A subsidy that lapsed on schedule

On January 1, 2026, the enhanced premium tax credits that lowered the cost of Affordable Care Act marketplace coverage expired. They were not repealed by a vote. They were temporary from the start, and Congress let them run out.

The consequence is a sharp, across-the-board increase in what marketplace enrollees pay for health insurance — a cost shift large enough that the Kaiser Family Foundation projects average out-of-pocket premium payments will more than double (KFF). This brief explains how the subsidy worked, what the “cliff” is, who is affected, and where the legislative fight stands.

How the subsidy works

The ACA has always offered premium tax credits to people who buy coverage on the marketplace. The credit caps the share of income an enrollee pays toward a “benchmark” silver plan; the federal government covers the rest.

Two things changed in 2021. The American Rescue Plan, and then the Inflation Reduction Act, enhanced those credits in two ways:

• Larger credits at every income level. The enhanced credits lowered the required contribution across the sliding scale — for some lower-income enrollees, the share of income owed for a benchmark plan fell to roughly 0-2%.
• No income ceiling. Before 2021, the credit cut off entirely at 400% of the federal poverty level. The enhancement removed that hard cutoff and capped contributions at 8.5% of income for everyone above it.

These enhancements were always set to expire. The IRA extended them only through the end of 2025.

What the “cliff” is

“Cliff” describes two distinct effects.

The first is the return of the 400% FPL cutoff. With the enhancement gone, an enrollee earning even one dollar above 400% of poverty loses the entire credit — not a reduced credit, the whole thing. For an older couple buying coverage near that line, the swing is severe. KFF’s analysis finds a 60-year-old couple earning roughly $85,000 (just above 400% FPL) could see their annual premium payment rise by more than $22,000, pushing the cost of a benchmark plan toward a quarter of their income (KFF).

The second is the general increase for everyone still subsidized. Enrollees below 400% FPL keep a credit, but a smaller one. KFF projects that subsidized enrollees’ average annual premium payment rises about 114% — from roughly $888 in 2025 to about $1,904 in 2026 — an average increase of just over $1,000 per year (KFF).

Who is affected

The expiration reaches the entire ACA marketplace, but unevenly:

• Middle-income enrollees near and above 400% FPL absorb the largest dollar increases, because they go from a capped contribution to no assistance at all. Older enrollees are hit hardest, since premiums rise with age.
• Lower-income enrollees keep a credit but pay more; some who paid near-zero premiums now face a monthly bill.
• Self-employed workers, early retirees, and small-business owners — people without employer coverage who rely on the marketplace — are heavily represented in the affected group.

The enrollment effect is already visible. KFF reports marketplace sign-ups for 2026 fell by more than a million people to about 23.1 million, the sharpest single-year drop since the marketplaces launched (KFF), and projects that effectuated enrollment could fall further as enrollees see their first higher bills and drop coverage (CNBC).

Where the legislation stands

The enhanced credits can only be restored by Congress.

• In December 2025, the Senate voted down a three-year extension (Health Affairs).
• On January 8, 2026, the House passed a three-year extension, 230-196, with 17 Republicans joining Democrats against their leadership (CNBC).
• The Senate has not acted on the House-passed bill. Majority Leader John Thune said there was “no appetite” in the chamber for a clean extension (CBS News).
• A bipartisan Senate compromise was negotiated in parallel. The reported framework would extend the credits for two years but add an income eligibility cap (around 700% FPL), require a minimum premium so no plan is fully free, and route some assistance through health savings accounts. By February 2026, senators involved said those talks had stalled — reportedly over demands to attach abortion-funding restrictions and the absence of leadership support (NBC News).

As of late May 2026, the credits remain expired, the House bill remains untaken up in the Senate, and the bipartisan compromise has not been revived.

What to ask your representatives

• Will they support an extension of the enhanced premium tax credits — and if not a clean extension, what specific alternative will they vote for?
• Do they accept the projected 114% average increase in premium payments as the status quo, or do they have a plan to address it?
• For senators: will they bring the House-passed extension to a vote, and if a compromise is the only path, what is blocking it?
• How do they propose to keep coverage affordable for enrollees just above 400% of the poverty line, who now receive no assistance at all?