Important Healthcare Tax Credit Changes Could Double Your Insurance Premiums in January
If you purchase health insurance through the Affordable Care Act marketplace, you need to pay attention to what’s happening in Washington right now. A tax credit that’s been helping millions of Americans afford their health insurance is set to expire on December 31, and without congressional action, your monthly premiums could more than double starting in January.
This isn’t a minor adjustment. We’re talking about potentially hundreds or even thousands of dollars in additional annual costs for families who’ve been relying on the enhanced premium tax credit to make their insurance affordable. The enhanced credit was created during the pandemic and expanded eligibility to people earning more than the original income limits. It also capped what higher earners had to contribute toward their premiums at 8.5 percent of their income.
Congress is working on several proposals to extend this credit, but as of mid-November, nothing has passed. Senate leaders have promised a vote by mid-December, but the competing proposals vary widely in how long they’d extend the credit and who would remain eligible. Some proposals would cap eligibility at around $193,000 for a family of four, while others set the limit closer to $320,000. One alternative proposal would scrap the credit entirely and replace it with flexible spending accounts, though that seems less likely to pass.
The uncertainty makes planning difficult, but there are steps you should take now. First, check whether you’re currently receiving advance premium tax credits. If we have ever asked you to provide form 1095 for your tax return, you most likely received credits. If you are receiving credits, particularly if your household income is higher than it was when the original ACA was passed, you’re at risk of losing some or all of that credit. Second, look at what your unsubsidized premium would be. Your marketplace should be able to show you the full cost without the credit applied.
This is where reaching out to our firm makes sense. We can help you model different scenarios based on your specific income and family situation. If Congress caps eligibility at certain income levels, there may be strategic opportunities to manage your taxable income to stay below those thresholds. We can also help you understand whether adjusting your advance credit payments for the remainder of 2025 makes sense to avoid surprises when you file your tax return.
Even if you’re not currently receiving a credit, this could affect you. Changes to the ACA marketplace impact everyone’s premiums, and understanding your options now gives you time to explore alternatives if needed. If you’re close to retirement, this could significantly impact your healthcare cost projections. If you’re self-employed or considering becoming self-employed, the affordability of marketplace insurance is a critical factor in your financial planning.
The bottom line is that waiting until January to deal with this could leave you scrambling, and to make matters worse, open enrollment for 2026 plans is happening now. Congress might pass something at the last minute, or they might not. Either way, you need to know what your 2026 healthcare costs could look like and have a plan in place.
Contact our office before the end of the year to review your situation. We’ll help you understand your exposure, explore your options, and make sure you’re positioned to handle whatever changes come. Being proactive now prevents panic later.
grow@cultivateconsulting.co
Christine Gervais
Christine Gervais is a licensed CPA, using her skills to help businesses grow and achieve their fullest potential. Christine has a Master’s degree in accounting from Southern New Hampshire University in addition to holding her CPA license for over a decade. Notably, Christine is a nationally recognized speaker providing education to other CPAs on how to best serve clients as well as instruction on a wide variety of topics for business owners on how to maximize success. Christine prides herself on the value she can bring to clients with her extensive tax knowledge and provides strategic, forward-thinking financial strategies to help clients grow. When not behind her desk, you can find Christine spending quality time with her daughter and stepson or tending to the family’s excessively loved farm animals.
