Impact of Expiration of COVID Tax Credits on Health Insurance Changes This Year

The expiration of COVID-related tax credits has brought significant changes to health insurance for many consumers this year. After two years of enhanced financial support, millions of Americans now face adjustments in their health coverage costs and options. Understanding what happened, why it matters, and how it affects your wallet can help you make informed decisions during this year’s enrollment period.

What Were the Expired COVID Tax Credits?

During the COVID-19 pandemic, the federal government introduced temporary tax credits to help people afford health insurance. These tax credits, part of the American Rescue Plan Act (ARPA) passed in 2021, expanded subsidies for health insurance premiums under the Affordable Care Act (ACA). The goal was to reduce financial barriers to coverage amid widespread job losses and economic uncertainty.

Key features of the COVID tax credits included:

• Increased subsidy amounts that lowered monthly premiums for millions of people.

• Expanded eligibility so that individuals and families with incomes above 400% of the federal poverty level could qualify.

• No cap on premium costs relative to income, meaning premiums were capped at a lower percentage of household income than before.

  
  

These changes made health insurance more affordable for many, especially those who lost employer coverage or faced financial hardship during the pandemic.

What Changed This Year?

The enhanced COVID tax credits were temporary and expired at the end of 2022. This expiration means:

• Subsidies have returned to pre-pandemic levels. The expanded eligibility and increased amounts are no longer available.

• Premium costs have increased for many consumers. Without the extra tax credits, monthly premiums are higher.

• Some people no longer qualify for subsidies. Those with incomes above 400% of the federal poverty level may now pay full price.

  
  

These changes have led to noticeable shifts in the health insurance market this year.

How Premium Increases Affect Consumers

Many consumers are seeing premium increases this year due to the expiration of COVID tax credits. The Kaiser Family Foundation reported that average premiums for benchmark plans increased by about 10% nationally in 2023 compared to 2022. Without the extra tax credits, consumers must pay more out of pocket.

For example:

• A family of four earning $75,000 annually might have paid $300 per month in premiums last year with COVID tax credits. This year, their premium could rise to $450 or more.

• Individuals who previously qualified for subsidies may lose them entirely if their income exceeds the new eligibility limits.

  
  

These premium increases can strain household budgets and lead some people to reconsider their coverage options.

What Consumers Should Know About Enrollment

With these changes, consumers need to be proactive during the health insurance enrollment period. Here are some practical tips:

• Review your eligibility carefully. Check if you still qualify for subsidies based on your current income.

• Compare plans thoroughly. Look beyond premiums to consider deductibles, copayments, and coverage benefits.

• Explore alternative coverage options. Medicaid or employer-sponsored plans might be more affordable for some.

• Use official resources. The HealthCare.gov website and state marketplaces provide tools to estimate costs and subsidies.

  
  

Understanding these factors can help you find the best plan for your needs and budget.

Why the Expiration Happened

The COVID tax credits were designed as temporary relief during an emergency. Lawmakers intended these subsidies to support people through the pandemic’s economic impact, not as a permanent change to the ACA framework.

The expiration reflects:

• Budget considerations. The government must balance spending priorities and cannot extend all pandemic-era programs indefinitely.

• Policy debates. Some policymakers argue for returning to the original subsidy structure, while others push for permanent expansions.

• Market adjustments. Insurers and regulators expect some premium increases as temporary subsidies phase out.

  
  

Consumers should stay informed about potential future changes, as health policy continues to evolve.

What This Means for Different Groups

The impact of the tax credit expiration varies depending on individual circumstances:

• Low-income households may see smaller changes if they qualify for Medicaid or other assistance.

• Middle-income families often face the largest premium increases, especially those near or above 400% of the federal poverty level.

• Young adults and healthy individuals might consider high-deductible plans or short-term coverage to manage costs.

• People with chronic conditions should weigh premium increases against out-of-pocket costs and coverage needs.

  
  

How to Prepare for Next Year

Planning ahead can reduce surprises and help you maintain affordable coverage:

• Estimate your income accurately. This affects subsidy eligibility and premium costs.

• Keep documentation ready. Income verification and tax information are essential for enrollment.

• Monitor policy updates. New legislation or state programs could alter subsidies or coverage options.

• Seek expert advice if needed. Certified navigators and insurance brokers can provide personalized guidance.

  
  

Taking these steps improves your chances of securing the best possible health insurance.

Summary

The expiration of COVID tax credits has led to premium increases and reduced subsidy eligibility for many consumers this year. These changes mark a return to pre-pandemic health insurance rules, which means higher costs for some households. By understanding the details and preparing carefully, consumers can navigate this transition and find coverage that fits their needs.

If you are shopping for health insurance this year, start early, compare plans, and use available resources to manage premium increases. Staying informed is the best way to protect your health and your budget.