When President Biden expanded COVID-era premium tax credits, two major changes made health insurance far more affordable: higher subsidy amounts for eligible individuals, and the elimination of the 400% FPL cutoff—known as the “subsidy cliff.” As a result, even individuals earning above that threshold could receive help, and middle-income Americans saw real relief in their premiums.
But—and this is a big one: these enhanced subsidies are set to expire at the end of 2025, unless Congress acts. If they vanish, the subsidy cliff will come crashing back. That means people below 400% of the Federal Poverty Level (FPL) will face significantly higher costs—while those above it will get no financial assistance at all, potentially driving up the uninsured rate.
What the Data Shows
According to KFF:
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If the subsidies aren’t extended, enrollees’ out-of-pocket premiums could rise by 75% or more—costs may even double for some. (kff.org
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The Congressional Budget Office (CBO) projects ACA Marketplace enrollment could drop from 22.8 million in 2025 to 18.9 million in 2026, sliding to just 15.4 million by 2030.
- For those above 400% of the FPL, KFF notes that roughly 1.6 million people currently receiving subsidies would abruptly lose them—even small income increases could wipe out aid entirely.
What It Means for Employers
Employer-sponsored health coverage may become more attractive—especially voluntary options like Individual Coverage HRAs (ICHRAs), where the employer subsidizes an employee’s individual plan. Without federal help in the individual market, that employer subsidy fills a growing gap in the health benefits ecosystem.
Bottom line: Unless lawmakers renew the enhanced subsidies—or create another workaround—health insurance costs for individuals will rise sharply in 2026. Coverage losses are likely, and employers who understand these shifts may find strategic opportunities to support their workforce.