Jason Levitis, Sabrina Corlette, and Claire O’Brien
As the nation winds through its second week of government shutdown, Affordable Care Act (ACA) policy has again taken center stage. A key sticking point in funding negotiations is upcoming reductions in the premium tax credit (PTC). Democrats say they cannot vote for a bill that allows the reductions to proceed. Republicans have expressed openness to considering some form of extension but have insisted that negotiations can wait until later, since the reductions don’t take effect until 2026.
So what’s the truth of the matter? In this case, the facts are clear. As we explained here last year, the timeline of health insurance rate setting and Marketplace enrollment means that the harms from a reduction are locked in well before the new plan year.
Indeed, Congress has already waited too long. Even if the enhancements were to be extended tomorrow, millions of people now inevitably face higher premiums for the year, because insurance companies have finalized their rates assuming that smaller PTCs will push healthy people out. According to Congressional Budget Office (CBO) estimates, even if Congress had extended the enhancements on September 30, gross premiums would have been 5 percent higher compared to earlier enactment. And while it will never be “too late” for action to support future coverage, the immediate harms will grow quickly in the weeks ahead. By mid-October, millions of people will learn that they face drastically higher out-of-pocket premiums, leading to cancellations and decisions to stay uninsured that will be impossible to fully reverse. If an extension passes at year’s end, coverage losses will be 1.5 million due to the delays alone, according to published reports citing CBO estimates.
These delays also impose financial costs on insurance companies, Marketplaces, and state regulators that are ultimately borne by consumers and taxpayers. When and if the enhancements are extended, Marketplaces have options to mitigate (but not eliminate) coverage losses. But executing these maneuvers is costly and grows more so the longer Congress waits.
Background
The PTC enhancements were first enacted in 2021 under the American Rescue Plan Act and extended in 2022 under the Inflation Reduction Act. The enhancements increase affordability and expand coverage in several ways. First, they reduce net premiums for virtually all PTC recipients relative to the original, smaller PTC. Second, they eliminate the eligibility cliff at 400 percent of the federal poverty line (about $60,000 for a single individual in 2025). This is especially important for older people and others facing higher premiums. For example, in 2025 a 60-year-old with income at $65,000 (which is 432 percent of the federal poverty line) would pay $12,653 annually for a benchmark silver on average without the enhancements in place, or $5,525 with the enhancements in place. Finally, the enhancements reduce gross premiums by pulling healthier people into the risk pool, which helps people ineligible for PTC. Eliminating these savings would increase health care costs for consumers and employers and, in doing so, reduce coverage.
In our piece last year, we noted the perhaps-unintuitive timeline for effects of the PTC’s expiration to be felt. Tax cuts are commonly enacted or extended during or even shortly after the tax year without substantial drawbacks, given the retrospective nature of tax filing. But the unique structure of the PTC means that the enhancements’ expiration is felt much sooner. Specifically, the rate filing process for a year plays out in the spring and summer of the prior year. And the enrollment process locks in place consumer responses to expected net premium changes before the coverage year has even begun. Despite this dynamic, Congress acted in the reconciliation bill to extend other tax cuts that expire at year’s end, while taking no action on the PTC.
The time for acting to completely avoid higher costs and coverage losses has now passed, and certain harms are now locked in place. However, swift passage of the PTC enhancements would stop additional harms that will otherwise spread in the coming weeks.
Harms Already Locked In Place
October 1: Higher Insurance Premiums Finalized
In a normal year, health insurers participating in the ACA marketplaces finalize their premiums in mid-August and sign Marketplace contracts by the end of September. This year, the Centers for Medicare & Medicaid Services (CMS) and many states extended those deadlines to account for the uncertainty over Congressional action on the extension of enhanced premium tax credits and other federal policy changes. On September 23, CMS announced that insurers would have until October 1 to make any changes to premium rates, and until October 2 to sign their contracts with the federal Marketplace. They have now reached a “pencils down” moment.
CBO has previously estimated that extending the enhancements would reduce premiums by 7.6 percent annually on average (though as explained in this article achieving that level of reduction for 2026 would have required acting earlier). This projection is supported by a recent analysis of health insurers’ individual market proposed premium rates for 178 Marketplace plans across 28 states, which found that insurers are attributing between 1 and 14 percentage points of their proposed rate increases to the expiration of the enhanced premium tax credits. This is generally because insurers assume that most of the people who drop their coverage due to a loss of enhanced premium tax credits will be young and healthy, leaving them with a smaller and sicker risk pool and higher costs.
These higher premiums mean higher costs for consumers not eligible for premium tax credits, since these individuals, unlike those who do receive premium tax credits, are not insulated from list premiums. The higher premiums also increase costs for employers who provide coverage for employees using individual coverage health reimbursement arrangements (ICHRAs) and similar vehicles.
If Congress passes an extension in the next few weeks, some state regulators and state-based Marketplaces could, in theory, require or allow for re-submission of plans and rates even at this late date. But this scenario is unlikely due to the operational difficulties and costs associated with re-loading plans and rates into Marketplace websites and revising consumer notices and marketing materials. Indeed, CBO estimated that, even if Congress had been able to enact an extension of the enhanced tax credits by September 30, 2025, insurers were only 50 percent likely to make rate adjustments after meeting state and federal deadlines for finalizing 2026 premium rates. And the value of such adjustments is quickly declining, since insurers would know that many of the healthier people already knocked out of the market won’t return. For these reasons, CBO’s forecast for a September enactment is that premiums for 2026 would have fallen by just 2.4 percent had Congress extended the enhanced PTC last month, compared to the 7.6 percent reduction CBO estimated with more of a runway. In other words, CBO believes that a premium increase of about 5 percent is already locked in.
Any such late rate revisions would also impose costs on issuers, Marketplaces, and state regulators that would be passed along to consumers and taxpayers.
Harms That Will Be Locked In Place In The Weeks Ahead
While the increases in gross premiums are substantial, the much larger impact will be on PTC recipients. KFF estimates that net premiums will more than double on average if the enhanced PTC are allowed to expire. And PTC recipients generally have lower incomes and so are less able to and less likely to have other good coverage options, meaning that higher net premiums will translate into substantial uninsurance for this population.
Over the course of October, most consumers will be informed of these higher net premiums through the various avenues described below. Many considering new enrollment will choose not to enroll. Current enrollees will have premium shock and may decide not to re-enroll, including cancelling auto-reenrollment.
Congress could still restore the higher PTCs by passing an extension later, and this would restore affordability for eligible consumers and mitigate coverage losses. But some consumers won’t come back, since they will lose the benefit of auto-reenrollment, lose trust in the marketplace, change their budget planning, and/or tune out.
Throughout October: Window Shopping Shows Lower PTC
Before the open enrollment period, most Marketplaces offer tools that permit “window shopping”: browsing plan options and receiving an estimate of financial help. Window shopping started at the beginning of October in six states (Georgia, Idaho, Maryland, Nevada, New York, and Virginia), opens by mid-October in most other State Marketplaces, and by late October in the Federal Marketplace. Window shoppers are already seeing much higher premiums. And because window shopping tools don’t generally collect contact information, Marketplaces will have no way to contact these potential enrollees if the enhancements are later restored.
Middle To Late October: Re-Enrollment Notices Showing Higher Net Premiums
By the end of October, virtually all State Marketplaces will send current enrollees re-enrollment notices showing higher net premiums and lower financial assistance. (The federal marketplace’s notices do not include 2026 premiums). The National Association of Insurance Commissioners expressed concern about the resulting premium shock in its August 21 letter, noting, “Without an extension of the enhanced credits in September, insurers and marketplaces will begin to notify over 20 million consumers in all 50 states of major premium increases in a matter of weeks.”
Even if Congress passes an extension soon, revising these letters is not instantaneous. Letters already in the mail may be impossible to stop. And sending revised letters will require states to re-run their “batch” redetermination on all current enrollees and then re-print and send large numbers of new letters—a process that will vary depending on each state’s IT systems and operational capacity. Any such revisions will impose additional costs on Marketplaces.
By Late October: Marketplaces Lock Down IT And other Systems
Best practices for websites and other systems serving millions of people require extensive preparation, testing, and a “code freeze” well before the go-live date. When and if an extension passes, Marketplaces may be unable to immediately change course. Timelines will depend on the agility of each Marketplace’s IT systems, customer support staff, and communications apparatus. Any such changes will impose additional costs for re-programming systems, revising communications materials, retraining customer support staff and navigators, and booking additional advertising. Last-minute changes also create more demand for call centers and other assistance.
November 1: Open Enrollment Begins Nationwide
On November 1, the open enrollment period opens nationwide (and October 15 in Idaho). At that point, both new applicants trying to enroll and current enrollees updating their applications and shopping will see the higher net premiums, deterring many from enrolling.
December: Enrollees Receive Bills Showing Higher Net Premiums
In December, all enrollees–including those auto-reenrolled–will receive their January 2026 bills showing their net premium for 2026. For auto-reenrollees in the federal Marketplace who don’t go in to shop, this will generally be the first time they see the higher premium, resulting in an additional round of disenrollment. If Congress later restores the enhancements, Marketplaces could contact these individuals to invite them back, but evidence suggests that direct-to-consumer notifications to uninsured people leads to only a small fraction of them enrolling.
In addition, December 15 is the last day to enroll for January 1 coverage in the federal Marketplace.
January: Open Enrollment Ends
The open enrollment period ends on January 15 in the federal Marketplace and most state Marketplaces. This will lock in consumers’ coverage decisions and plan choices. They will not be able to enroll in coverage without a special enrollment period. Some consumers will still enroll but will be more likely to disenroll later due to higher out-of-pocket costs. If Congress later restores the enhancements, Marketplaces could reach out to consumers who are not enrolled and ask them to come back, but again such marketing is typically not very effective. Marketplaces could also seek to increase the ongoing monthly PTC payments for remaining enrollees, as many of them did when the enhancements were first enacted in March of 2021. But this is an imperfect process, so some consumers would likely continue to pay the higher premiums throughout the year, leading to even more disenrollment.
Conclusion
While the substance of health policy is extremely important, sometimes timing matters, too. With 2026 rates already set and consumers starting to learn of premium increases, delays in extending the PTC enhancements beyond 2025 have already led to cost increases and coverage losses that cannot be reversed.
It will never be “too late” to extend the PTC enhancements—extending them will always save consumers money and help them get covered. But the next few weeks are crucial. Every passing day will lock in additional irreversible harms.
Jason Levitis, Sabrina Corlette, and Claire O’Brien “Damage From Inaction On ACA Tax Credits Has Begun And Will Grow With Further Delays” October 8, 2025, https://www.healthaffairs.org/content/forefront/damage-inaction-aca-tax-credits-has-begun-and-grow-further-delays. Copyright © 2025 Health Affairs by Project HOPE – The People-to-People Health Foundation, Inc.
