Health advocates, state officials brace for ‘sticker shock’ if ACA tax credits expire

by Danielle J. Brown, Maryland Matters
September 16, 2025

Marylanders who purchase health insurance on the state’s Affordable Care Act marketplace could see their monthly health expenses skyrocket unless Congress decides to extend a popular pandemic-era tax credit that’s set to expire this year, advocates say.

Just how much costs could rise is still unknown in many states, but advocacy groups such as the Robert Wood Johnson Foundation are trying to estimate the impact to help states and individuals prepare. The nonprofit said that some Marylanders could see monthly premiums more than double if enhanced premium tax credits created during the COVID-19 pandemic expire.

“You have a lot of people who don’t get an offer of coverage from their job,” said Katherine Hempstead, national health policy expert for the Robert Wood Johnson Foundation.

“These are people who don’t have another way to get health insurance because they are not eligible for Medicaid – their income is too high,” she said. “That could be people who work for small businesses … Someone who is self-employed – a musician or an entrepreneur.”

The enhanced federal tax credit was created in 2021 to help more people afford health insurance during the height of the pandemic. But Hempstead said health advocates want them to stick around because they encouraged people to get insurance who might otherwise go without.

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“Enhanced premium tax credits did two thing: It made the tax credits larger and it made more people eligible for them,” Hempstead said. “These enhanced premium tax credits solved a problem that a lot of people had with the marketplace, where they said, ‘That’s great but it’s still not affordable.’”

But the law creating those tax credits is set to expire at the end of the year unless Congress extends it. About  190,000 Marylanders currently benefit from the credits, according to state officials.

The RWJF estimates, released Monday, show how much monthly premiums could increase if the enhanced tax credits expire – which vary depending on age and how close the individual falls to the federal poverty level.

For example, a 40-year-old Marylander earning twice the federal poverty level, which would be a salary of about $31,000, may currently pay $47 in monthly premiums thanks to the enhanced tax credit. Without it, their monthly premium could jump  to $149 if they keep their lowest-level silver plan, according to the RWJF estimates.

A 40-year-old on the same plan at 250% of the federal poverty level could see premiums jump from $122 a month to $240 if the enhanced tax credits expire, nearly doubling their monthly expenses to maintain health coverage.

Hempstead noted that the RWJF estimates are likely more accurate for states that have already finalized their premium rate increases with insurers. Maryland insurance officials and health insurance carriers are still working out rate increases for 2026, according to a written statement from the Maryland Insurance Administration.

In August, the administration warned that carriers were requesting an average increase of 17.1% for all individual plans, accounting for the anticipated loss in enrollment if the tax credits expire. If the current tax credits were extended, rate increases would only jump about 8%, according to state documents.

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“The assumption in those rates is that the tax credits will not be extended,” said Johanna Fabian-Marks, deputy executive director for the Maryland Health Benefit Exchange. “Insurers are assuming that individuals will drop coverage because of the premium increases.”

She noted that those most likely to leave the market are healthier individuals, who help keep premiums down because they pay into the insurance pool but are less likely to face significant health risks.

“They have a certain amount budgeted for health insurance and if that increases, they may not have the flexibility in their income to cover that,” Fabian-Marks said. “And they’re going to be deciding between paying that health insurance bill, paying their food bill, paying their rent, and health insurance may be the thing that they decide to gamble on and drop.

“That has knock-on effects for the state as a whole. We could see increases in uncompensated care at hospitals. That can increase hospital costs, which affects all Marylanders,” she said.

The Maryland Health Benefit Exchange runs the ACA marketplace for the state. Fabian-Marks said that MHBE estimates about 190,000 people insured through the marketplace would be impacted by the tax credits expiring, which she said would “drive an average of 68% increase in their premium.”

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The remaining 110,000 Marylanders who have ACA insurance but do not qualify for those tax credits would also see monthly premiums rise due to the proposed 17.1% rate increase.

“That’s a really, really big increase and I’m sure a lot of people are going to say ‘I can’t afford it,’” said Hampstead. “It’s a big sticker shock for people.”

State subsidy bridge

In the most recent legislative session, lawmakers passed legislation aiming to mitigate potential disruptions in the state marketplace due to federal decisions.

That included a proposal to give the MHBE authority to create a state subsidy if the federal premium tax credit comes to an end. That authority would only be available for 2026 through 2028.

Fabian-Marks said that for 2026, the state subsidy would essentially replace the federal tax credit for those under 200% of the federal poverty level while offering partial assistance for others.

“For our lowest income enrollees, they will be kind of held harmless – that’s individuals under 200% of the federal poverty level,” Fabian-Marks said. “Individuals over that threshold, we are going to be able to replace, on average, about 50% of the value of the federal tax credits – up to 400% of the federal poverty level.

“That’s where we have to cut off the state subsidies because of our budget constraints,” she said.

But the state’s fraught fiscal outlook means those state subsidies could be temporary. Fabian-Marks hopes that Congress will choose to extend the tax credits in the next two years, otherwise the state legislature will have to have some “tough conversations.”

“We really can’t afford to maintain that level of generosity that we’ve set the program at for multiple years,” she said. “We’re hoping this could serve as a bridge.”

Maryland Matters is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Maryland Matters maintains editorial independence. Contact Editor Steve Crane for questions: editor@marylandmatters.org.