Democrats seek ACA enhanced subsidy deal as retirees face premium hikes

Bill and Shelly Gall say they would be rich if they didn’t have medical bills.

Early retirees who have an insurance plan purchased through Affordable Care Act marketplace, More than $20,000 was spent on medical expenses and insurance premiums in 2023 and 2024, largely due to chronic health problems and emergency eye surgeries. Bill said if they were lucky the couple would get a slightly smaller amount this year.

But next year, the Galls, who live in Meridian, Idaho, are bracing for their costs to increase significantly.

Based on current figures in Idaho online insurance marketplaceBill, 61, and Shelly, 60, expect to pay almost $1,700 in monthly health insurance premiums in 2026 if the enhanced premium tax credits expire at the end of this year as planned. That amount, an almost 300% increase over their current $442 premium, would add $15,000 a year to a household’s medical expenses.

CNBC reviewed the Gall family’s household financial records, including tax returns and health and insurance documents.

The Galls are among about 22 million ACA marketplace enrollees (about 92% of all enrollees) who face the prospect of higher premiums in 2026, according to KFF, a nonpartisan health policy research group.

Democrats are pushing Republicans to extend increased subsidies that make health premiums cheaper for enrollees as part of a deal to end the federal government shutdown that began Oct. 1. Republicans have said they want to negotiate any extension of ACA subsidies other than legislation to reopen the government.

But middle- and high-income older adults who are too young to qualify for Medicare face the largest increases in premium payments in dollar terms. based on Based on the analysis made by KFF.

Lynne Cotter, KFF’s senior director of health policy research, said they were perhaps “the most vulnerable population” when it comes to ending subsidies.

ACA enrollees who choose to keep their insurance plans can pay up to 30% of their total annual household income on health premiums alone, Cotter said.

For comparison, the average household with employer-sponsored coverage spent about 2% of its annual income on premiums in 2024. analysis By KFF and Peterson Center for Healthcare. That same year, ACA premiums were capped at 8.5% of household income.

“People like us need insurance,” said Bill, a civil engineer who retires in 2022.

If the Gall family’s health insurance premiums increase and their medical expenses remain constant, that figure will likely account for more than a quarter of their annual income.

The couple said they will have to make tough financial and lifestyle decisions because of significantly higher health premiums: withdrawing more from retirement savings; Claiming Social Security earlier than planned; this would lead to a lower lifetime benefit; postponement of non-essential medical care; and we travel less.

Bill said, “If there is no subsidy, we will pay the difference. We will pay $1,700 per month.” “You do the math. It’s a lot.”

It was initially available to households with incomes between 100% and 400% of the federal poverty line. For a family of two, this works out to an annual income of $21,150 to $84,600 in 2025. federal rules.

Originally, ACA enrollees whose income exceeded even one dollar of the 400% income threshold were ineligible for premium tax credits; this was a point known as the “subsidy cliff”. In this case, they will pay the full unsubsidized cost of market insurance premiums.

In 2021, the American Rescue Plan Act, a pandemic relief bill, increased the value of premium tax credits and expanded the group of households eligible for those credits.

These “enhanced” subsidies were offered to households whose incomes exceeded 400% of the federal poverty line. A household’s financial liability for premiums was also limited to 8.5% of its income.

In 2022, the Inflation Reduction Act expanded the scope of increased subsidies and made them available through 2025.

Increased tax credits meant families like the Gall family qualified.

The couple had modified adjusted gross income of about $123,000 in 2023 and $136,000 in 2024, mostly from pensions and some from individual retirement account withdrawals, according to their tax returns. Modified adjusted gross income is a measure of income used to calculate eligibility for premium tax credits.

Enrollment in the ACA marketplace has more than doubled since the introduction of enhanced credit, from about 12 million people to 24 million people. based on To KFF.

Although the percentage of Americans with ACA marketplace health insurance is small, the share may be large enough. run into a close electionKFF reported in October.

According to the KFF report, most ACA marketplace enrollees (57%) live in congressional districts represented by Republicans. According to KFF, at least 10% of residents in all congressional districts in Florida, Georgia, Mississippi and South Carolina and nearly all counties in Texas and Utah have Marketplace plans.

In the KFF report, in the 10 most competitive regions in the last elections, margin of victory He noted there were fewer than 6,000 votes and that there were at least 27,000 registered people in each of those precincts.

Extending enhanced subsidies would cost $350 billion over 10 years. based on To the Congressional Budget Office. This means an average of 35 billion dollars a year.

If Congress allows the increased subsidies to expire, many households would still be eligible for the premium tax credit even though they would receive less aid.

The subsidy gap will also return, meaning families like the Gall family won’t qualify for any premium tax credits.

Without the increased subsidies, premiums for the average 60-year-old couple earning $85,000 per year (402% of the federal poverty line) would increase by about $1,900 per month, according to KFF. analysis. Annual premiums will increase by nearly $23,000 in 2026, according to KFF to create.

Approximately 51% of ACA marketplace enrollees with incomes exceeding the four-times-poverty threshold are ages 50-64, according to KFF.

Bill, who has worked in local and state government for more than 31 years in Nevada and Idaho, said he expects households to surpass the 400% threshold in 2026, earning about $127,000 in retirement income.

The KFF analysis also accounts for the overall year-over-year increase in health premiums; KFF expects an average increase of 18%.

KFF’s Cotter said insurers can often raise costs more for older adults than for younger ones because of the application of age ratings. Older people tend to have more health problems and use their insurance more frequently; He said insurers in all states except New York are allowed to charge them higher premiums.

But he said he worries about the damage it could cause if lawmakers wait too long. People in most states can do this start registering for 2026 health care coverage through the ACA marketplace on November 1.

If lawmakers agree to an extension well beyond that date, people may choose not to sign up, analysts say.

If tax credit improvements are extended before ACA open enrollment begins, people visiting the ACA Marketplace site will shop for coverage, the Center on Budget and Policy Priorities, a nonpartisan research and policy institute, said in a Sept. 22 report. You will see accurate premium estimates for 2026. If they see the higher premiums that will kick in if loans are not extended, many will decide the coverage is financially unattainable and it will be difficult for them to return to the site, the report said.

But the Galls are cautiously hopeful.

“I think we’ll get the subsidy,” Bill said. “If this does not happen, it will cost us a significant amount,” he said.