As 2025 ends, millions of Americans who rely on the Affordable Care Act (ACA) for health insurance are facing sharp cost increases because enhanced subsidies that significantly lowered premiums are about to expire.
Which subsidies are expiring?
The most important subsidies that are expiring are the “enhanced” Premium Tax Credits that were expanded during the COVID-19 pandemic under the American Rescue Plan Act (ARPA) in 2021 and later extended by the Inflation Reduction Act through December 31, 2025. These enhanced tax credits have been a major source of financial support for ACA marketplace enrollees.
These more generous tax credits were originally put in place during the COVID-19 pandemic to make coverage more affordable, and Congress extended them through 2025. But lawmakers failed to pass legislation to continue them before the deadline, leaving enrolees, including many small-business owners and self-employed individuals, to confront a steep “subsidy cliff,” according to Ground News.
How will small business owners be affected?
The impact is particularly acute for small-business owners, the self-employed, and those who work at firms that don’t offer employer-provided health care. Many in this group have relied on ACA plans as the most affordable option. For example, one couple in New Jersey running a small practice learned their monthly premium could jump from around $340 this year to nearly $1,930 next year, making coverage unsustainable. Another small business owner in Vermont faces premiums rising to nearly $2,670 a month. Deciding whether to maintain coverage, pay cash for care, or become uninsured has become a wrenching choice for some, according to News Channel 3.
Nearly half of adults in the individual market are affiliated with small businesses, according to the Kaiser Family Foundation, and many said they will be forced to drop coverage or seek different options if costs remain this high.
The legislative fight over the future of ACA subsidies became intertwined with broader political battles in Congress, including disputes over a government funding package.
For many small business owners, this means not only higher personal health care costs but serious financial pressures on their businesses, with some considering cutting employees, reducing benefits, or even shutting down if affordable coverage is out of reach.