Vermont Health Insurance Costs Surge Immensely

Healthcare Tax Credits in Jeopardy: A Potential Blow to Vermonters

Healthcare tax credits, crucial for tens of thousands of Vermont residents, face expiration in 2026, potentially leading to a dramatic surge in health insurance premiums. If federal lawmakers fail to intervene and extend these credits, the situation could turn bleak for about 30,000 Vermonters relying on them for affordable health insurance coverage under the Affordable Care Act (ACA) on the Vermont Health Connect marketplace.

Unless these credits are extended, individuals who are currently paying two- or three-digit insurance premiums may find their costs multiply due to the combined effect of the expiration of tax credits and anticipated rate increases in health insurance.

Making this point clear, health policy analyst Charles Gaba at ACASignups.net provides an example. He states that a single 50-year-old Vermonter earning $30,000 annually and paying $12 per month in premiums in 2025 could expect to pay between $105 and $142 per month the following year. Similarly, a 64-year-old couple earning $90,000 a year and currently paying $638 a month for health insurance might see their monthly bill soar up to $2,724 in 2026.

The Future of Tax Credits

The tax credits in question, also known as enhanced premium tax credits, were formulated to make ACA Marketplace health plans more affordable for low- and middle-income families and small business owners. These credits were implemented as part of the American Rescue Plan Act in March 2021 and later extended under the Inflation Reduction Act of 2022. The credits are set to expire at the end of 2025.

The One Big Beautiful Bill Act (OBBBA), passed by Republicans in July, did not extend these tax credits. With the potential government shutdown looming, some Republican members of the U.S. House of Representatives have introduced a bill to extend these credits through 2026. However, it is uncertain if this measure will secure significant Republican support, or if Democrats will agree to an extension of just one year.

According to the Center on Budget and Policy Priorities (CBPP), around 2,000 Vermonters could lose health insurance due to the increasing costs in the absence of the tax credits. The Congressional Budget Office projected in July that about 3.9 million people nationwide would be less likely to enroll in Marketplace plans next year.

The potential impact of the expiration of these credits extends to Medicaid recipients as well. The CBPP estimates that by 2034, about 17,000 Vermonters would lose health coverage due to provisions in the OBBBA. The CBPP also warns that approximately 49,000 Vermonters could lose Medicaid due to new work requirements that may be challenging for some, such as gig workers, to meet.

Vermont: Home to the Most Expensive Healthcare?

The decline in tax credits would perhaps not be as significant an issue if Vermont did not already have one of the highest health care premiums in the nation. Consumer Affairs reports that Vermont residents pay more for healthcare than anyone else in the U.S. The lowest-cost, lowest-tier ACA plan in Vermont has a monthly premium of $808 in 2025, according to the Kaiser Family Foundation, while a mid-tier “benchmark” plan in the state costs $1,277.

By comparison, similar plans in Maine cost $464 and $546, while in New Hampshire, they cost $272 and $325, making it the second cheapest in the country.

However, it’s not just Vermont grappling with rising healthcare costs. Premiums for Obamacare plans are on the rise across the country. Kaiser reports that health insurance companies plan an average increase of 20% in 2026 compared to 2025. Factors such as rising labor and medication costs, inflation, hospital mergers, and a decline in the number of insured individuals are driving up insurance costs.

If the enhanced tax credits are not extended, the out-of-pocket cost of ACA plan premiums would rise by an average of 75% nationwide, Kaiser warns.