The premium tax subsidies that allow lower-income individuals to get Affordable Care Act (ACA) health insurance free or at reduced cost are scheduled to expire at the end of 2025. If the current subsidies do expire, millions of low-income individuals will face significant health insurance cost increases. Extension of the subsidies will be a key issue in the 2025 tax bill and/or during the November-December lame-duck session of the 118th Congress.
Currently, the decades-old battle to repeal the ACA seems to have receded. GOP opposition to the law has lessened significantly. However, efforts to chip away at it have been more successful. For example, in 2017 Congress zeroed out the tax penalty imposed on individuals for failure to carry health insurance. The Congressional Budget Office (CBO) estimates that if Congress allows reversion to the original tax subsidies included in the ACA when it was enacted in 2010, some 3.4 million individuals will lose health insurance coverage, and many millions more will face steep cost increases.
Generally, Republican lawmakers oppose extending the ACA subsidies, saying they are expensive—CBO says the cost of extending the subsidies for ten years would be $335 billion—and poorly designed (they are available, on a sliding scale basis but to at least some degree, to individuals earning as much as $100,000/year). Generally, Democrats support extending the subsidies.
There is legislation, sponsored by Democrats, currently pending in both the House and Senate that would make permanent the ACA premium tax credits. The legislation was introduced in the Senate on September 24 by Sens. Jeanne Shaheen (D-NH) and Tammy Baldwin (D-WI), with 43 Democratic (and no Republican) cosponsors. In the House, the bill (HR 9774) was introduced by Rep. Lauren Underwood (D-IL), with 27 Democratic cosponsors.
Prospects: ACA premium tax subsidies are hotly partisan and very controversial. They will be on Congress’ radar during lame duck as well as in next year’s tax bill. How the issue will be resolved is highly dependent on the November election results.
NAIFA Staff Contact: Jayne Fitzgerald – Director – Government Relations, at jfitzgerald@naifa.org.
