Enhanced Premium Tax Credits
- MaryCatherine Jones
- Apr 29
- 4 min read
Updated: May 2
Why They Matter for Free and Charitable Clinics and Pharmacies
As we look ahead, a key part of the Affordable Care Act (ACA) is set to expire in the end of 2025—and it could have significant consequences for millions of Americans and the healthcare organizations that serve them.
We're talking about enhanced premium tax credits—a lifeline that made health insurance more affordable for low- and middle-income families. For Free and Charitable Clinics, Charitable Pharmacies, and other safety net providers, their expiration could spell a new wave of demand and strain.
Let’s break down what they are, what happens if they go away, and why this matters.
What Are Enhanced Premium Tax Credits?
Simply put, premium tax credits lower the cost of monthly insurance premiums for people who buy coverage through the ACA marketplace. These credits were enhanced temporarily during the COVID-19 pandemic to help more people afford health insurance.
Here’s what changed under the enhancement:
Bigger subsidies: People paid less for premiums because the expected contribution was reduced.
No income cap: Even people making more than 400% of the federal poverty level (FPL) could get help if premiums exceeded 8.5% of their income.
These changes were first introduced in the American Rescue Plan Act of 2021 and later extended through 2025 by the Inflation Reduction Act. If Congress doesn’t act, the enhancements will expire at the end of 2025.
What Happens If They Expire?
Enhanced premium tax credits have made private insurance affordable for millions—especially in states that didn’t expand Medicaid. Marketplace enrollment more than doubled, reaching 24.3 million in 2025.
But if the credits end, here’s what we’re likely to see:
🔺 Higher Costs
Families will face larger premiums, making it harder to fit healthcare into already tight budgets impacted by inflation.
⛔ Loss of Subsidy Eligibility
People earning just over 400% of the FPL will no longer qualify for any subsidies—even if insurance remains unaffordable.
❌ More Uninsured Americans
An estimated 4 million people could lose their insurance, reversing progress made over the last several years.
How Will Free and Charitable Clinics and Pharmacies Be Affected?
For many years, Free and Charitable Clinics and Pharmacies have served people who fall through the cracks—often those earning up to 250% of the FPL. If the enhanced tax credits disappear, more Americans may turn to safety net providers for help, especially those who no longer qualify for subsidies but still can’t afford insurance.
Increased Demand for Charity Care
Hospitals, public health departments, FQHCs, and Free and Charitable Clinics could all see rising demand from people previously covered through the Marketplace.
Pressure on Resources
Even with expanded support in recent years, many safety net providers already operate at or near capacity. An influx of new patients may require more staff, space, volunteers, and supplies, and raise costs.
Systemic Strain
If enhanced tax credits expire and Medicaid funding is reduced, safety net systems may lose capacity—leaving even more people without access to care.
Why Would Congress Let the Credits Expire?
While the enhanced credits are popular, there are arguments in favor of letting them end:
💰 Reduce Federal Spending
It would cost an estimated $335 billion over 10 years to extend the credits. Many Republicans prioritize fiscal restraint and reducing government spending.
🏛️ Preference for Market-Based Solutions
Some lawmakers oppose ACA subsidies altogether, viewing them as government overreach. Instead, they advocate for deregulation and private-sector innovation to reduce healthcare costs.
🎯 Political Strategy
Allowing the credits to expire fits with broader efforts to undo Biden-era and pandemic-era policies, including expanded federal benefits.
Why Should They Be Extended?
There are strong arguments for keeping the enhanced credits in place—at least for now:
🛫 Improve Healthcare Access
The enhanced premium tax credits have led to record enrollment in the healthcare Marketplace and expanded health coverage to a record number of people. Enrollment in coverage supports individual and community health and wellbeing. It improves access to care, improves health outcomes, and encourages appropriate use of healthcare resources. It reduces financial strain on American families.
🛫 Build a Transition Runway
Extending the credits gives states, federal agencies, and healthcare providers time to prepare for a post-subsidy future, including identifying alternative funding and delivery models.
🧾 Protect Household Budgets
With the rising cost of food, rent, and transportation, healthcare premiums could become unaffordable again for working families—especially those earning above 250% FPL.
🏥 Prevent Overcrowding in ERs
When people lose access to primary care, they end up in emergency rooms for preventable issues. This leads to higher costs, lower quality care, and stress on hospitals.
🧩 Protect Communities
Healthcare instability affects more than health—it impacts productivity, childcare, household finances, and overall community well-being.
In Summary
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The enhanced premium tax credits have expanded health insurance coverage, reduced costs, and eased pressure on America's healthcare safety net. Their expiration could undo that progress, increasing the uninsured rate and straining the very organizations that stepped up during the pandemic.
Free and Charitable Clinics and Pharmacies, FQHCs, hospitals, and public health organizations could all face increased demand—and without the resources to match.
With the clock ticking toward 2026, Congress must decide: Will they extend this vital support—or allow a wave of consequences to ripple across the country?
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