Health insurance premiums purchased via the federal marketplace may see a significant increase after 2025 if Congress does not take action. This increase is due to the possible expiration of the premium tax credit, which currently helps make health insurance more affordable for marketplace participants. The credit was temporarily enhanced during the Covid-19 pandemic and extended through 2025 by the Inflation Reduction Act.
If the premium tax credit enhancements expire after 2025, almost everyone enrolled in marketplace plans could face higher premiums. President Joe Biden proposed making the expansion permanent in his fiscal 2025 budget request, highlighting the benefits of the program, especially for communities of color. However, making the program permanent could result in a significant increase in the federal budget deficit, according to the Congressional Budget Office and Joint Committee on Taxation.
Without an extension from Congress, marketplace premiums are expected to increase for Americans across different income levels. The Center on Budget and Policy Priorities report found that a typical family of four making $60,000 could see monthly premiums soar from $100 to $326, while a family earning $125,000 could see premiums rise from $885 to $1,525. Overall, the expiration of the tax credit expansion is anticipated to impact nearly all marketplace participants.