The U.S. House of Representatives approved a bill Jan. 8 that would extend enhanced Obamacare subsidies for an additional three years. Passing the legislation was a bipartisan effort, with 17 Republicans joining all of the House Democrats in voting 230-196 to extend the enhanced Affordable Care Act (ACA) tax credits that expired at the end of 2025. The end of the enhanced subsidies is expected to result in steep premium increases for millions of Americans who purchase their health insurance from ACA marketplaces.
The vote on the bill, H.R. 1834, came after several Republican representatives voted with Democrats in favor of a discharge petition that unlocked debate on the measure. The move bypassed House Speaker Mike Johnson, who refused to allow a vote on the bill. GOP lawmakers who oppose the extension contend the program is ripe with fraud and insurance company giveaways. The Congressional Budget Office (CBO) estimated that 2.3 million marketplace enrollees improperly claimed the credit in 2025.
The bill now goes to the U.S. Senate, which is not required to vote on it. The Republican leadership in the Senate opposes the legislation, but there has been discussion of a possible bipartisan compromise in that chamber. President Trump said on Jan. 11 that he might veto the bill if it passes the Senate.
The Centers for Medicare & Medicaid Services (CMS) reported that 22.8 million people have signed up for individual insurance coverage through ACA marketplaces since the start of the 2026 open enrollment period in November 2025. The CBO estimated that a three-year extension of the enhanced ACA credits would result in 6.2 million more individuals enrolling.
Enhancing an Existing Credit
The ACA included a premium tax credit to help those purchasing plans through the marketplace lower their monthly health insurance premiums. Even after the enhanced credit expired, enrollees can still claim the premium tax credit to help pay for their health coverage.
Congress created the enhanced premium tax credit in 2021 as a temporary premium subsidy to keep ACA insurance plans affordable during the COVID-19 pandemic. In 2022, the Inflation Reduction Act extended the enhanced credit until the end of 2025. The original ACA premium tax credit remains in place, despite the end of the enhanced credit.
The expiration of the credit leaves those with ACA marketplace coverage paying more of their monthly premium. A study conducted by the Keiser Family Foundation (KFF) found that premiums for ACA marketplace plans would more than double after the enhanced credit expired.
Why Premiums Will Increase
Enrollees claiming the premium tax credit pay a share of their annual income toward a benchmarked premium, which is the premium payment for a Silver Plan. HealthCare.gov breaks down the health plans offered in the health insurance marketplace into gold, silver, and bronze based on their benefits, with Silver Plans covering about 70% of medical expenses. The sliding scale increases from roughly 2% of the enrollee’s income for households of up to 133% of the federal poverty level (FPL) up to 9.5% for those at 400% of the FPL.
The enhanced premium tax credit allowed enrollees with incomes of up to 150% of the FPL to pay no premiums, or very small premiums. Additionally, under the enhanced credit, households would not pay more than 8.5% of their income in premiums for a Silver Plan. The expiration of the enhanced credit eliminated the 8.5% cap on payments for enrollees with incomes greater than 400% of the FPL.
Return of the ‘Subsidy Cliff’
Eligibility for the premium tax credit is determined by the enrollee’s income. Those claiming the credit must have incomes of between 100% and 400% of the FPL. For 2026, 400% of the FPL is $62,600 for an individual and $128,600 for a family of four.
The 400% FPL income cap is known as the “subsidy cliff” because enrollees with incomes above that amount can’t claim the premium tax credit. When Congress passed the enhanced credit, it eliminated the subsidy cliff and allowed households with incomes above 400% of the FPL to claim it. After the enhanced credit expires, the subsidy cliff will return, reducing the number of taxpayers eligible to claim the credit.
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