Enhanced Premium Tax Credit Expiration and the Impact on Healthcare Cost Burdens: A Scenario-Based Analysis for Near-Elderly Marketplace Enrollees

Background One of the mechanisms used to expand access to health insurance through the Affordable Care Act (ACA) has been the Enhanced Premium Tax Credits (EPTCs) for individuals to access private health insurance through the Marketplace. EPTCs were expected to expire at the end of 2025, which will result many individuals and families experiencing substantial increases in their healthcare premium costs and potentially other healthcare costs if they utilize healthcare services—sometimes referred to as the “cliff”. Objectives Estimate the healthcare costs, including premiums and out of pocket costs, with and without the EPTC across all 50 States and for individuals with a chronic condition like diabetes. Methods We estimated how premiums will be impacted by the EPTC expiration for individuals at varying ages to understand the EPTC “cliff”. We conducted a descriptive scenario-based affordability analysis using public Marketplace data to examine healthcare costs for a 63-year-old individual across various chronic diseases, healthcare profiles, and utilization patterns in both urban and rural areas. Annual costs included premiums with and without EPTCs plus co-payments, co-insurance, and deductibles for those with the silver benchmark plan. Results Removal of the EPTC will re-introduce a cost “cliff” for those at 400% of the federal poverty level (FPL), with the largest impact for older women. For a woman 63-years-old, in an urban area, at 400% of the FPL, average monthly premiums will increase from $416 with the EPTC to $1096 without the EPTC subsidies. Taking into consideration total annual cost of care, the percent of income spent on healthcare could increase up to 247% for an individual with diabetes requiring two hospital visits. Conclusion Our findings emphasize the importance of the EPTC for healthcare affordability, particularly for older individuals close to 400% of the FPL with chronic conditions, such as diabetes.