ACA Subsidy Expiration: A Patchwork of State Responses Emerges

Earlier this year, KBRA discussed the expected impacts of enhanced premium tax credits expiring at year-end 2025. These tax credits were first introduced under the American Rescue Plan Act of 2021 and later continued through 2025 under the Inflation Reduction Act. KBRA identified potential negative credit implications for hospitals and knock-on pressures for states already facing budgetary constraints stemming from the One Big Beautiful Bill Act (OBBBA). An enhanced premium tax credit is a refundable credit that helps offset the cost of health insurance premiums for eligible individuals purchasing coverage through the Affordable Care Act (ACA) marketplace. Once the enhanced premium tax credits expired, this effectively reverted eligibility and benefit levels to their pre-pandemic framework, including the reinstatement of the 400% federal poverty level…