://www.healthreformbeyondthebasics.org/cost-sharing-charges-in-marketplace-health-insurance-plans-answers-to-frequently-asked-questions/.

[12] CBPP calculations using 2022 West Virginia and Wyoming average benchmark premiums with age adjustments and pre-Rescue Plan contribution percentages. These estimates illustrate the cost increases that typical individuals and families under these scenarios would face if the premium tax credit enhancements expire. Actual costs will be determined by future premiums, contribution percentages, and other unknown factors. The family of four includes two 40-year-old parents, a 10-year-old, and a 5-year-old. See Appendix Table 2 for estimates including all states.