The Future of eAPTCs

What Are eAPTCs?

Income-based Advance Premium Tax Credits (APTCs) were established through the Affordable Care Act (ACA) to make health insurance more affordable for qualifying Americans purchasing coverage through the Marketplaces. However, the APTCs now include several features that were temporarily enhanced under the American Rescue Plan Act (ARPA) and extended under the Inflation Reduction Act (IRA) through Dec. 31, 2025.

The APTCs under permanent law state that eligibility for premium assistance is limited to households with incomes between 100% and 400% of the Federal Poverty Level (FPL), among other requirements. APTCs are calculated as the difference between the premium of a benchmark health plan and an established maximum percentage of income that a household must contribute toward that plan. Under the APTCs established by the ACA, this required contribution amount increases on a sliding scale up to the 400% FPL income cap.

However, the temporarily “enhanced” credits (eAPTCs) eliminate the previous eligibility limit of 400% of FPL, allowing households earning above 400% of FPL to qualify for subsidies and leaving only the minimum income threshold of 100% of FPL in place. This temporarily removes the “subsidy cliff.” The eAPTCs also reduce the required contribution amount across all income levels. For example, households at 250% of FPL would normally be required to contribute 7.73% of the baseline premium under the permanent APTC calculation, but under the eAPTC calculation, these households are required to pay only 4% of the baseline premium, which nearly doubles the amount of premium assistance available. Under the eAPTC calculation, the maximum a household must pay is 8.5% of income toward a benchmark premium. If a household has an income high enough that 8.5% of income exceeds the benchmark premium, that household does not qualify for a subsidy.

Health insurance enrollment through the ACA Marketplaces reached 24.3 million for plan year 2025, more than double the 11.4 million who were enrolled in 2020. Notably, around 22.4 million enrollees (92%) received eAPTCs in 2025. Expiration of the eAPTCs would especially affect most individuals enrolled in marketplace health insurance plans, including beneficiaries with incomes above 400% of FPL, who would no longer be eligible. Households would also see their premiums rise sharply, leading to higher uninsured rates. The Congressional Budget Office (CBO) projects that the uninsured population would increase by 2.2 million in 2026 alone without an extension.

The Debate Over eAPTCs

The fate of the eAPTCs became a central flashpoint during the record-breaking government shutdown, which lasted from Oct. 1 to Nov. 12. Republicans refused to address the subsidies until the government reopened, arguing that it should be discussed separately from government funding. In contrast, Democrats said they would refuse to support legislation to reopen the government until the subsidies were addressed, highlighting that allowing them to expire will lead to substantial price increases for millions of Marketplace enrollees.

After more than six weeks of stalled negotiations, eight Senate Democrats voted with Republicans to help pass a government funding package through Jan. 30, and the House quickly followed suit. However, the deal did not include an extension of the expiring eAPTCs. Instead, Senate Republicans agreed to hold a vote by mid-December on whether to extend them. There is no guarantee of passage, and House Republican leaders have not committed to bringing the measure up for a vote in their chamber. This leaves the future of eAPTCs unresolved, with open enrollment already in full swing and a Dec. 31 deadline fast approaching.

Extension of eAPTCs

Some moderate Republicans have acknowledged the importance of extending the eAPTCs. In October, 13 House Republicans sent a letter to Speaker Mike Johnson (R-LA) urging him to immediately focus on extending the eAPTCs after the government shutdown ends. The letter was led by Reps. Jen Kiggans (R-VA) and Jeff Van Drew (R-NJ), reminding the speaker that millions of Americans will face skyrocketing health insurance premiums if the eAPTCs expire at the end of the year. They called on Speaker Johnson to help chart a conservative path forward on the eAPTCs, underscoring that allowing the credits to lapse without a path forward would risk real harm to their constituents. The letter does, however, call for reforms to make the credits more fiscally responsible.

Separately, Rep. Brian Fitzpatrick (R-PA), who leads the Bipartisan Problem Solvers Caucus, has been vocal in pushing leadership to craft a bipartisan solution that is designed to pass both chambers and become law. He also led the introduction of the Premium Tax Credit Extension Act, alongside Rep. Kiggans, Problem Solvers Caucus Cochair Tom Suozzi (D-NY) and a bipartisan coalition of lawmakers, which would extend the enhanced subsidies through 2026 and maintain expanded eligibility for families earning above 400% of FPL.

Proposed Changes to eAPTCs

Outside of simply letting the eAPTCs expire or granting a straight extension, several notable Republicans have floated lists of possible ways to modify the eAPTCs without eliminating them entirely when they expire. Other proposed changes are likely to emerge as negotiations become more public. Some rank-and-file Democrats have been open to the idea of placing restrictions on the eAPTCs, but it is not clear whether they would be willing to accept a total phase-down of the subsidies.

Reps. Don Bacon (R-NE), Jeff Hurd (R-CO), Suozzi and Josh Gottheimer (D-NJ) released a “statement of principles” outlining a potential bipartisan path forward on extending the eAPTCs. The plan includes the following ideas for extending and reforming the subsidies:

• Temporary Extension: A two-year extension of the eAPTCs.
• Income Cap: An income cap phased out between $200,000 and $400,000.
• Reform: Guardrails to prevent improper payments of eAPTCs.
• Prevent “Ghost Beneficiaries”: Requirements that ACA Marketplaces confirm recipient eligibility with the Death Master File.
• Crack Down on Fraud: Establish a “preponderance of evidence” standard of proof to determine when an agent or broker should be allowed to continue operating in the ACA Marketplaces.
• Enhance Delivery Clarity: Requirements that Marketplaces better notify recipients of the value of eAPTCs they are receiving from the federal government.

New Income Limits

One of the Republicans’ main concerns is that the eAPTC calculation removed the cap on credits going to individuals making above four times the FPL. Key Republicans, including Reps. Kiggans and Fitzpatrick have indicated an openness to imposing new income caps. Furthermore, several members of the House Problem Solvers Caucus have floated a $200,000 income cap. Key Democratic leaders have not outright rejected the proposal and have acknowledged that most beneficiaries already earn less than $200,000. Sen. Jeanne Shaheen (D-NH) has signaled she would be open to potential income caps, suggesting the idea is gaining bipartisan support.

Minimum Out-of-Pocket Premiums

Another idea floated by Republicans is mandating a minimum out-of-pocket payment to unlock eligibility for the eAPTCs. Certain Republicans have alleged that millions of ACA enrollees may not even know they are enrolled in certain plans because the premiums are fully subsidized. Sen. Dan Sullivan (R-AK) has highlighted that the minimum out-of-pocket premium could be very small, citing something like $5, to make people stop and think about what they are signing up for. This policy idea could help target “phantom” ACA enrollees, a concern that House Energy and Commerce Committee Chairman Brett Guthrie (R-KY) said would need to be addressed in any extension.

Cutting Off eAPTCs for New Enrollees and Implementing Fraud Prevention

Some Republicans are calling for allowing current eAPTC enrollees continued access but cutting off access to the enhanced tax credits for new enrollees. The creation of a “grandfathering” clause would likely be accompanied by initiatives to root out waste, fraud and abuse in such health care plans.

New Abortion Restrictions

Some conservative activists argue that the tax credits indirectly subsidize plans to cover abortion. Republican lawmakers have echoed these concerns. Senate Majority Leader John Thune (R-SD) has made clear that Republicans will insist on stronger Hyde Amendment protections, which prohibit federal funding for abortion. He is joined by Sens. Steve Daines (R-MT), Mike Lee (R-UT) and Mike Rounds (R-SD), who warned Democrats, “you won’t get any Republican votes” without tighter restrictions.

Democrats, however, remain firmly opposed to such restrictions. Sen. Shaheen called the proposal a “nonstarter,” emphasizing that the ACA already includes guardrails to comply with the Hyde Amendment. Sen. Ron Wyden (D-OR) and other Democratic leaders have similarly rejected reopening the abortion debate. This standoff could present a major hurdle to reaching a bipartisan agreement, as Republicans view abortion restrictions as essential while Democrats insist the issue was settled when the ACA was enacted.

Alternatives to eAPTCs

Some Republicans, including President Donald Trump and Senate Health, Education, Labor and Pensions (HELP) Committee Chairman Bill Cassidy (R-LA), have proposed redirecting federal subsidy dollars from insurers to individuals through pre-funded Health Savings Accounts (HSAs) or Flexible Spending Accounts (FSAs). Instead of receiving the eAPTCs that lower monthly premiums, eligible exchange enrollees would receive cash-like deposits into an account that could be used for qualified health expenses such as deductibles, co-pays, prescriptions, dental and vision services or out-of-network care. The plan has also been promoted by prominent conservative think tanks, including Paragon Health Institute.

Considering this activity, the Senate Finance Committee, which has jurisdiction over the eAPTCs, held a hearing on Nov. 19 to examine rising health care costs, the pending expiration of the eAPTCs and potential reforms or alternatives. Much of the discussion centered on alternative approaches rather than adjustments to the credits themselves. Republicans argued that temporary subsidies mask structural problems and promoted HSA-based and other models, while Democrats called for an immediate extension of the eAPTCs to prevent sharp premium increases for millions of enrollees.

During the hearing, Sen. Cassidy raised his HSA-based proposal again, framing it as a consumer-driven alternative that would redirect federal dollars from insurers to patient accounts to cover out-of-pocket costs. However, Democrats, like Sen. Shaheen, have stressed that the proposal would do little to help consumers facing sharply higher premiums in 2026, since HSA funds cannot be used to pay premiums and most ACA enrollees are not in bronze plans that qualify for HSAs. As a result, they argue that this approach would not offset the large premium increases expected when the eAPTCs expire.

On the House side, Republicans on the Ways and Means Committee are beginning to circulate legislation that aligns with President Trump’s recent calls to redirect federal subsidy dollars away from insurers and directly to ACA enrollees. The Affordable Care and Comprehensive Economic Support through Savings (ACCESS) Act, led by Reps. Kat Cammack (R-FL) and Greg Steube (R-FL), would allow individuals to elect to receive part of their cost-sharing assistance as contributions to an HSA rather than through insurer-applied reductions in out-of-pocket costs.

Supporters argue this approach gives consumers greater control over their health spending and shifts power away from insurers. Additionally, some Republicans suggest it could lower premiums and federal deficits and allow lower-income enrollees to access more money for their health expenses. Critics, however, caution that redirecting subsidies could reduce ACA Marketplace enrollment by making comprehensive coverage less attractive, especially for younger and healthier individuals who may instead choose cheaper, less comprehensive plans or remain uninsured. While proponents view HSAs as a patient-centered alternative that increases flexibility, opponents see the option as a potential step toward weakening the ACA subsidy structure rather than a substitute for extending eAPTCs.

President Trump has started to contemplate this potential alternative to eAPTCs as part of his broader push towards health care affordability, as he says he wants a health care system where “we pay the money to people instead of the insurance companies.” Sen. Rick Scott (R-FL) is separately working on a bill related to HSAs alongside Sen. Roger Marshall (R-KS), who has stated that Republicans will have a health care plan laid out by December that will lower costs. Ways and Means Committee staff are preparing presentations to walk members through the proposals, which signals that House Republicans may move ahead with Trump-aligned alternatives even as the Senate prepares for a December vote on extending the eAPTCs.

Regardless of the final approach, HSAs could be an attractive option for GOP members as they try to coalesce around a proposal in the next few weeks. Democrats largely see HSAs as a tactic to undermine the ACA and derail an extension of the tax credits.

On the Horizon

Open enrollment for ACA marketplace plans started on Nov. 1, and enrollees have received notices of planned premium increases. If Congress does not extend the eAPTCs before the end of the year, households will see a significant premium increase in their insurance plans. The Senate will have to hold a vote on the eAPTCs by mid-December, but there is no guarantee of action in the House. Over the next few weeks, lawmakers will need to coalesce around a strategy as they sort through dozens of potential options.

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