A huge number of Americans are anxiously waiting to see if their health care insurance premiums will nearly double in 2026. Whether or not those premium increases occur depends upon how U.S. lawmakers resolve the issue of whether or not to extend the current subsidy offered by the Affordable Care Act (ACA), which has provided premium assistance to millions of people across the country since 2010.
There is a major deadline looming to resolve the future of the ACA subsidy, also referred to as the “Enhanced Premium Tax Credits.” Those subsidies assist millions of families in paying for their health insurance premiums. However, the subsidies are scheduled to expire after this year.
Some recent legislative actions related to the federal government's funding bill have removed the potential political leverage that may have caused lawmakers to act quickly to renew the subsidies. As a result, the potential path for renewal is uncertain.
Below we provide a comprehensive overview of what is occurring. We will explain the legislation; describe what may happen if the subsidies are not renewed; and analyze the implications of the potential loss of the subsidies for both patients and medical providers.
What Is the ACA Subsidy Cliff?
Before explaining the solution, it would be helpful to understand the problem. The Affordable Care Act (ACA) created Health Insurance Marketplaces for consumers to purchase private health insurance. To help make health insurance plans affordable to consumers, the ACA included the use of tax credits to reduce the cost of private health insurance premiums for eligible consumers.
In March 2021, Congress enacted the American Rescue Plan (ARP) that temporarily increased the amount of tax credit assistance available under the ACA for many low- and moderate-income households. The ARP also expanded the number of households that were eligible to receive the increased tax credits.
Additionally, in August 2022, Congress enacted the Inflation Reduction Act (IRA). Among other provisions, the IRA extended the increased tax credit assistance that was originally enacted under the ARP through the end of 2025.
The increased tax credit assistance did two important things:
- Increased the amount of tax credit assistance for low-income households.
- Expanded the eligibility criteria to include middle-income households that had been ineligible for previous tax credit assistance.
Those increased tax credit assistance expire on December 31, 2025. If Congress does not enact another law that extends the increased tax credit assistance, the cost of purchasing private health insurance will increase substantially for many households. Analysts refer to the impending expiration of the increased tax credit assistance as the “Subsidy Cliff.”
How Does the Government Funding Bill Impact the ACA Subsidy Extension?
In late 2025, Congress passed a short-term continuing resolution (CR) to fund the federal government from late 2025, through January 30, 2026.
As reported by Modern Healthcare, advocates of extending the ACA subsidies believed they could include the subsidy extension in the CR. Advocates hoped to attach the subsidy extension to the CR because it was considered a "must-pass" piece of legislation. Unfortunately, the subsidy extension was not attached to the CR. Thus, the immediate pressure to negotiate a deal has disappeared.
Although the Senate Majority Leader has stated his intention to bring the subsidies up for a vote prior to the end of 2025, that is not a commitment to pass the legislation.
Takeaway: Although the federal government remains funded until January 30, 2026, the clock continues to tick on increasing health care costs for many families.
What Are the Financial Consequences of Losing the Subsidies?
If Congress fails to act to extend the subsidies, the consequences will be economic. Families bank accounts will feel the pain.
For example, according to the Congressional Budget Office (CBO) and Kaiser Family Foundation (KFF), some individuals may experience a doubling in their monthly premium costs if the subsidies are not extended.
| Consumer Group | With Enhanced Subsidies | Without Enhanced Subsidies |
|---|---|---|
| Low Income ($20k/year) | $0 premium (often) | Potential modest monthly cost |
| Middle Income ($60k/year) | Capped at 8.5% of income | Could exceed 15-20% of income |
| High Income ($100k+/year) | Eligible for help | Lose all subsidy help |
Note: These figures are estimates based on standard marketplace data.
Families earning four times the federal poverty level will no longer qualify for subsidies. Families that make four times the federal poverty level would have to purchase their health insurance at the full cost of the premium.
The Current Proposals on the Table
While many legislators offer their solutions to the problem, we will remain non-political and examine the various legislative solutions presented to us as possible ways to address the crisis.
1. The Three-Year Extension
Senate Democrats, led by Senators Chuck Schumer and Hakeem Jeffries, are advocating a more long-term solution than the present short term fix. The Democrats want to increase the enhanced tax credit for three years. The Goal: This locks in lower rates through 2029. It provides stability for insurers and patients.
2. The Two-Year Modified Extension
Reps. Jeff Hurd and Don Bacon, two House Republicans, introduced an alternative to the Schumer-Jeffries proposal. The Hurd-Bacon proposal offers a two year extension of the present tax credit. However, there are conditions to the Hurd-Bacon proposal.
Details of the Hurd-Bacon Proposal:
- Duration - two years.
- Income Caps - the Hurd-Bacon proposal would create new income caps to determine who can receive subsidies.
- Fraud/Eligibility Screenings - the Hurd-Bacon proposal would require stricter fraud and eligibility screenings before receiving subsidies.
Insurance companies have expressed concern regarding the Hurd-Bacon proposal. Insurance companies have indicated that they believe it would be difficult to implement the proposed stricter fraud and eligibility screenings in time to meet the 2026 open enrollment deadline.
3. The "Fairness" Alternative (Health Savings Accounts)
Some members of Congress disagree with the current subsidy system altogether. In fact, President Donald Trump recently posted on his social media platform expressing opposition to extending the subsidies to the insurance industry. He stated he opposed sending more money to insurance companies.
President Trump suggested sending the money directly to individuals. His suggestion mirrors proposals to expand Health Savings Account (HSA) options. Advocates of expanding HSA options suggest it would give consumers greater control over how they spend their health care dollars. Opponents of expanding HSA options suggest HSA's are ineffective in assisting consumers in paying the high monthly premiums associated with health insurance.
Why This Timeline Is Dangerous
Timing is everything when it comes to the Insurance World.
Open enrollment for 2026 coverage started on November 1. Most states have an open enrollment deadline of January 15.
People are actively buying for health care plans today. However, People are essentially buying for plans without having the ability to “see” the real price they’ll be paying. That’s because the prices listed on Healthcare.gov are based on subsidies that may or may not continue to exist after December 31. Therefore, the prices listed on Healthcare.gov could be inaccurate if Congress doesn’t extend the enhanced subsidies by December 31.
1. Here’s how the timing works:
- November - December - People buy plans based on lower prices.
- December 31 - Enhanced subsidies end.
- January 2026 - People receive their first bill for significantly more than what they were quoted.
This creates confusion. This results in policies being canceled. This results in People losing their insurance.
2. How the Changes Affect Health Care Providers
Health care providers - doctors, hospitals and clinics are also at risk if the ACA subsidy extension fails. When patients lose insurance, the amount of money that health care providers get paid decreases.
As deductibles increase (or as patients choose to stop paying premiums), they are considered “self-pay” patients. Collecting payment from self-pay patients is difficult, which means that the number of bad debt cases will increase.
That’s why Human Medical Billing services can help navigate these changes. When the insurance environment changes, the number of administrative errors increases.
3. The Burden on Verification
If there are changes in subsidy rules, especially the fraud checks proposed by Reps. Hurd and Bacon, eligibility verification for patients will become chaotic. The front office staff will spend countless hours on the phone trying to resolve issues related to verifying patient eligibility with payers.
To avoid these issues, many providers outsource eligibility verification to third-party companies. Companies that provide medical credentialing services can ensure that the provider continues to comply with each of the payers' requirements as they change.
4. Disrupting the Revenue Cycle
A rapid decrease in the number of patients who have health care insurance will create a ripple effect in the financial system of a health care facility. Claims are denied. Payment is delayed.
Smart facilities are preparing for this now. Smart facilities are auditing their systems. Smart facilities are looking into healthcare revenue cycle management services to make sure that they have optimized their systems before the chaos begins in January. There's nothing you can do about Congress, but you can certainly control your billing process.
Legislative Obstacles Moving Forward
There isn’t a straightforward road to passing a new bill.
Democrats attempted a “Discharge Petition,” which is a procedural tool used by Democrats to force a vote on a bill regardless of leadership opposition. A discharge petition requires a majority of signatures and so far there has been no sign of a Republican signature supporting the effort.
The focus now shifts to the Senate. Senator Thune stated his commitment to voting on a bill renewing the ACA subsidies, however he did not state whether he would be supportive of the legislation.
Senate Finance Committee Chairman Mike Crapo recently announced hearings on "The Rising Cost of Healthcare," and included several individuals opposed to the ACA as witnesses. This appears to signal that the Senate majority is searching for alternatives rather than simply serving as a rubber stamp for renewal.
The Role of Tax Credits:
Tax credits are defined as “the government pays a portion of the premium on your behalf directly to the insurer.” These are considered “advance tax credits.”
When tax credits decrease, the amount the government contributes to your premiums decreases and therefore the amount you contribute increases.
Ways Providers Must Prepare for 2026:
The uncertainty surrounding the future of the ACA subsidy extension creates significant risk for providers. Therefore, providers should create protective measures against the potential consequences of the ACA subsidy extension failing.
1. Develop Stronger Denial Management Programs
A significant increase in denied claims will occur if the rules for coverage change. Patients who believe they are covered, but miss a premium payment, will have their claims rejected.
Denial management services will act as the safety net in times of such change. You will need aggressive denial appeal specialists and knowledgeable professionals who can assist in navigating the evolving policies of payers.
2. Enhance Up-Front Collections
Providers cannot afford to wait until the back-end to collect for the portion of deductibles that patients owe. If deductibles increase, then you must collect the patient’s portion at the time of service.
Train your staff to engage in financial conversations with patients and be open and honest about all costs.
3. Leverage Technology
Manual billing does not provide the speed required for this type of environment. Artificial intelligence (AI) medical billing provides efficiencies. It identifies errors prior to a human reviewing a claim. Additionally, AI can predict what claims will be rejected.
Technology also assists with addressing shortages of personnel.
Broader Economic Implications:
Healthcare represents 17% of the US economy. Disrupting the health insurance market disrupts the economy.
High medical expenses reduce the number of dollars families spend on other goods. Families with large medical expenses often choose to purchase older vehicles, cancel planned vacations, etc.
Additionally, hospitals operate on extremely narrow margins. An increased volume of uncompensated care may lead to the closure of many rural hospitals. Closure of hospitals reduces the ability for all consumers, including those who are insured, to obtain healthcare.
Risk of a “Death Spiral”
Insurance markets require both a combination of sick and healthy individuals.
If the prices of health insurance continue to rise, healthy individuals opt out of purchasing health insurance. Healthy individuals perceive taking the risk is preferable to continuing to pay premiums for an insurance policy that they will not use. As a result, only sick individuals remain in the insurance market. Insurance companies subsequently raise premiums again in anticipation of continued increased utilization by sick individuals. This cycle is known as a “death spiral.” Enhanced subsidies helped retain healthy individuals in the market by providing affordable health insurance options. Loss of these individuals creates the possibility of destabilization of the risk pool.
What Should Consumers Do Now?
Consumers cannot individually alter the law; however, there are actions that can be taken to protect their family.
1. Step 1: Update Your Income
Visit Healthcare.gov to verify that your income information is up-to-date. Subsidies are based on estimated income and any inaccuracies will result in paying more for coverage.
2. Step 2: Actively Shop for Plans
Do not allow your plan to automatically renew. Your current plan may experience the largest price increase. Compare your current plan with competitive offerings.
3. Step 3: Monitor the News in December
Mid-December is expected to be the month of the vote regarding the ACA subsidy extension. Follow updates on the status of the legislation. If the law changes, you may have a short window to switch plans before January 15.
4. Step 4: Pay Your Initial Premium
Pay your January premium immediately. Prevent your coverage from lapsing. Re-enrollment into a policy is significantly more difficult than maintaining coverage.
Understanding the Political Argument - Understanding the Delay
Arguments supporting the delay in implementing changes include the increased costs associated with a rising cost of living. Advocates for extending the Affordable Care Act (ACA) argue that health-care is a basic right. Supporters point to the fact that the number of people signing up for coverage under the ACA has reached all-time highs; more than 21 million signed up last year. They also express confidence that the ACA is a successful model that can be replicated nationwide.
However, there are opposing views toward the delay in implementation as well. Opponents of the delay cite the national debt, which they believe is being exacerbated by the expanded subsidies under the ACA. Additionally, opponents argue that the subsidies provided by the ACA drive up the underlying cost of healthcare because they shield consumers from paying the full cost of their treatment. They advocate for the use of free-market principles to reduce costs.
Regardless of the differing opinions toward the economic implications of the proposed legislation, both sides agree that the manner in which the issues are addressed is at the heart of the controversy.
The Role of Third Party Partners in Maintaining the Healthcare System During Times of Legislative Gridlock
Third party partners such as Human Medical Billing continue to provide stability to the healthcare system during periods of congressional gridlock.
By absorbing the complexities of the regulatory process, companies such as Human Medical Billing allow physicians to focus on providing medical treatment rather than on administrative burdens.
Additionally, when changes occur in regulation, the libraries of medical coding services utilized by third party partners are updated immediately to reflect the new codes. A single physician practice is unable to absorb the speed of updates to the billing and coding requirements as quickly as a third party partner.
Frequently Asked Questions
The current funding for the ACA will run out on January 30th. If the government were to shut down after this date, many government functions would cease to operate. However, the ACA marketplace operates almost entirely on permanent appropriations and user fees. Thus, while some aspects of the operation may be impacted, the website is expected to remain operational.
If your household income decreases, you may be eligible for Medicaid. Medicaid rules vary from state-to-state. The expiration of subsidies under the ACA does not affect eligibility for Medicaid.
Unlikely. The debate surrounding the proposed legislation focuses solely on the "Individual Market." If you receive insurance through your employment, your rate will be negotiated independently from the individual marketplace.
The Silver Loading strategy is a sophisticated pricing strategy employed by insurance companies. If subsidies are eliminated, states may attempt to manipulate the prices of "Silver" plans in order to take advantage of any remaining federal assistance. It is a temporary solution and not intended to replace the subsidies.
That is dependent upon the actions taken by Congress. If the subsidies are extended, your premium is likely to be equivalent to your 2025 premium (with standard inflation adjustments). If the subsidies expire and you make more than 400% of the federal poverty level, your premium may greatly increase. Even if you make less than 400% of the federal poverty level, you may still experience an increase in your premium depending on the plan you choose and the benchmark used in determining your premium.
Conclusion: A Month to Remember
Millions of people's healthcare financial futures are dependent on the next couple of weeks. The proposal to extend the ACA subsidies is currently stalled in a legislative impasse.
Although the government has been funded temporarily, the policy fight is far from over.
For consumers, vigilance is the best course of action. Keep an eye on your mailbox and watch local news. Review and update your applications as necessary.
For providers, preparation is essential. The revenue cycle is expected to experience significant turbulence. Whether you handle the turbulence internally or through the services of medical billing experts, you must develop a contingency plan.
The objective is simply to provide continuity of care. Regardless of the outcome of the debate in Congress, patients require access to doctors and doctors require reimbursement. In addition, the healthcare delivery system must function continuously.
At Human Medical Billing, we stand ready to assist our provider clients in navigating these turbulent waters. We are monitoring the developments in Washington D.C., so our clients can monitor their patients.
Remain informed. The decisions made in December will become apparent on your patient's bills in January.
Contact Human Medical Billing to schedule a compliance readiness review or learn more about our end-to-end billing and regulatory support services.
