Half of ACA tax credit users are small business owners and employees. Your credit is about to expire
As many as 5 million Americans could lose health care by 2026
Democrats are hoping voters will punish Republicans for letting the health care tax credit expire in the midterm elections.
Krisa Ostenzo expects to withdraw money from her $401,000 to pay for her $1,500-a-month health insurance plan when the Affordable Care Act’s enhanced tax credits expire next year.
She and her husband operated an optometry office in rural Wisconsin for 35 years until his death a few months ago. With tax credits, they also paid $500 in premiums. Before the tax credit was created in 2021 to help more people buy insurance during the pandemic, it cost nearly $2,000 a month.
Ostenso, who is now working to downsize and sell the business without him, received a letter stating that without the enhanced credit, a plan that covered just her would cost $1,500 a month, with a $7,200 deductible.
“It’s insane,” she told USA TODAY. “Nothing else has increased costs like this.”
Approximately 22 million Americans will receive enhanced subsidies, lowering the cost of their ACA premiums. The subsidies will expire at the end of the year unless Congress takes action to reinstate them. If lawmakers don’t comply, premiums for the average recipient will more than double by 2026, according to KFF, a nonpartisan health policy research group.
According to KFF, about half of the recipients are small business owners and employees like Mr. Ostenso, or are self-employed.
The public offering closes in mid-January, but consumers have until Dec. 15 to make a decision to start insurance in the new year, leaving little time for Congress to act.
The Senate is scheduled to vote Dec. 11 on a Democratic proposal to extend expiring tax credits for three years. It would need Republican support to reach the 60-vote threshold to avoid a filibuster, which is expected to fail.
Republicans also plan to vote on their own health care plan that does not extend any of the tax credit enhancements. Instead, it will deposit $1,000 to $1,500 into the health savings accounts of eligible consumers who purchase plans through the Marketplace.
The vote for the Democratic plan was due in part to the expiration of tax credits that Republicans promised to a handful of Democrats in November in exchange for aid to end the longest government shutdown in history.
The big picture of Obamacare
The Health Insurance Marketplace was created as part of the Affordable Care Act of 2010, often referred to as Obamacare, to allow people without access to Medicaid or employee-sponsored insurance to choose from a variety of high-quality health plans. The marketplace also offered financial assistance, such as tax credits and cost-sharing relief, based on users’ income.
The idea: Just as employer-based plans involve so many people that they can negotiate prices, more people participating lowers overall costs through market competition.
Democrats have long promoted the idea that the Affordable Care Act would give people more freedom to start businesses and become entrepreneurs without worrying about losing their health insurance. However, marketplace plans were less affordable for middle-income families who did not qualify for the initial tax credits.
Then-President Joe Biden signed a tax credit expansion in 2021 that resulted in record enrollment and historically low uninsured rates, according to KFF.
Katherine Hempstead, senior policy director at the health-focused nonprofit Robert Wood Johnson Foundation, said “that would be a really big deal” if the credit enhancement ends. “The importance of marketplaces for small businesses and the self-employed has really grown in recent years.”
In total, nearly 1 in 5 of the nation’s small business owners and self-employed people between the ages of 21 and 64 relied on the Affordable Care Act Marketplace for insurance coverage in 2022, according to the latest data available from the Treasury Department.
Hempstead expects there will be a ripple effect throughout the economy as people close their businesses or choose not to open one because health care costs are too high.
“I don’t think people are talking enough about the impact this is having on mainstream Main Street and how this is impacting job creation and other important, ripple benefits to the economic well-being of the community,” she says.
Andrew Volk, 42, of Portland, Maine, said he was comfortable taking the risk to open his own cocktail bar 12 years ago because of his access to affordable health insurance through the Marketplace. That safety benefit came a year later when her daughter had a complicated birth.
“My business wouldn’t exist without the ACA,” he said. It’s a common refrain he hears from other entrepreneurs, and he worries that without stronger tax credits, other entrepreneurs won’t be able to follow their passions.
“This is going to be a drag on the economy for years to come,” Bork said.
Republicans say tax credits are temporary
Congress originally created enhanced tax credits in 2021 to help Americans afford health insurance during the COVID-19 pandemic, and people rushed to take advantage of them.
The number of people buying insurance through the Marketplace has more than doubled since 2020. According to KFF, the majority of users live in states that voted for Trump in 2024, including Florida, Georgia and Texas.
According to KFF, about 92% of the 24.3 million Americans who use the marketplace receive some kind of subsidy. If Congress does not act and the credit expires at the end of 2025, out-of-pocket premiums would rise by more than 75% on average.
The enhanced tax credits increased the subsidies those eligible received and expanded eligibility to include those with incomes more than four times the federal poverty level. In 2025, that amount will be $62,600 for an individual and $124,800 for a family of four.
The Congressional Budget Office estimates that an additional 4.2 million people will be uninsured by 2034 if the expanded credit ends. Expanding the insurance premium tax credit would cost nearly $350 billion over the next 10 years, according to a study by the Congressional Budget Office.
According to KFF, up to 22 million Americans with ACA plans could see their monthly health insurance premiums jump 114% without the enhanced tax credits.
Republicans argue that the government should not subsidize health insurance for millions of Americans and that expanded tax credits are not permanent. Democrats are poised to use the midterm elections to slam Republicans for overseeing skyrocketing health insurance costs for poor and middle-class Americans.
return to work at work
Steve Gomez, 44, of Gilbert, Arizona, ran his own project management business for many years, and his wife had a job with employee-sponsored benefits.
“The deal was that I would make the money and she would benefit,” he told USA TODAY.
This was especially beneficial when my son Anthony required a heart transplant at six weeks old. Between the long hospital stay and the surgery, it would have cost millions of dollars without insurance.
Since then, his wife has also joined him and started working for herself. This allows us to be flexible with our children’s schedules and accommodate the medical needs of Anthony, who is now 10 years old. But whether it makes sense for her to return to a more rigorous company-based job because of the benefits is “in the back of our minds”.
The $2,900 gold plan offered next year by Blue Cross Blue Shield of Arizona will no longer allow patients to have medical savings accounts and will take all of Anthony’s doctors out of network, including the only pediatric cardiologist in the Southwest, he said.
This means the family will have to incur huge medical costs, including an annual catheterization procedure to monitor Anthony’s heart function scheduled for January 7th.
Ostenso, 62, who lives in Wisconsin, is considering looking for a job just for insurance benefits until she becomes eligible for Medicare at age 65, but that idea doesn’t sit well with her.
“I’m not really crazy about the idea of signing up to work 40 hours a week, even though I’ve been self-employed all my life,” she said.
