22 million Americans hit by ACA health insurance cliff after vote fails

The Senate on Thursday rejected legislation to extend enhanced Affordable Care Act tax credits, all but ensuring that millions of Americans will face sharply higher health insurance costs at the start of the year.Lawmakers voted down both a Democratic proposal to extend the subsidies for three years and a Republican alternative that would have created new health savings accounts. The votes marked an abrupt end to months of Democratic efforts to prevent the COVID-era subsidies from expiring on Jan. 1.According to KFF.org, about 22 million of the roughly 24 million people enrolled in ACA marketplace plans currently receive a tax credit to help offset the cost of coverage.Those subsidies have played an outsized role in holding down premiums. KFF also estimates that health insurers’ premiums in the ACA marketplaces are rising an average of 26% for 2026. In states that operate their own marketplaces, the average benchmark, or second-lowest-cost silver plan used to calculate subsidies, is expected to rise about 17%. In states that rely on HealthCare.gov, benchmark premiums are projected to jump an average of 30%.Related: AARP raises red flag on Social Security, MedicareSome experts offered little optimism for people who have benefited from the enhanced subsidies.“They should hope and pray that Trump decides to lean into health care, like no other GOP president except maybe Nixon,” said John Desser, head of government affairs at HealthEquity. Desser suggested that could take the form of a one-year extension, followed by a broader overhaul, or both.Others urged consumers to organize and push back.“Join the efforts of many organizations and people who are not prepared to be quiet about the destruction of our health care coverage system,” said Anne Montgomery, a longtime policy analyst and health systems researcher. One such organization being the National Committee to Preserve Social Security and Medicare.“Stripping people of their ability to easily access comprehensive, high-quality health care insurance and instead trying to trick them into thinking a $1,000 voucher will actually pay for anything is a gesture of huge contempt and should accordingly be rejected,” Montgomery said.In the meantime, consumers should prepare for higher costs, said Jae Oh, author of Maximize Your Medicare, noting in an interview that people should assume the enhanced ACA premium tax credits will expire and plan accordingly by reviewing income projections and coverage options before open enrollment deadlines.What follows is an edited-for-clarity-and-brevity transcript of that conversation. Jae Oh, author of Maximize Your Medicare, says consumers should plan for higher costs and assume enhanced ACA tax credits will expire when reviewing coverage options during open enrollment.Photo by SeizaVisuals on Getty Images The Senate vote and what it means for ACA subsidiesRobert Powell: Legislation to extend the enhanced advance premium tax credits into 2026 and beyond failed in the Senate by a vote of 51 to 48. Joining us to talk about what happens next is Jae Oh, author of Maximize Your Medicaid. Jae, welcome.Jae Oh: Thanks for having me, Bob.Robert Powell: Millions of people are wondering what to do now that the enhanced Affordable Care Act premium tax credits appear set to expire at year-end.More Health Care:Dave Ramsey sounds nationwide Medicare alarmMedicare drug decision will have major impact on older womenWhat Medicare Part B price hike means for your 2026 Social SecurityFDA restricts children’s health products over safety concernsWhat Doom Scrolling Does to Your Mental HealthJae Oh: That’s right. As things stand, the enhanced advance premium tax credit is scheduled to expire. There have been last-ditch efforts, but how that turns out remains uncertain. The guidance I’ve shared consistently is this: People should assume the credits will not be extended and act accordingly.That means carefully reviewing your plan and estimating your taxable income for next year. If there are ways to manage income, people should explore them. The issue isn’t just higher taxes. It’s also higher health insurance premiums. That combination can be painful.For most of the country, the deadline is approaching fast. December 15 is the last day to enroll and have coverage effective January 1. You don’t have to pay the premium until the end of the year for that January coverage to take effect.Managing premium shock and choosing the right planRobert Powell: Some people are learning their premiums could double. What advice do you have for finding a plan that fits their budget? Should they consider changing metal tiers?Jae Oh: It depends on the individual. In my practice, I always start with a person’s health situation. That provides insight into planning horizons and the uncertainty around future health care costs.If someone is in excellent health, a lower-tier plan may make sense to reduce premiums, recognizing that the likelihood of immediate, high-cost care is relatively low. Under the Affordable Care Act, people can switch to a more robust plan in a future year if their health status changes. Many of our clients reassess this annually.Networks, deductibles and hidden costsRobert Powell: Beyond premiums and tiers, people also need to think about networks, deductibles and copays. Is that right?Jae Oh: Absolutely. Network matters under all insurance, but it’s especially important in the ACA individual market. In large cities, there can be dozens of plans. Even within the same insurance carrier, networks may have similar names but different providers.There’s no shortcut here. People have to check whether their doctors, specialists and hospitals are in-network. The cost difference if you go out of network under the ACA can be enormous.Alternatives to ACA coverage and their risksRobert Powell: For people who still find premiums too high, are there alternatives such as faith-based plans?Jae Oh: Those options exist, including faith-based health-sharing plans and short-term medical coverage. They can work in limited situations. But consumer protections are far thinner than under the Affordable Care Act.ACA plans must meet minimum standards. Those guardrails don’t exist with health-sharing or short-term plans. As a result, consumers need to be very cautious.The risk of going without insuranceRobert Powell: Going without health insurance is probably the wrong choice.Jae Oh: It’s a tough situation. In theory, people talk about consumer choice. In practice, if something unpredictable happens, the risk of financial ruin can materialize immediately.A small minority of households can self-insure, but those households typically understand risk well enough to avoid that approach. For many others, especially gig workers or part-time workers, the Affordable Care Act still works.I saw a case this morning involving someone under 30 with part-time work who doesn’t qualify for Medicaid. Her ACA coverage still costs zero, and she has protection from catastrophic expenses because every ACA plan includes an out-of-pocket maximum.The subsidy cliff and who is most affectedRobert Powell: It’s also important to note that not everyone loses subsidies. The enhanced credits were part of COVID-era legislation.Jae Oh: Correct. The underlying subsidies remain, but the so-called subsidy cliff returns. As income rises above certain thresholds, subsidies decline, sometimes sharply.Those at or near the federal poverty level still benefit significantly. The group facing the biggest impact includes married early retirees who are pre-Medicare. For them, costs can rise by five figures annually if no planning is done. That increase can persist every year until Medicare eligibility.Planning ahead for rule changesRobert Powell: Before the ACA, pre-Medicare individuals often had no good options. Are we heading back in that direction?Jae Oh: To some extent, but time has passed. That time has allowed people to plan. Knowing that rules can change is part of responsible financial and health care planning.Final enrollment remindersRobert Powell: Anything else that bears repeating?Jae Oh: One key point is timing. If there is a last-minute agreement, coverage starting January 1 still requires enrollment by December 15. Under current rules, people can change plans through January 15 for coverage beginning February 1.That flexibility is helpful, but it’s not a reason to skip January coverage. Doing so invites unnecessary risk.Key takeawaysThe enhanced ACA premium tax credits are set to expire, and consumers should plan as if they will not be extended.Managing taxable income can help reduce both taxes and health insurance premiums.Network coverage under ACA plans is critical and requires careful verification.Alternatives to ACA coverage offer fewer consumer protections and carry higher risk.Early retirees who are pre-Medicare face the largest potential premium increases.