Small business owners, self-employed people, and early retirements are one of the 24 million Americans who could lose their tax credits, and perhaps their health insurance.
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Victoria Sylvester and her husband discussed divorce (just on paper – to protect their assets if her medical expenses lean her towards bankruptcy.
Their health insurance premiums are expected to jump from $0 to $1,500 a month, the premium tax credits they relied on later this year.
Over 24 million Americans will receive subsidies to reduce out-of-pocket health insurance costs obtained through the health insurance market, created by the 2010 law. Impending changes to subsidies amounts and restrictions can lie to the roots of the Congressional fight over funding to the government. Without bipartisan dealings, the government would be shut down.
For Sylvester, 55, of Traverse City, Michigan, enrolling in health insurance is not an option.
In 2022, Sylvester was diagnosed with stage 3 ovarian cancer, and while he is currently in remission, he is experiencing a high rate of recurrence. She should frequently diagnose and test it and catch it as soon as she comes back. And she is still undergoing treatment for some side effects from chemotherapy.
“I feel that no one should be in a position to choose whether or not they can keep themselves alive for stupid finances and insurance,” she said.
She’s already looking into their budgets and trying to find some extra money. She and her husband are both self-employed.
“I’m extremely stressed,” she said. “I break it down weekly, OK, where can I come up with $x each week? I don’t know where it’s coming from.”
With costs looming, she hopes to work long hours, cut groceries and lessen the frequency of visiting grandchildren and children.
“Anyway, we don’t spend very frivolously, so it’s hard to figure out how to get $1,200 to $1,500 a month,” she said. “Forget eating out.
Give and Take in DC Politics
Feeling a moment of potential leverage, Democrats hope to use the fundraising bill to reverse Medicaid cuts and extend Obamacare subsidies, which expire at the end of the year. Medicaid cuts were included in the GOP tax and expenditure bill signed into law in July.
Republican leaders were initially willing to argue for expanding subsidies to win Democrats’ support for the Senate vote to open the federal government. It’s important to attract Democrats as the budget bill requires 60 votes to pass the Senate.
Some are vulnerable and centristic Republicans, and others want to expand their expanded premium subsidies, but other GOP members have criticised the expanded credits as the benefits of the Covid era that were supposed to end.
On September 16, Republican House leaders advocated short-term funding measures to keep federal agencies open until November 21st. The bill did not include Democrats’ demands to extend grants or cancel Medicaid cuts.
Democrats accused Republicans of walking away from bipartisan negotiations. Republicans said addressing major healthcare changes should not be part of a “clean” spending bill that continues to fund governments at current levels. They opened the door to addressing it before the credit expired on December 31st, but have not committed.
The House narrowly passed the GOP funding bill on the party line, mainly by votes of 217-212 on September 19. However, the senator voted against the bill backed by the GOP by a 48-44 vote on the same day.
Senate Republicans are back in Washington, the day before current spending officials expire. And Senate leaders are expected to lift the GOP bill again, hoping Democrats will change their minds in the face of closures.
Trump canceled a planned meeting with Democratic leaders and called their demands “disgusting and ridiculous.”
House Republicans are not expected to return until after the closing deadline, and the choice of relying on the GOP to aid in Senate Democrats will not give them the option of extending credits or signaling the end of fundraising authorities.
During and after the Covid-19 pandemic, Congress approved the American Rescue Plan Act (ARPA) enhanced premium tax credits, extending them under the Inflation Reduction Act (IRA). They are set to expire at the end of 2025.
The enhanced tax credit increased the grants received by eligible people and expanded eligibility to include those who create federal poverty levels of four or more times. In 2025, the figures were $62,600 for individuals and $124,800 for a family of four.
The enhanced credits have more than doubled the number of people who have been buying from the market since 2020, and the majority of states voted for President Donald Trump in 2024, according to KFF.
The Congressional Budget Office estimates that an additional 4.2 million people will be uninsured in 2034 if the enhanced credits end. An expansion of the premium tax credit would cost around $350 billion over the next decade, according to a review by the Congressional Budget Office.
My monthly payments have been doubled
The premium tax credit cut Leicester Johnson’s monthly payments by half.
Johnson, 52, left Corporate America 16 years ago, opening a soul food restaurant in Jackson Ward, a historic black neighborhood in Richmond, Virginia, expanding his mother’s catering business to a physical location. Due to the low profit margins at the restaurant, he cannot afford to provide insurance to more than 30 employees.
He has not held his breath that Congress will recover credits before the opening registration begins in October.
He expects the monthly expenses of his family’s insurance will double, and he is still covering where the $700 a month extra comes from. He is thought to end extracurricular activities for his 8-year-old daughter.
“As an entrepreneur, you worry so much,” he said. Losing a tax credit is “an unnecessary worry for me and my family.”
Who will be affected by the tax credit change?
According to KFF, about 92% of the 24.3 million Americans using the market receive some amount. If Congress fails to act and credit expires at the end of 2025, out-of-pocket premiums will increase on average by more than 75%.
Low-income and older users, as well as those living in states that have not expanded Medicaid, are expected to see the most significant cost increases.
According to KFF, 48% of small business owners, self-employed people and those employed by small businesses account for 48% of those using the market.
“If this market is really expensive and isn’t very affordable for people, then it’s about reducing the formation of new businesses, and if people can’t start something new, will there be some ripple effect on the local economy?” asked Katherine Hempstead, senior policy director at the Robert Wood Johnson Foundation, a health-focused nonprofit.
Hempstead said early retirees, who make up the fastest group of Medicaid-free market users, ages 50 to 64, are not eligible for Medicaid.
Farmers also generally use the market, she said, as well as very low-income people living in states that did not choose to expand Medicaid access as provided under Obamacare.
Lelaine Bigelow, executive director of the Georgetown Centre on Poverty and Inequality, says most people who buy in the market will double the premium. She pointed to a KFF calculator that people can use to estimate how their costs change based on state, zip code, income and family size.
“Next year, I’m going to see a lot of people opting to not take out health insurance,” Bigelow said.
Louise Norris, health policy analyst at Medicareresources.org, said that even those who don’t receive the grant can be seen as a 20% increase in costs as healthier people choose not to pay for insurance. Others will see their subsidies shrink. People who earn more than 400% of federal poverty levels are not eligible for subsidies at all.
She urged people to pay much attention to mailing from the market and its insurance companies this year.
“This isn’t just a year where you just stick them in your drawers and forget about them. You’re really heading towards open registration, are your plans going up at premium, what’s your forecast grant for next year?” Norris said. “It could definitely be a lot of sticker shocks.”
Keep small business employees
Kyle Lafon, 47, a Middleton, Wisconsin entrepreneur, doesn’t know how fewer than eight employees will replace the latest $700 with grants that are getting off track and losing.
“They may need to look for other jobs,” he said. “I’m really worried about losing people.”
The market has levelled out the arenas for small businesses seeking to recruit quality employees, he said. The cost of providing health insurance to a small number of employees will be “astronomical,” he said. For years he has encouraged them to use the market like he does.
“A lot of people were able to find employment that they were passionate about or enjoy, rather than getting caught up in corporate jobs that are truly soulless or pointless to many people,” he said.
He hopes that the premium subsidies will be extended forever, but he does not expect Congress to do that. He urges employees to plan as if they were finished.
“In this example, hope cannot become a strategy,” Lafon said.
Sarah D. Wire wrote in USA Today about real people being influenced by the federal government. She can contact swirre@usatoday.com
