Enhanced ACA premium tax credits expired Dec. 31, leaving millions of marketplace enrollees facing higher premiums in 2026. Congressional efforts to extend the subsidies have stalled, with neither a Democratic three-year extension proposal nor a Republican alternative focused on HSAs passing the Senate. A House vote on extending the subsidies could still happen in January.
About 4 million people will lose coverage without an extension, according to the Congressional Budget Office, as insurers have implemented the highest rate increases since 2018.
The ripple effects will extend across the healthcare industry as hospitals face a rise in uncompensated care and insurers lose membership. Total national economic output could decrease by $57 billion and overall employment could decline by 286,000 jobs nationwide, including 130,000 healthcare positions, according to the Commonwealth Fund.
A handful of states have taken action to mitigate the impact, though none can fully replace federal funding long-term. Here’s what they’re doing:
New Mexico: The only state fully replacing the expired subsidies for 2026 with $17 million in enhanced premium and cost-sharing assistance for individuals and families purchasing coverage through the state’s exchange.
California: Allocating $190 million to replace subsidies for individuals earning up to 165% of the federal poverty level in 2026. The state’s remaining 2 million exchange enrollees will see higher costs, and Covered California projects up to 400,000 people could become uninsured.
Maryland: For 2026, state subsidies will replace the subsidies for people under 200% of the federal poverty level. For those between 201% and up to 400%, the state will replace 50% of the subsidies.
Colorado: Passed legislation to reduce 2026 premium increases through an allocation of up to $100 million in funds to stabilize its individual market.
Connecticut: Committed $70 million to offset the expiring subsidies for 2026. Individuals earning up to $56,000 and families of four earning up to $128,000 will see little to no change in costs.
Arkansas, Texas, Wyoming: Implemented “premium alignment,” a regulatory tactic that shifts costs to ensure remaining federal subsidies reach more people and keep out-of-pocket costs from rising, according to Politico.
