Government shutdown: What happens if the premium tax credits on Obamacare expire?

By Katherine Hempstead
At the center of the current federal government shutdown is a dispute about the pending expiration of the enhanced Premium Tax Credits on the Affordable Care Act (Obamacare) individual market.
These tax credits make health insurance coverage more affordable for millions of people who use the ACA marketplace.
Yet these credits will expire at the end of 2025, unless Congress acts.
This means that the cost of health insurance on the ACA marketplace will increase sharply for enrollees in 2026, and it is predicted that millions will drop their coverage. The Congressional Budget Office estimates that nearly 4 million people will become uninsured over the next 10 years if the enhanced credits are allowed to expire. The CBO also estimates it will cost $350 billion to extend the credits over the next 10 years.
While Congress considers what action to take, the clock is ticking. Open enrollment will begin on Nov. 1, and if the credits expire, consumers will face premiums that are on average 100% higher than what they are currently paying.
What is the ACA marketplace?
The ACA marketplace is the individual health insurance market, i.e. the market for people who don’t get an offer of coverage from an employer and who are not eligible for Medicaid or Medicare. The marketplace was created as part of the Affordable Care Act. In New Jersey, the marketplace is called GetCoveredNJ. There are more than 500,000 New Jerseyans enrolled in plans purchased through the marketplace. Marketplace enrollees include small business owners and their employees, entrepreneurs, freelancers, gig workers, artists, musicians, early retirees, caregivers, and many others who do not have an alternative source of health insurance.
What is the role of premium tax credits in the ACA marketplace?
The ACA marketplace provides comprehensive coverage and does not exclude people with pre-existing conditions. To make coverage affordable, the ACA created premium tax credits (PTCs) based on income. But for many would-be enrollees, especially those with low incomes, these credits were not big enough to make coverage affordable, and people earning more than 400% of the Federal Poverty Level (about $62,000 per year) did not receive any tax credit. So many people did not enroll in ACA plans because they did not find them affordable.
What are the enhanced Premium Tax Credits (ePTCs)?
In 2021, as part the American Rescue Plan Act, Congress increased the PTCs. The changes made more people eligible for tax credits, and they also made the tax credits larger. The percentage of income that must be contributed toward premiums was reduced and is now capped at a maximum of 8 1/2%. Those with incomes over 400% the poverty level can now get a tax credit, and enrollees with incomes below 150% of the level (about $40,000 for a family of three) generally can choose a plan with a $0 premium. Many more people enrolled in coverage, and the size of the marketplace doubled, growing from 12 million in 2021 to 24.3 million in 2025. In New Jersey, the marketplace grew from about 269,000 enrollees in 2021 to 513,000 in 2025.
What will happen if the ePTCs expire?
If the enhanced credits expire, consumers will see very large increases in their monthly health insurance premiums in 2026. The average consumer will see an increase of approximately 100%. Enrollees with lower incomes may see a change from a $0 premium to a premium of $50 or $75 per month. Enrollees with incomes over 400% of the federal poverty level will no longer have any tax credit, and their costs will increase very significantly. Many people will drop their coverage and become uninsured. Healthier people will be more likely to drop their coverage, so the risk pool in the market will get worse, leading insurers to raise their premiums, which will increase costs further for those remaining. Some insurers could exit the market if they think it has become too risky.
Who will be most affected by the expiration?
All enrollees will be impacted, but those with the lowest and highest incomes will see the biggest changes. Older enrollees will be impacted more because they pay higher premiums. Aside from the terrible health and financial consequences for individuals that lose coverage, there are broader economic impacts. Small-business owners may not be able to keep their businesses open if they and their employees can’t get affordable coverage. Doctors and hospitals will be impacted because fewer people will be able to pay for care, and this can affect cost and access for everyone.
Will there be any PTCs in the individual market if the enhanced credits expire?
Yes, the original ACA premium tax credits will remain available, but they will be less generous and fewer people will qualify.
Is there any chance the enhanced credits will be extended?
Yes, there is ongoing discussion in Congress about extending the enhanced premium tax credits, but the timeline is getting extremely short. Some members of Congress have suggested that they can take action on the PTCs in December, but if the enhanced credits are extended after open enrollment begins, this will be very disruptive for insurers and consumers. In particular, many consumers will have already looked at prices and been discouraged, and many will not come back.
How can I stay informed?
This is a hard time for consumers, since there is so much uncertainty. The best source of information about premiums for 2026 is Get Covered New Jersey.
Calling your elected representative in the U.S. House Of Representatives or U.S. Senate is the most effective way to influence policy. To find your representative and senator to voice your position, go to the House website and the Senate website.