The Federal marketplace has been a source of affordable health insurance for many individuals through the premium tax credit. However, without action from Congress, premiums could increase significantly after 2025. Gideon Lukens, from the Center on Budget and Policy Priorities, warns that if the benefits of the credit expire after 2025, virtually everyone will face higher premiums. This could have a major impact on Americans across all income levels, with health insurers expected to release higher rates by mid-2025.
Implications of the Expired Benefits
For instance, a typical family earning $60,000 annually could see their monthly premiums spike from $100 to $326, resulting in an additional cost of around $2,700 per year. Similarly, a family earning $125,000 might see their monthly premiums increase from $885 to $1,525, amounting to an extra $7,700 annually. The potential for such steep premium increases highlights the urgent need for Congressional action to prevent this financial burden on American families.
President Joe Biden has proposed making the premium tax credit expansion permanent, as reported in his fiscal year 2025 budget request. This proposal aims to ensure that the benefits of the credit continue beyond 2025, providing stability and affordability for marketplace participants. However, it is crucial to note that making the program permanent could lead to a federal budget deficit increase of $335 billion from 2025 to 2034, according to the Congressional Budget Office and Joint Committee on Taxation.
The expiration of the premium tax credit expansion is expected to affect all enrollees, regardless of their eligibility for the tax break. Even those who are not eligible have benefited from reduced costs due to an improved nongroup market risk pool. Prior to 2021, the credit was restricted to households with an income between 100% to 400% of the federal poverty level. However, the American Rescue Plan Act removed these limitations and capped premiums at 8.5% of income, making health insurance more accessible to a wider range of individuals.
Call to Action
It is clear that the expiration of the premium tax credit expansion will have broad-reaching implications for Americans seeking affordable health insurance coverage. Without Congressional intervention, marketplace premiums are expected to rise significantly, creating a financial strain for families across the country. The time to act is now to ensure that the benefits of the credit remain in place beyond 2025, providing stability and support for marketplace participants. As Congress considers the future of health insurance affordability, the well-being of millions of Americans hangs in the balance.