NEWS: As we reach the end of 2025, Congress has yet to approve keeping the ACA tax credit enhancement that helps to make health insurance affordable for millions of Americans.
WHAT IT MEANS TO YOU: No matter how you get your health insurance, making it too expensive for millions of Americans will also make health care and insurance more expensive for you.
There’s been a lot of talk about Affordable Care Act tax credits expiring. A lot of the reporting is so superficial, though, that it’s hard to get a handle on what exactly is going on. It’s clear that millions of Americans will have to pay much higher health insurance premiums, or will lose their insurance, but how does that work?
Let’s take a look.
What has ACA accomplished?
The Affordable Care Act went into effect Jan. 1, 2011, with enrollment started Nov. 1, 2010. It was designed to provide lower-cost health insurance to Americans who otherwise wouldn’t it. Before ACA, Americans who weren’t insured through an employer struggled to pay for insurance. Since 2013, the number of uninsured Americans has dropped from more than 14% to less than 8%. As many as 50 million people who otherwise wouldn’t have health insurance have been enrolled in ACA at some point since it became law.
More than 23 million people are enrolled in ACA as of this year. More people having health insurance means lower health-care costs for everyone, since fewer people are using the emergency room for health care, or ignoring conditions until they became a major and much more expensive issue.
How does ACA work?
The ACA provides a tax credit to most of those enrolled that ensures their health care premium won’t be more than 8.5% of their income. Enrollees can choose their health care insurance from the “marketplace,” and most major insurers are represented there.
A tax credit reduces the amount of tax a person owes, so it’s different than a deduction, which decreases your taxable income before your tax bill is calculated.
The original ACA provided the tax credit for anyone whose income was between 100% and 400% of the federal poverty guideline (those who make less than 100% of the federal poverty guideline get Medicaid). In 2025, 100% of the FPG is $15,650, so 400% is $62,600. The amount rises by $5,500 per person in a household, up to family of eight.
Someone who doesn’t qualify for the tax credit can also get health insurance through the ACA marketplace, but more than 90% who are in ACA get a tax credit.
ACA enrollees can choose to use the credit monthly to lower their premium, or take it yearly when they file their taxes. Once they check the box saying which they want to do, it’s seamless. They pay their health insurance premium every month, and when they file their taxes they include the document showing their credit that’s provided by their state’s ACA administrator. In New Hampshire, that’s the New Hampshire Insurance Department.
Enrollees get to pick a plan from their state’s ACA Marketplace. They have a choice of plans from major insurers with a variety of deductibles, coverage and premium prices. The monthly premium prices they’re shown are based on their tax credit amount.
What exactly is expiring?
In 2021, the American Rescue Plan and Inflation Reduction Act eliminated the 400% FPG cap, which means that people who make more than that can get a tax credit to offset their premium. Since the credit is tied to income, the more money someone makes, the lower the credit is.
The enhanced credit that was enacted in 2021 was set to expire at the end of 2025 unless Congress acts to extend it or make it permanent. This isn’t unique to this credit, by the way. Many fiscal enhancements are temporary until Congress makes them permanent. For instance, the 2017 tax bill, passed during the first Trump administration, was set to expire this year and the so-called “Big Beautiful Bill” extended it, and also added some new things.
About 23.2 million Americans enrolled in ACA on 2025 get the tax credit, with many of them getting the enhanced credit, according to the Center on Budget and Policy Priorities. Before the enhanced credit, about 11.9 million people got ACA insurance. Economic analysts say that just shows how difficult it is for even people who are middle-income to afford health insurance if it’s not provided by their employer.
What happens if the enhanced ACA tax credit isn’t renewed?
The monthly health care premiums of more than half of the people who are enrolled in ACA would rise to an amount that many likely wouldn’t be able to pay. You’ve heard all about it by now – people are getting notices their premium will increase by 100% or more. This means that many people won’t have health insurance, since they can’t afford it anymore.
The more people who are uninsured, the more everyone’s health care costs, including insurance premiums, go up. On top of it, a rise in insurance premiums tends to be viral. People who aren’t in ACA have also reported big hikes in their insurance premiums.
At least Medicare premiums are safe from big increases, right?
Not really. Last month the Trump administration announced that Medicare’s Part B premiums (the part of Medicare that pays for anything other than hospitalization and emergency care) will increase by 9.7%. More than 64 million Americans are on Medicare, which is health insurance for people over 65.
Medicare Part B premiums are deducted from monthly Social Security payments. With Social Security cost of living rising 2.8% in 2026, Social Security recipients who pay for Medicare Part B (about 70% of them) will pocket less money each month next year than they did this year.
“This is the greatest erosion of the COLA in nearly a decade and the first time that the monthly Medicare premium has exceeded $200,” the Century Foundation noted.
Of course, Social Security recipients are not forced to get Medicare. They can get ACA or pay for private insurance – and pay even more.
What about the Trump plan to “pay people” and let them choose their own insurance?
Actually, that’s exactly what the ACA is now. A tax credit is money in your pocket – it’s a reduction in the amount of federal taxes you have to pay. People who get ACA are getting a government subsidy every month to help pay for their health insurance. They choose an insurance plan from the health insurance marketplace, administered by their state. They actually have a lot more choice than someone who gets a health insurance plan through an employer.
Health insurance for people who can’t afford it has been a political cause in Congress for decades, but it never got anywhere. President Obama’s administration finally managed to get ACA passed, in 2010. It’s not perfect – opponents gutted some major provisions – but it’s as good as we could get. Since then, Republicans in Congress have worked hard to eliminate it. Speaker of the House Mike Johnson even said after Trump was elected that it would be a goal of Congress. Project 2025 calls for eliminating it, too. So, anyone who believes that Congress is going to come up with a better plan if the ACA is scrapped should consider the history of it and how likely anything better than what we have now will happen.
The numbers thrown around in the proposed Trump plan – the details aren’t really clear – represent a fraction of what most people get now with the tax credit.
What happened to that deal that our New Hampshire senators, and others, made to end the shutdown? Weren’t they supposed to get an agreement on ACA?
On Nov. 9, New Hampshire U.S. Senators Jeanne Shaheen and Maggie Hassan joined Maine’s independent Sen. Angus King, and three other Democrats to broker a deal to end then 39-day government shutdown for a promise that Congress would consider a bill addressing the ACA enhanced tax credit before the year was over.
The deal was derided by many as a sellout – critics were pretty sure that the Republicans in Congress weren’t going to cave on ACA subsidies, which was the roadblock that had led to the shutdown.
Those critical of the deal were right. With the year quickly coming to an end, the House last week passed a budget bill that didn’t include extending the ACA tax credit enhancement. The Senate is expected to not pass that bill. That means we’re cruising for another government shutdown at the end of January, when the temporary budget agreement ends.
That said, the October-November government shutdown had the potential of causing much more financial harm than loss of the ACA tax credits. The Republicans were not going to give in to their opposition to them. The fact the deal got government operating again avoided major issues that would’ve arisen as the shutdown went on.
With a mid-year election looming in less than a year, it’ll be interesting to see how Republicans up for re-election deal with the growing unhappiness of the general population. A reminder, that the entire House is elected every two years. One-third of the Senate is up for election, and in 2026 this includes 22 Republican seats and 13 Democratic seats.
Didn’t the ‘Big Beautiful Bill’ change ACA to make it harder for people to enroll?
The tax bill signed by President Trump in July extended the tax cuts for the wealthy that were included in the 2017 tax bill approved under Trump I in December 2017. Its other intention is to nickel and dime low and middle-income Americans in order to pay for increases to the amount of those tax cuts for the wealthy. To generate that money, people need to be knocked off of ACA. So, aside from Congress not renewing the enhanced tax credit, the bill make sit harder for people to enroll in ACA, or stay enrolled.
Estimates are the new rules will increase the amount of uninsured Americans by 17 million in the next decade.
The changes to ACA in the tax bill include:
Premium tax credit “recapture.” Many people who get ACA are self-employed or have other jobs with unpredictable incomes. A person’s ACA tax credit is based on their tax filing the previous year, which means that changes in income aren’t reflected for a year. The following year, any differences are reconciled in what they’re charged for a premium, with the amount that must be paid back capped, according to income. The goal is to not penalize a person to the point that they can’t afford their insurance premium. Beginning Dec. 31, those whose premium was higher than what it should’ve been, given their income, will have to pay the difference back in full.
Re-enrollment process more complicated. As it works now, those who re-enroll in ACA, if they don’t want to change their plan, simply acknowledge they want to re-enroll. With the enrollment period that begins Nov. 1, 2027, all recipients who get the premium tax credit must re-apply for ACA, which means filling out a complicated application.
Added to that, re-enrollees will have to reconcile differences in the premium they’re eligible for and actual income before they will be covered. If they don’t, they lose coverage completely. This will be a big burden – in some cases not even possible – for self-employed people, people who work a variety of part-time jobs, farmers, small-business owners and anyone else whose income isn’t predictable every year.
Smaller open enrollment window. Beginning next year, the open enrollment period will be Nov. 1-Dec. 31, a chance from it ending Jan. 15. Some states have their own deadline, but the federal date is the one that most go by. This means less time to get the information together for the more complicated enrollment period, and even more difficulty for those who need to reconcile their incomes, since they won’t have 1099s, W-2s and other earned information income yet for that year.
No special enrollment for lowest-income recipients. This began Aug. 25, so it’s already happening. The year-round special enrollment period (SEP) for people who have incomes that are 150% of the federal poverty guideline or less has been eliminated. Before the new law, this year-round enrollment made sure that people who didn’t have much money would still have access to health care, since they likely wouldn’t be able to pay for it out of pocket.
This year, 150% of the federal poverty guideline is $22,590 for an individual, $30,660 for a two-person household, $38,730 for three, and $46,800 for four.
The SEP for “qualifying life events” – a change in employment, loss of health care, divorcing a spouse whose job provided health insurance, or having a baby – is still in effect, but requires more verification for approval. Analysts say it may delay health coverage for 90 days or more for those who apply.
Many legally residing immigrants lose eligibility. Many groups of legally residing immigrants who were eligible for ACA are no longer eligible under the new law [this includes Medicaid and some other government benefits, too] including:
- Those legally living in the U.S. under DACA.
- Refugees and asylum-seekers with humanitarian status.
- Survivors of trafficking and domestic violence who have pending or approved T-visas or have petitioned for legal status under the Violence Against Women Act.
- Those with valid Temporary Protected Status visas.
- Lawfully residing immigrants who earn less than 100% of the federal poverty level and are not covered by Medicaid.
ACA subsidizes health insurance fore people. Should we be using taxpayer money for that?
Almost all private health insurance is subsidized. One of the “justifications” Congress is giving for not continuing the expanded tax credits is that people who make more than 400% of the federal poverty guideline make enough money that they don’t need a subsidy.
Those same members of Congress get a subsidy that covers 72-75% of their health care plan. In case you were wondering, a member of Congress is paid $174,000 a year, which is 1,100% of the federal poverty guideline. Speaker of the House Mike Johnson’s salary is $223,500; party leaders are paid $193,400.
Businesses get a subsidy that covers as much of 50% of what health care costs them (and, of course, employees pay premiums). So, providing subsidies in the form of tax credits for people who get ACA is not giving them anything anyone else isn’t getting. As far as the members of Congress who have yet to extend the tax credits, ACA enrollees get a lot less.
In fact, under the tax bill passed in July, taxpayers are paying an average $80,000 tax cut for Americans who make more than $1 million a year. Which means we’re subsidizing people who make, at a minimum, 6,400% of the federal poverty guideline.
The amount of additional tax breaks for millionaires in the July tax bill adds up to roughly the same amount that not renewing the ACA tax credit enhancement does. Gee, what a coincidence!
What does someone who is actually enrolled in ACA say about the plan?
I have been enrolled in ACA since mid-2021, when I left my last full-time employer for self-employment. It’s not perfect, and the deductibles are high, but it’s actually no worse than what I got through my last employer, with lower premiums, since my premiums are tied to my income. I take a prescription medication that’s gone from about $250 a month to nearly $500 a month in that time (and no, the price has not gone down under Trump). My employer insurance paid 50% of the cost of the medication. With my ACA plan, it’s $80 a month. The medication also requires an expensive doctor visit every two months in order to keep getting it.
I’m lucky that I make less than 400% of the federal poverty guideline. It means my tax credit is intact for next year. I’m not sure I could afford health insurance if I made more than 400% of FPG and didn’t get a credit.
ACA is not a “disaster” or a “bad plan.” It gives people like me the opportunity to afford health insurance. If someone has a better plan, that would be great. Given the history of ACA as a political football, I don’t see it happening. Many of those in power now were elected with the help of those who are benefiting from those tax cuts and others who, for whatever reason, don’t want to see ACA continue. That group certainly doesn’t include people like me and the millions of Americans who benefit from it.
I have a question of my own for you.
Three sets of my great-grandparents, and one grandmother, came to America from economic hardship that had been created by generations of feudal systems in which those in power got rich and retained wealth on the backs of the people under their control. Despite the dismantling of many of those systems, the effects lived on, including abject poverty, no generational wealth and no way to get ahead. In America, they could achieve success that they never could’ve in the countries of their birth.
Why are we willing to subsidize incredibly wealthy people at the expense of ourselves, our families, our neighbors and our fellow hard-working Americans? How do you think a divide between rich and poor, with a middle class that is less and less able to afford the basics for a decent life, begins?
The cuts to the ACA are a part of that growing divide. They’ll have a far-reaching negative impact that will affect you and your family, possibly for generations.
You can reach Maureen Milliken at mmilliken@manchesterinklink.com