Millions of Americans rely on ACA Marketplace subsidies to keep health insurance affordable. However, these protections are at risk of expiring after 2025, which could lead to families facing skyrocketing premiums, reduced access to care, and increased financial strain.

BuzzRx spoke with Senior Pharmacy Director, Dr. HaVy Ngo-Hamilton, PharmD, to better understand, from both a clinical and patient-care perspective, how these subsidies work and what may happen if they expire after 2025.

What are ACA Subsidies?

“ACA subsidies, also known as premium tax credits (PTCs), are a form of financial assistance to help make health insurance more affordable under the Affordable Care Act (ACA),” explains Dr. Ngo-Hamilton.

Enacted in 2010, these subsidies lower monthly premiums for people purchasing Marketplace coverage, helping 20 million Americans afford health insurance.

How Do ACA Subsidies Work?

ACA subsidies are federally funded, and eligible individuals pay considerably lower premiums based on their household income relative to the federal poverty level (FPL). The government pays the rest of the premium directly to your insurer.

“For example,” Dr. Ngo-Hamilton says, “if a Marketplace plan costs $700 per month in premiums, and you qualify for $500 in premium tax credits per month, you only have to pay $200 for your insurance premium per month. That $500 is paid by the federal government to your insurer.”

According to the 2024 Open Enrollment Report by the Centers for Medicare & Medicaid Services (CMS), 92% of enrollees received the Advance Premium Tax Credit (APTC), which reduced their average monthly premium to about $111.

The Premium Tax Credit (PTC) is the total subsidy an individual qualifies for based on their actual household income. The APTC is the same credit applied in advance each month by the U.S. Treasury to insurers (health insurance companies) to lower enrollees' premiums.

According to Dr. Ngo-Hamilton, these subsidies make a massive difference in whether patients can afford both their insurance and their medications. For many households, losing them would mean having to choose which prescriptions they can realistically keep filling.

Who Qualifies for ACA Subsidies?

Subsidies target individuals and families earning 100–400% of the FPL who lack affordable employer-sponsored coverage and don’t qualify for public programs like Medicaid or Medicare.

“Assistance is provided on a sliding scale,” Dr. Ngo-Hamilton explains. “Lower-income households pay little or nothing, while higher-earning households contribute more.”

The table below, published by the Internal Revenue Service (IRS), shows the required contribution percentage for coverage in 2025.

Household Income (as % of FPL)	Initial Percentage (for income at the lower range)	Final Percentage (for income at the higher range)
Less than 150%	0%	0%
150% to less than 200%	0%	2%
200% to less than 250%	2%	4%
250% to less than 300%	4%	6%
300% to less than 400%	6%	8.50%
400% and higher	8.5%	8.50%

Source: IRS

Why Are the Subsidies Ending?

The ACA subsidies are set to expire in 2026 due to the sunset clauses for certain funding mechanisms outlined in the original Affordable Care Act legislation. Dr. Ngo-Hamilton explains, “Without legislative action to extend or replace these subsidies, millions of Americans could lose access to affordable health insurance, potentially destabilizing the healthcare market and increasing overall healthcare costs in the long run.”

What Does The Expiration of Subsidies Mean For Individuals and Families?

Enhanced ACA subsidies, expanded under the American Rescue Plan Act (ARPA) and extended by the Inflation Reduction Act (IRA), are set to expire December 31, 2025. Without congressional action, millions could face sharply higher premiums in 2026, making health insurance unaffordable for many.

Once the subsidies end, the average premium payment for subsidized enrollees may increase from approximately $888 to $1,904.

According to a Kaiser Family Foundation analysis, Marketplace premiums are projected to increase by 114%, or approximately $1,016 annually, for the average subsidized enrollee if Congress does not renew the enhanced subsidies.

“When insurance becomes unaffordable, patients often stop coming in for routine visits or stop picking up essential medications,” says Dr. Ngo-Hamilton. “That can lead to new or worsening health problems as time goes on.”

Who Will Be Affected By the Subsidies Expiring?

The Urban Institute's modeling projects that approximately 4.8 million people would become uninsured in 2026 if the premium tax credits are allowed to expire.

Dr. Ngo-Hamilton identified the following groups as the most likely to be impacted by the subsidies ending:

Lower-income Marketplace enrollees: Those who fall within the 100% to 400% federal poverty level range, especially those between 100–150% FPL whose premiums dropped to near zero under ARPA and IRA, might struggle to maintain coverage, leading to a potential increase in uninsured rates and financial strain.
Middle-income households: These enrollees benefited from the removal of the 400% FPL “subsidy cliff,” a rule that once cut off all subsidy eligibility for anyone earning just above 400% of the poverty level. Under ARPA/IRA, premiums were capped at 8.5% of income regardless of earnings, but if these subsidy enhancements expire in 2026, those slightly above the threshold could again lose subsidies and face steep premium hikes.
Residents of non-expansion states: In states that expanded Medicaid, adults may qualify if their household income is at or below 138% of the FPL. However, in non-expansion states, adults earning below 100% of the FPL may fall into a “coverage gap,” where they are earning too much for Medicaid but not enough for ACA subsidies, leaving them without affordable health insurance options.
Medicaid transitioners: About 27 million people lost coverage during post-pandemic Medicaid redeterminations. While Medicaid recipients are not paying Marketplace premiums now, the subsidies are the key factors determining whether they can afford to stay insured after losing Medicaid.
Individuals with chronic health conditions: The expiration of the ACA subsidy will significantly impact individuals with chronic health conditions that require ongoing treatments, monitoring, and medications. “Patients managing chronic conditions like diabetes, asthma, or cardiovascular disease rely on ongoing care,” Dr. Ngo-Hamilton notes. “Interrupting treatment, even briefly, can cause long-term harm.”

What Happens if ACA Premium Subsidies Expire in 2026?

1. More Americans Become Uninsured

The Marketplace premiums could spike across the board, with insurers requesting a median rate increase of 18%. Higher costs may drive many to forgo insurance coverage, resulting in a less healthy and more expensive enrollee base.

2. Reduced Medication Adherence and Delayed Medical Care

Without affordable health insurance, the cost of treatments becomes entirely the responsibility of individuals and families. “As a result,” says Dr. Ngo-Hamilton, “people may skip medications, cut doses, or delay follow-up care to save on costs.”

Currently, about 21% of adults report that they have not filled a prescription due to cost, and approximately one in seven adults has either cut pills in half or skipped doses of their medications to extend their supply.

These numbers are expected to increase further if subsidies expire.

3. Increased Burden on Safety-Net Institutions and Providers

The expiration of ACA subsidies is likely to increase the number of uninsured and underinsured individuals, leading to higher uncompensated care costs. It is projected that uncompensated care for uninsured individuals will rise by $7.7 billion, impacting various health institutions and provider types as follows:

Approximately $2.2 billion for hospitals
$1 billion for physician offices
$3.1 billion for other services
$1.5 billion for prescription drugs

This situation will particularly strain safety-net health institutions and providers, which include hospitals and other providers that offer care to patients without insurance or those on Medicaid.

In addition, the federal allotment for Medicaid Disproportionate Share Hospitals (DSH), a program established to provide additional federal funding to hospitals that serve low-income, uninsured patients and Medicaid recipients, will be reduced by $8 billion starting in fiscal year 2026, adding further strain to providers serving low-income and uninsured patients.

How Can People Protect Their Coverage?

“It's important to stay proactive whether you're enrolled in Medicaid or an ACA Marketplace plan,” Dr. Ngo-Hamilton reports. “Taking steps and planning ahead can prevent gaps in coverage and high out-of-pocket costs for prescription medications later.”

1. Check and Review Your Medicaid Eligibility Early

If you or a loved one is enrolled in Medicaid, it’s important to act now rather than wait for a renewal notice. To be proactive, consider the following steps:

Update your contact information with your state's Medicaid office.
Open all correspondence from Medicaid and respond as needed. Some letters may request income verification or other important updates.
Renew your Medicaid plan on time, even if your income or other significant household information hasn't changed. This helps prevent disenrollment due to paperwork or procedural issues.

If you lost your Medicaid coverage in the past 90 days, you might qualify for a plan from the ACA Marketplace during a special enrollment period. This means you won't have to wait for the general open enrollment period in the fall.

2. Compare Marketplace Plans Carefully

Many people select Marketplace plans primarily based on their monthly premiums. However, there are additional factors to consider, including:

The plan's formulary: A formulary is a list of preferred or covered drugs under a health plan. Ensure that all your current prescription medications are included in this list.
Tier placement: Medications are typically categorized into four tiers, which affect your co-payments. Tier 1 includes generic medications with the lowest copayments, while Tier 4 consists of more expensive specialty medications that treat serious or specialized health conditions.
Pharmacy network: Health plans partner with specific pharmacies. Preferred pharmacies usually offer the lowest copayments or coinsurance. Before filling your prescriptions, check to see if your preferred pharmacy is included.

3. Research Prescription Saving Tools

Medication prices can vary widely and can be costly even with insurance. Utilizing savings options can help reduce costs further, including:

Prescription discount services, like BuzzRx, can help you find the best savings on prescription medications.
Some drug manufacturers offer manufacturer patient assistance programs (PAPs) for individuals who meet specific criteria.
Copay cards, another option provided by drug manufacturers, help lower out-of-pocket costs for those with private health insurance.

FAQs

What Determines the Subsidy Amount?

The amount of the subsidy is based on household income, size, and the cost of the benchmark plan, which is the second-lowest-cost Silver plan available in your county.

What Does "Medicaid Expansion" Mean?

“The Affordable Care Act allows states to expand Medicaid to adults earning up to 138% of the federal poverty level,” explains Dr. Ngo-Hamilton. “As of 2025, 41 states, including Washington D.C., have adopted expansion, while 10 states have not.”

Click here to find out if you qualify for Medicaid in your state based on your household income.

What Are the Key Deadlines for the ACA Marketplace Open Enrollment for the 2026 Coverage Year?

“Open enrollment period begins on November 1, 2025, for most states. From there, you typically have until December 15, 2025, to sign up or make any changes to your plan,” Dr. Ngo-Hamilton states.

Some states, such as California, Idaho, Massachusetts, New Jersey, New York, Rhode Island, Virginia, and Washington D.C., may have different deadlines.”