Health Insurance Costs Remain Uncertain Amid Government Shutdown
Premiums for people who purchase health insurance through Pennie, Pennsylvania's health insurance marketplace, could more than double if Congress does not act to continue enhanced premium tax credits set to expire on December 31, 2025.
Understanding Enhanced Premium Tax Credits
Enhanced premium tax credits are federal subsidies that make health insurance more affordable for people who buy health coverage through the Affordable Care Act marketplaces, like Pennie. These tax credits first became available in 2021 under the American Rescue Plan Act of 2020 and were later extended through 2025 by the Inflation Reduction Act. They expanded eligibility for premium subsidies to include middle-income individuals who previously earned too much to qualify for help, and they significantly increased the amount of financial assistance available to lower income households.
Impact on PA Residents
Nearly 500,0000 Pennsylvanians are enrolled in Pennie; the large majority use enhanced tax credits to afford health coverage. If enhanced premium tax credits are not extended, these people will face steep cost increases. Starting in January, average health insurance premiums will go up 102% when combined with 2026 insurance rate increases. Some enrollees will see their costs go up even higher.
People earning over 400% of the Federal Poverty Level (about $60,000 annually for a single person) will face the steepest premium increases. These people were previously ineligible for any federal assistance but became eligible under the enhanced tax credits. Lower income people will also see premiums rise. Older Pennsylvanians (ages 45-64), who make up half of Pennie enrollment, will be hit particularly hard.
Potential Coverage Loss
The cost increases will come as a shock to Pennie enrollees, three-quarters of whom have only ever experienced enrollment with enhanced tax credits. Pennie estimates that up to 245,000 Pennsylvanians could lose health coverage if enhanced tax credits expire and accounting for other recent federal policy changes. The loss of coverage will primarily be driven by people dropping coverage that is no longer affordable.
What You Need to Know About Open Enrollment
Open enrollment for Pennie begins November 1, 2025 and runs through January 31, 2026. Current Pennie enrollees and new applicants who are concerned about affording coverage should play close attention to whether the enhanced tax credits are extended. This decision could happen well after open enrollment begins. If the tax credits are extended, Pennie will update their systems to reflect lower premiums so enrollees will want to update and refresh their Pennie accounts to see their costs.
Looking Ahead
The loss of enhanced premium tax credits would represent a significant setback for health insurance affordability in Pennsylvania. PHLP will continue to monitor this situation and provide updates on any actions to extend the enhanced premium tax credits.
