On November 12, 2025, President Trump signed the Continuing Appropriations and Extensions Act of 2026, effectively ending the 43-day federal government shutdown. The stopgap bill temporarily extended funding for most of the federal government through January 30, 2026. Notably, though, the bill did not include any extension of the ACA enhanced premium tax credits (PTCs), which was the central issue during the shutdown. However, the parties tentatively agreed to vote on the outcome of the enhanced PTCs this month (i.e., in December).
As background, the PTC was originally established to help eligible individuals lower their premium payments for plans offered through ACA exchanges (marketplace). The PTC was originally available only to people who met specific criteria, including a modified adjusted gross income between 100% and 400% of the federal poverty line. Subsequent legislation “enhanced” PTC eligibility by eliminating the maximum income limit for eligibility, while also reducing the cost of monthly insurance premiums. The enhanced PTCs are currently set to expire at the end of 2025, absent a legislative extension.
Currently, the likelihood of a legislative compromise regarding the enhanced PTC is not clear. As explained in our prior article, Enhanced ACA Premium Tax Credits to Expire at End of Year, if the enhanced PTCs expire, premiums are expected to significantly increase. This increase may result in an overall decline in marketplace enrollment, a marked increase in the number of uninsured individuals, and a marketplace risk pool that includes more people with higher health needs.
Employer Takeaway
Despite the reopening of the federal government, the debate regarding the extension of the ACA enhanced PTCs remains unresolved. There have been a variety of proposals in the Senate, including to replace the enhanced PTCs with federal contributions to HSAs, which could be used for out-of-pocket expenses; however, it’s not clear exactly how such an arrangement would work or whether the proposals have sufficient support. Hopefully, the legislators will reach an agreement before the current government funding expires in late January.
The expiration of the enhanced PTC should not directly impact employers. If an applicable large employer (ALE) subject to the ACA employer mandate is offering all full-time employees affordable minimum value (MV) healthcare coverage, the employees would not be eligible for a PTC, and the employer would not risk penalties. Of course, if an ALE fails to offer affordable MV coverage to full-time employees, potential penalties can apply.
However, if the enhanced PTC subsidies expire, it’s possible some employers will experience an increase in enrollment of spouses or dependents of employees, to the extent eligible for the employer’s coverage. Additionally, if market premium costs are not more favorable, more qualified beneficiaries may also choose to elect or remain on COBRA. Finally, if the employer contracts with independent contractors, these individuals may also be seeking affordable coverage if they are no longer eligible for an enhanced PTC. However, for compliance reasons, it is generally not advisable for employers to expand group health plan eligibility to allow independent contractors to enroll; please see our related FAQ: Health Coverage for Independent Contractors? | NFP.
Accordingly, employers should remain aware of the status of the enhanced PTC, and related legislative developments, as 2026 approaches.