Vulnerable, Working Class Americans will be Hardest Hit if Congress Lets Premium Tax Credits Expire

Millions of people benefit from premium tax credits that help them buy and afford health coverage on healthcare.gov or on state-based marketplaces. In light of rising health care costs and the huge impact they have on American families, Congress made those tax credits more generous ("enhanced") beginning in 2021. But those enhancements will expire in December unless Congress acts NOW to protect them - and people with low and modest incomes, including those who just barely earn too much to qualify for Medicaid, are particularly likely to lose coverage.

The expiring tax credits impact those who buy coverage as individuals or families - people who do not have affordable offers of job-based coverage and don't qualify for Medicare or Medicaid.

They include workers without job-based coverage, up and down the income scale, including:

• Fast food, restaurant, and retail workers.
• Gig & App workers: such as ride share, taxi, and food delivery drivers and people hired for household tasks.
• Childcare workers, health care aides.
• Seasonal workers: farmworkers and fishermen, artists and the entertainment industry, tourism, and more.
• Small business and solo practitioners: beauticians and barbers, small shopkeepers, crafts people.
• Independent contractors and freelancers: real estate agents, consultants, servicepeople, and tradespeople like carpenters and electricians - literally Joe the Plumber.
• Young low-income workers in their first jobs that don't provide coverage yet.

Federal employment data shows that about 25 percent of people in service-providing industries and almost half of people in the lowest wage quadrants lack access to health insurance on the job. Many therefore turn to healthcare.gov or the state-based marketplaces for their insurance: small business owners and self-employed workers make up over one-fourth of marketplace enrollees, and the overwhelming majority of those (82%) get premium tax credits.

Even people who are currently covered on-the-job or through a public program have cause for alarm - many of them may need to buy individual coverage in the future, especially in a life transition: between jobs, graduating from school, after a divorce, or retiring early.

The enhanced tax credits provide crucial help for older people of all incomes, in addition to low- and modest-income people of all ages:

• OLDER ADULTS FACE HIGH DOLLAR SPIKES: The enhanced tax credits remove the cap on assistance to those over 400% of the federal poverty line ($50K for an individual) so they don't have to pay more than 8.5% of their total income on premiums. This really matters for people in their 50s or 60s who typically must pay three times more than younger people for coverage. If these tax credits go away, older consumers would get hit with eye-popping increases of not just hundreds but thousands of dollars.
  • Take for example a 60-year-old in Maine who would go from paying $450/month to $1400/a month - over $10,000 more each year if the enhanced credits end. For older couples, average increases will be over $26,000 - and even more in some states.

• LOW-INCOME WORKERS ARE MOST LIKELY TO LOSE COVERAGE ALTOGETHER: The tax credits improve coverage affordability for people with incomes under 400% of the federal poverty level. For people on the lower end of that scale, a little help goes a very long way - the majority of people who became newly covered when tax credits were increased are those living near poverty. Three-quarters of the people with premium tax credits have incomes below 300% of poverty, about $47,000 for one person. In fact, enhanced premium tax credits nearly doubled marketplace enrollment among people with incomes below 250% of poverty - from 8.2 million in 2021 to 15.9 million in 2024.
  • The lowest income enrollees have zero-dollar premiums; those with income at twice the poverty line (about $31,000 for an individual) now pay $600 per year in premiums - but that will more than double next year. In states that have not yet expanded Medicaid, enhanced premium tax credits provide needed $0 coverage to people just above the poverty line. If enhancements expire, premiums for people who are just barely making will skyrocket and cause many to lose coverage. In fact, Urban Institute estimates that lower income groups are the most likely to fall off coverage altogether.
  • The table below shows how much more single individuals and couples would pay for a typical plan (silver level coverage) if these credits expire. For instance, someone at 150% of poverty, earning $23,475 per year, who now owes no premium will suddenly face premiums of $493 per year - and the paperwork burden together with the added expense will likely shut people in these circumstances out of coverage. Premiums will double for someone earning $39,125 per year (250% of poverty) to $3,302 per year.

*Specific income levels correspond to a percentage of the Federal Poverty Level.

Congress must act now to make the enhanced tax credits permanent and prevent skyrocketing costs for millions. Please join Families USA and other national and state partners in urging Congress to take action.