Congress passed enhanced premium tax credits (PTCs) in March 2021 as part of the American Rescue Plan Act and extended them through 2025 by the Inflation Reduction Act of 2022. The enhanced PTCs substantially increased the subsidies available to buy insurance in the Marketplace and extended eligibility for PTCs to people with incomes above 400 percent of the federal poverty level (FPL), making coverage more affordable for eligible people. As a result, enrollment steadily increased and jumped by 5 million people, or 31 percent, during the 2024 open enrollment period.

In this summary, we examine the expected distribution of enhanced PTCs among nonelderly people with incomes over 400 percent of FPL by age, income, and state. We use projected 2025 subsidized Marketplace enrollment from the Health Insurance Policy Simulation Model, supplemented with 2024 benchmark premiums and FPLs, to estimate the financial impact of enhanced PTCs.

WHY THIS MATTERS

Soon, Congress will debate whether to reauthorize enhanced PTCs or make them permanent. Enhanced PTCs that extend eligibility to people with incomes above 400 percent of FPL improve Marketplace plan affordability largely for older adults and those in high-premium states. If the enhanced PTCs are allowed to expire, many older Marketplace enrollees in high-premium states could be forced out of coverage. Older couples would face very high out-of-pocket premiums for coverage in the absence of enhanced PTCs.

WHAT WE FOUND

Our key findings are as follows:

• Less than 10 percent of the 17.4 million Marketplace enrollees who will receive an enhanced PTC in 2025 have incomes above 400 percent of FPL. Half of this group, around 725,000 people, have incomes below 500 percent of FPL.
• Enhanced PTCs reduce out-of-pocket premiums, mostly for adults aged 50 and older and people living in high-premium states.
• Without enhanced PTCs, a 60-year-old earning $60,251—just above 400 percent of FPL—would pay $986 per month, or almost 20 percent of income, on average for a Marketplace plan in 2024.
• Among nonelderly adults with individual incomes of $60,241 per year—just above 400 percent of FPL—enhanced PTCs lower average out-of-pocket premiums by 11 percent for 40-year-olds and 57 percent for 60-year-olds.