The article discusses the possible significant increase in health insurance premiums purchased through the federal marketplace after 2025 if Congress does not take action. The premium tax credit, which makes health insurance more affordable, was temporarily enhanced by the American Rescue Plan Act due to the COVID-19 pandemic. However, the Inflation Reduction Act extended this benefit only through 2025. If the benefits expire after this year, it is expected that almost everyone will face higher premiums, according to Gideon Lukens, a senior fellow at the Center on Budget and Policy Priorities. This could have a significant impact on consumers across various income levels.
For instance, a typical family of four with an income of $60,000 could see a monthly premium increase from $100 to $326, adding up to $2,700 more per year. On the other hand, a family of the same size earning $125,000 may see their monthly premiums rise from $885 to $1,525, resulting in an additional $7,700 annually. This shows that the expiration of the premium tax credit expansion could have a substantial financial burden on American families, regardless of their income levels.
President Joe Biden proposed making the premium tax credit expansion permanent in his fiscal year 2025 budget request. However, this move is expected to increase the federal budget deficit by $335 billion from 2025 to 2034, according to the Congressional Budget Office and Joint Committee on Taxation. The article mentions that former President Donald Trump’s campaign did not respond to inquiries about the program, indicating a lack of clarity on the political stance regarding the issue. It remains to be seen how Congress will respond to this potential crisis in the health insurance marketplace.
The expiration of the premium tax credit expansion could have a significant impact on the health insurance market. The tax credit has reduced costs for all enrollees, thereby improving the nongroup market risk pool. Until 2021, the credit was limited to households with incomes between 100% to 400% of the federal poverty level. However, the American Rescue Plan Act removed these restrictions and capped premiums at 8.5% of income. If the program is not extended beyond 2025, it could lead to widespread premium increases across the board, affecting both individuals and families alike.
The potential expiration of the premium tax credit expansion after 2025 could have dire consequences for Americans seeking affordable and accessible health insurance through the federal marketplace. It is crucial for policymakers to address this issue to prevent significant financial burdens on individuals and families across the country. The future of health insurance affordability in the US hinges on the decisions made by Congress in the coming years.