Jan. 8, 2026 Update: The U.S. House of Representatives voted to retroactively extend the PTC subsidies for three additional years. The legislation is unlikely to pass the Senate in its current form, but some lawmakers are hopeful it will serve as the starting point for a broader compromise. We will continue to monitor and update progress as the bill moves to the Senate.
As of Jan. 1, 2026, the enhanced Premium Tax Credits (PTCs) that stabilized the individual health market have officially expired.
With Congress unable to finalize an extension before the Dec. 31 deadline, the individual market has reverted to pre-2021 rules. We have now entered a statutory gap — a period where the subsidy cliff is no longer a risk, but a reality.
Employers must pivot their strategy to manage this financial shock and ensure compliance stability before the next legislative update changes the math again.
Where Things Stand (The Legislative Gap)
Although a bipartisan group of legislators successfully utilized a discharge petition to force a floor vote on an extension, procedural rules — specifically a mandatory seven-day waiting period — prevented a law from being signed in 2025.
The Current Status: On Dec. 17, 2025, the House passed H.R. 6703, the Lower Health Care Premiums for All Americans Act, by a narrow vote of 216-211. While the bill included provisions for association health plans and stop-loss insurance, it notably omitted the extension of enhanced PTCs. Following this, the Senate rejected a separate measure to extend the credits for three years.
Currently, the discharge petition led by Democrats and supported by four Republicans is pending. A vote is expected in the coming weeks, but the subsidies have already lapsed.
The Retroactivity Question: Any fix passed in the coming weeks would likely need to be retroactive. This scenario creates administrative complexity for insurance carriers that have already issued invoices for January coverage at the new, unsubsidized rates. For enrollees, it means paying significantly higher premiums now in hopes of a future refund or tax credit.
The Cost Hike Specifics (What Employees Are Seeing)
The expiration has triggered the return of the subsidy cliff, a rule that cuts off all financial assistance for individuals earning more than 400% of the Federal Poverty Level (approximately $62,600 for an individual).
The Return of the Cliff: Under the enhanced rules, these earners paid a capped percentage of their income. Now, they face the full market price.
Example: For a 60-year-old couple earning $85,000 (just above the 400% threshold), premiums could skyrocket from 8.5% of their income to roughly 25% — an annual increase of over $20,000.
This figure, based on analysis by the Kaiser Family Foundation (KFF), represents the full, unsubsidized market price of a Silver plan for older adults who lose the protection of the 8.5% income cap.
The Rate Shock for Low Earners: For those earning below the 400% threshold, subsidies still exist, but are far less generous.
- Premiums Doubling: On average, premiums for subsidized enrollees are expected to more than double compared to December rates.
- Loss of Coverage: Estimates from the Urban Institute project that approximately 4 million Americans will drop coverage entirely due to these price spikes, leaving them uninsured.
The Market Impact: This mass exodus creates a risk of adverse selection. As healthy, cost-conscious individuals drop their plans, the remaining pool is made of up a higher concentration of individuals who incur medical costs, potentially driving base premiums up even further in future plan years.
What This Means for Employers
While the chaos is centered on the individual market, the ripple effects will be felt by employers.
Increased Pressure on Employer Plans: Employees priced out of the exchange may now turn to your plan. Expect inquiries regarding Special Enrollment Periods (SEPs), but verify your plan rules immediately: under most plan documents, the loss of a subsidy is not a Qualifying Life Event — only the loss of coverage is.
Value of Stability: While the individual market faces volatility, your employer-sponsored plan remains a stable anchor. Employees reading headlines about rate shocks may not realize those hikes are specific to the public exchange. Use this opportunity to educate your workforce on the total value of their benefits, reinforcing the security your plan provides relative to the open market.
Compliance Stability: The Employer Mandate rules remain unchanged. Regardless of the subsidy lapse, Applicable Large Employers (ALEs) must still offer affordable, minimum value coverage to full-time employees to avoid penalties. For the 2026 tax year, the affordability threshold stands at 9.96%. Your compliance obligations stand firm.
The Path Forward (Scenarios to Watch)
Employers should monitor two potential outcomes:
- The Retroactive Fix: Congress passes the bipartisan extension in late January or February. While this restores relief for employees, it will trigger a complex process of issuing refunds and correcting tax forms.
- The Permanent Lapse: The Senate blocks the House measure, or the discharge petition fails. In this case, pre-2021 subsidy levels become the permanent standard for 2026, and the cliff remains in place.
Recommended Approach: Proceed with your 2026 strategy, assuming the cliff is in effect. Base your compliance on current law to minimize risk.
It is safer to communicate the current reality now, and announce a positive update later if Congress acts, than scramble to explain a cost hike if a fix never comes.
Ensure Compliance Stability with Trusaic
The expiration date has passed, but legislative uncertainty doesn’t have to compromise your compliance strategy. With 2026 filing deadlines approaching fast, now is the time to lock in your data accuracy.
Trusaic’s ACA Complete® solution eliminates the guesswork by combining real-time legislative monitoring with expert-led penalty risk assessments. Contact us today to learn how ACA Complete® can help you navigate the cliff, meet your filing obligations with confidence, and keep your organization audit-ready.
