In 2010, the Affordable Care Act (ACA) was signed into law. Through the introduction of regulated health insurance markets, commonly known as Marketplaces, the ACA aimed to provide an avenue of affordable health insurance for those who could not otherwise afford it and inhibit discrimination of coverage based on things like pre-existing conditions and gender.
When the ACA was signed into law in 2010, so were standard Advanced Premium Tax Credits (APTCs). These refundable tax credits helped eligible individuals and families lower the cost of health insurance premiums through Marketplace plans.
Enhanced premium tax credits (EPTCs) are temporary expansions and changes made to the original APTC rules, intended to make health care more affordable for more people. These changes were enacted through the American Rescue Plan Act of 2021 and extended through later legislation.
How did EPTCs increase health care affordability?
Under standard rules, households had to pay a capped percentage of income toward a benchmark plan. EPTCs reduced this required contribution, capping premiums at a lower percentage of income.
Additionally, the original cap at 400% of the Federal Poverty Level (FPL) was removed under EPTCs under the American Rescue Plan Act. This meant that individuals who earned a higher income qualified for subsidies if their premiums otherwise exceeded 8.5% of their household income.
Finally, larger subsidies made it so more individuals to upgrade from the ACA’s Bronze plans to Silver or even Gold plans, allowing for lower deductibles, lower out-of-pocket maximums and better network options with more provider choices.
By making health insurance more affordable, EPTCs increased enrollment. The subsidies helped drive 24.2 million Americans to enroll in Marketplace plans, according to the Centers for Medicare and Medicaid Services. That figure is up from 21 million people in 2024 and 12 million people in 2021, prior to the enhancements. More than 90% of enrollees rely on EPTCs to pay for health insurance.
EPTCs set to expire at the end of 2025
Most EPTCs are set to expire at the end of 2025. Many individuals will still be eligible for Advanced Premium Tax Credits (APTCs) in 2026, which can still significantly reduce or eliminate premium costs for eligible individuals. However, these credits are less generous than EPTCs.
The current government shutdown partially revolves around the status of EPTCs. A decision by Congress to either let these tax credits expire or fund and extend them should be made in November or December.
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