Older Adults Face Spike in Health Insurance Costs as ACA Tax Credits Expire

AARP is fighting for a permanent extension of savings that lower the price of Affordable Care Act coverage

Miriam Cross,

Updated December 12, 2025

AARP

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Published September 19, 2025

/ Updated December 12, 2025

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AARP (Getty Images, 2)

Charlene Sterlace is feeling the pinch of higher health insurance premiums already.

The 61-year-old New York state resident has purchased insurance since 2019 through the state’s Affordable Care Act Marketplace. She remembers her rates plunging during the pandemic when Congress enacted new tax credits. “I was so grateful,” she says. 

Since then, she and millions of other older adults who rely on health coverage through the Affordable Care Act federal and state health insurance marketplaces enacted under the ACA have benefited from those enhanced premium tax credits. Those credits, a form of savings that emerged in 2021 and expanded upon federal tax credits already available to low-income enrollees, lowered the cost of marketplace plans across the board.

But the enhanced premium tax credits are set to expire at the end of this year, and open enrollment ends Dec. 15 for coverage that starts on Jan. 1. Two proposals to address this problem — one by Democrats to extend the tax credits for three years and one by Republicans to soften the blow of higher premiums with health savings accounts — were blocked in the Senate on Thursday. That means the cost of ACA health insurance will skyrocket for many people in January.

The change will hit especially hard for nearly 5 million adults between the ages of 50 and 64 who rely on this coverage. They already pay up to three times more for private insurance than younger adults on the same plan. 

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When the enhanced premium tax credits lapse, people with incomes above 400 percent poverty will lose their cushion entirely. Adults between the ages of 50 to 64 who have high premiums will see their average annual premiums increase by about $4,600 in 2026, according to an analysis by health care consulting firm Avalere Health for AARP. Lower-income enrollees will continue to receive premium reductions but will see higher premiums because of the loss of enhanced premium tax credits. Older adults with incomes at 100 to 400 percent of poverty will face average premium increases in 2026 of $600 to $1,400 per year. 

In August, Sterlace estimated that the current tax credits are saving her $35 to $40 per month on her premiums.  

“When you take away this extra help, even if it’s $5 a month, that’s still $5 a month, because your electric bill goes up $14 a month,” she says. “People can’t afford it.”

The importance of ACA tax credits

Health insurance rarely feels like a bargain. But enhanced premium tax credits have been a lifeline for those who otherwise felt priced out of their insurance. 

Before the pandemic, people whose incomes fell between 100 percent and 400 percent of the federal poverty level and did not have access to affordable coverage through an employer could receive financial help for their ACA plans. But those limits froze out anyone above that 400 percent threshold. 

“That was really hard for our folks, the 50 to 64, many of whom are right above that,” says Brendan Rose, a government affairs director at AARP. According to KFF, a nonprofit focused on health policy research and polling, 51 percent of ACA enrollees with incomes over four times poverty ($62,600 for an individual in 2025) fall in that age range.

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In 2021, Congress boosted ACA tax credits for low-income enrollees as part of the American Rescue Plan Act and ensured that no one’s monthly premiums would exceed 8.5 percent of their annual household income. In 2022, Congress extended these benefits through the end of 2025 as part of the Inflation Reduction Act. 

AARP has been pushing Congress to make the enhanced premium tax credits permanent rather than letting them expire. In 2023, AARP joined Keep Americans Covered, a coalition of health care organizations and advocacy groups fighting for lower-cost premiums and a permanent extension of ACA credits.

Throughout 2025, AARP also engaged with members of the Senate, House and their staff members hundreds of times to emphasize the damage the loss of these tax credits will have in a specific state or congressional district.

“We urge Congress to act swiftly and extend the enhanced premium tax credits that help make health care more affordable and accessible for millions of Americans before they expire at the end of this month,” AARP wrote in a December statement to the U.S. Senate Committee on Health, Education, Labor and Pensions. “Nowhere is that pressure heavier than on Americans ages 50 to 64, who do not yet qualify for Medicare coverage and who are more likely to need health care services than other age groups.”

Without the enhanced premium tax credits, a couple with a household income of $84,600 and above would be ineligible for help paying for their health coverage, a separate AARP statement points out. For example, a 60-year-old couple earning $85,600, just above 400 percent of poverty, could see annual premium increases of 399 percent in Texas, 384 percent in South Dakota, and 421 percent in Florida.

Health insurance sticker shock

Just over 40 percent of those enrolled in ACA marketplace health insurance are between the ages of 45 and 64, according to a fact sheet published by AARP’s Public Policy Institute in September. Some retired before they were eligible for Medicare. Others work for companies that do not provide health insurance, are self-employed or are on a new path later in life. 

“A lot of folks are starting businesses, taking on new challenges or facing adverse circumstances where they were let go from their jobs and face a loss of coverage for the first time in decades,” Rose says. 

The enhanced premium tax credits meant that people with annual incomes below 150 percent of poverty may pay nothing at all for their premiums, depending on which plan they select. People with incomes above four times poverty got a break for the first time in 2021. 

For example, AARP’s Public Policy Institute found that a 60-year-old marketplace enrollee earning 450 percent of poverty, or $70,425, would pay an average annual premium of $5,760 for silver plan coverage in 2025. Without the 8.5 percent cap, that person would have paid $12,653 for the year.

These credits reduced the number of uninsured people and helped drive ACA marketplace enrollment to a record high of 24.3 million people in 2025, according to KFF.

“It shows that this just wasn’t a pandemic crisis,” says Sara Collins, senior scholar at the Commonwealth Fund, a foundation that supports health care research. “It was an affordability issue in the law itself that needed to be fixed by Congress.”

KFF estimates that the premiums enrollees pay out of pocket will increase by an average of 114 percent next year for those receiving tax credits across all age groups — but the increase will likely be higher for older adults. This spike is not just about pending expiration of the enhanced premium tax credits, though. Insurers are also concerned about rising health care and labor costs, inflation and tariffs. 

If ACA enrollees feel they cannot afford their new rates as premiums rise and enhanced tax credits disappear, the trade-offs they face are tough. Open enrollment ends on Dec. 15 for coverage that starts on Jan. 1, leaving little time to decide.

People may choose to downgrade to a cheaper plan, such as from a silver to a bronze plan, but that will come with more out-of-pocket costs when seeking medical care. Those who are self-employed may decide to reenter the corporate world to access group health insurance, at the cost of job flexibility or a solo business they enjoy. Others may need to cut back on other expenses to afford medical care.

“Some individuals will be left with no good option,” says Matt McGough, a policy analyst in KFF’s program on the Affordable Care Act.

Christine Meehan, who is 51 and lives in Upper Chichester, Pennsylvania, has faced the dilemma of whether or not to maintain insurance. Meehan has been a hairstylist for 32 years. At one point, she worked for a chain that offered health insurance. Otherwise, she sometimes purchased private insurance and other times risked going without before the ACA. 

The cost of coverage through Pennie, Pennsylvania’s marketplace, “is not bad,” Meehan says. She pays $160 per month thanks to her premium tax credits; otherwise, her monthly rate would be $583. Meehan and her fiancé explored the cost of adding her to his group health insurance, but he was quoted a rate of $600 per month.

Meehan will pay $264 out of pocket for the same plan in 2026. “It’s a $100 increase a month, but it’s still doable,” she says. “I am just going to have to watch other things.” 

Still, she notes that the increase in her monthly premiums between 2025 and 2026 will be 65 percent. 

“That’s a lot,” she says.

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