Enhanced Premium Tax Credit and 2026 Exchange Premiums: Frequently Asked Questions

Although the premium tax credit (PTC) has been available since 2014, there is increased congressional interest in the federal subsidy due to the impending expiration of a provision that enhanced the PTC. The Patient Protection and Affordable Care Act (ACA; P.L. 111-148, as amended) established the PTC to help eligible households lower their payments toward premiums for qualified health plans offered through health insurance exchanges. The American Rescue Plan Act of 2021 (ARPA; P.L. 117-2) expanded eligibility for and the amount of the PTC for tax years 2021 and 2022. The fiscal year (FY) 2022 budget reconciliation law (P.L. 117-169) commonly referred to as the Inflation Reduction Act extended the ARPA provision for three additional tax years, 2023 through 2025. In general, the enhanced PTC provision allowed more households to become eligible for the credit and provided larger subsidies to all eligible households, compared with ACA-only rules. As a result, federal expenditures for the PTC were larger under ARPA/FY2022 reconciliation rules than under ACA-only rules. If the enhanced subsidies expire, the Congressional Budget Office (CBO) estimates a decrease in enrollees with subsidized exchange coverage resulting in a reduction in federal expenditures. CBO also estimates that expiration of the enhanced PTC would contribute to a rise in the uninsured rate. If the enhanced subsidies are permanently extended, CBO and the staff of the Joint Committee on Taxation estimate an overall increase in exchange enrollment leading to an increase in the federal budget deficit. Exchange premium data for 2026 are public with the start of the 2026 open enrollment period on November 1, 2025. Premiums for selected households indicate an increase compared to 2025 premiums. In addition, the expiration of the enhanced PTC will result in larger premium contributions and smaller subsidy amounts for eligible households that enroll in 2026 exchange plans compared to 2025. The change in subsidy generosity may have implications for households seeking exchange coverage in 2026. Affordability may be a concern for lower-income households that will lose fully subsidized coverage and for some higher-income households that will no longer be eligible for the PTC.