TL/DR –
Open enrollment for Affordable Care Act (ACA) health insurance plans will see average premiums increase by 26%, as estimated by the Kaiser Family Foundation. Most of the 24 million people enrolled receive premium tax credits, but these are set to expire in 2025. If the credits are not extended, average monthly payment for subsidized enrollees could more than double, causing concern for individuals and small businesses who rely on the ACA for health insurance.
Millions of Americans are preparing for a possible increase in health insurance premiums as open enrollment for Affordable Care Act (ACA) health insurance plans commences. According to the Kaiser Family Foundation, premiums could rise by an average of 26%, fueled by inflating hospital costs, the growing demand for high-priced medications such as GLP1s, and looming tariff concerns.
Despite the predicted hikes, not everyone will bear the full brunt of the increased costs. Premium tax credits – initiated by the Inflation Reduction Act and set to end in 2025 – help reduce the financial burden for 22 million out of the 24 million people enrolled in ACA plans. However, if Congress fails to extend these credits, subsidized enrollees could face more than double their current average monthly payment – a shocking surge of 114%.
Government Shutdown Impacts ACA Discussions
The predicted cost leap is central to the ongoing federal government shutdown that has entered its fifth week. Democrats are standing firm on their decision not to reopen the government until Republicans engage in discussions about enhanced tax credits while Republicans are inclined to postpone such talks.
Caught in the political crossfire are people like Kelly Peterson, the Executive Director of the Superior Business Improvement District. Peterson, who for 31 years served as the director of residential services for people with disabilities, stepped down due to burnout following the COVID-19 pandemic and a personal loss. Now relying on the ACA for health insurance, Peterson, along with others in similar circumstances, could face unmanageable premiums without the enhancement of tax credits.
The Impact on Individuals
Presently, Peterson spends just over $1,000 per month on her insurance plan and receives a monthly tax credit of $430 due to her widow status. “Manageable. I could do that,” Peterson comments. But come 2026, without the tax credits, Peterson’s plan will rise to roughly $1,200, coupled with an increased deductible.
Peterson, as well as other enrollees, must consider the costs and coverage of each plan. “This is similar to many of the small businesses I work with every day. They do go on the Affordable Care Act, if they can afford it. Many still, with the tax breaks, they’re still not able to afford it,” Peterson explains. The impacts, she says, will be felt throughout the entire community.
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