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Premium Tax Credit Improvements Must Be Extended to Prevent Steep Rise in Health Care Costs
November 14, 2024 @ 12:00 pm
eople in this group would face dramatic premium increases:
- A typical 60-year-old couple making $82,000 (401 percent of the poverty level) would see monthly marketplace premiums more than triple, from $581 to $2,111 — an annual increase of roughly $18,400.
- A typical family of four making $126,000 (403 percent of the poverty level) would see their monthly marketplace premium increase from $893 to $1,589 — an annual increase of about $8,400.
Instances of dramatic premium spikes are most likely to occur:
- in states with high underlying marketplace premiums, such as West Virginia and Wyoming;
- for older enrollees, who pay higher premiums under ACA rules than younger people; and
- for people with incomes above 400 percent of the poverty level, who would lose subsidies entirely if the enhancements expired.
For example, a 60-year-old West Virginia couple making $82,000 would see annual premiums for a benchmark silver plan increase more than sixfold, from $6,970 to over $46,000. (See Figure 3 and Appendix Table 2).
Premiums Will Rise Across Congressional Districts if Improvements Expire
Expiration of the improved tax credits would mean much higher premiums for marketplace enrollees in every congressional district, according to estimates from the 32 states that used the federal enrollment platform in 2024.[17] The average annual premium increase would range from $360 to $1,860, with an increase of $684 in the median district. In percentage terms, premium increases would range from 41 to 218 percent across districts, with a median increase of 91 percent.
For example, in Texas’ 19th District, roughly 73,000 people signed up for marketplace coverage with PTCs. If the PTC enhancements expire, premiums would increase for these enrollees by 165 percent on average, or $456 annually.
Figure 4: Interactive
Marketplace Enrollees Across the Country Will Face Steep Premium Increases if Enhancements Expire
Average premium increase due to tax credit enhancement expirations among states that operate federally facilitated marketplaces, by congressional district, 118th Congress
40%
65%
75%
85%
90%
100%
115%
125%
220%Zoom InZoom OutReset
Note: Estimates are for enrollees receiving advanced premium tax credits. Estimates are only available for states that operate federally facilitated marketplaces. Other states, shaded in gray, would also experience premium increases, but estimates are unavailable.
Source: Centers for Medicare and Medicaid Services
Center on Budget and Policy Priorities | CBPP.org
Appendix
Note: FPL = federal poverty level. The FPL for these calculations is based on 2024 poverty guidelines, which are used to determine premium tax credits for 2025 marketplace coverage. Examples are illustrative and based on 2025 national average benchmark (second-lowest-cost silver plan) premiums with age adjustments. The example family includes two 40-year-old parents, a 10-year-old, and a 5-year-old. Estimates are applicable in all states except for those with different poverty level standards than the national standard and/or those that subsidize marketplace premiums beyond the federal subsidy. See Appendix Table 2 for state-specific estimates.
Source: CBPP calculations and Congressional Budget Office estimates of applicable percentages without enhancements in 2025.
Note: FPL = federal poverty level. The FPL for these calculations is based on 2024 poverty guidelines, which are used to determine premium tax credits for 2025 marketplace coverage. Examples are illustrative and based on 2025 state average benchmark (second-lowest-cost silver plan) premiums with age adjustments. The example family includes two 40-year-old parents, a 10-year-old, and a 5-year-old. Alaska and Hawai’i have state poverty levels that differ from the federal poverty level; estimates for Alaska and Hawai’i assume that the state poverty levels match the federal poverty levels depicted, which means that income levels in the examples differ from those depicted. Depending on the scenario, for a few states, premium payments under the enhancements do not exceed the income cap of 8.5 percent. In those cases, premium payments are equal with or without enhancements. Estimates do not account for any state subsidized marketplace premiums beyond the federal subsidy because such state policies may be dependent on the federal tax credit enhancements.
Source: CBPP calculations and Congressional Budget Office estimates of applicable percentages without enhancements in 2025.
