On Dec. 31, Affordable Care Act tax credits that reduced premium costs for millions of Americans expired after inaction from Congress. Now with costs rising and people losing coverage, healthcare providers are left to sort through the ripple effects.
January 1 marked 12 years since the Affordable Care Act (ACA)’s marketplace went into effect, the most significant change to the nation’s healthcare system since the creation of Medicaid and Medicare in the 1960s.
It also marked the expiration of key federal tax credits that made premiums more affordable for tens of millions of Americans. In North Carolina, the loss of those subsidies contributed to a 22% plunge in ACA sign-ups this year, with 220,000 fewer residents enrolling in plans than in 2025.
The loss of tax credits comes after Republicans in Congress declined to extend them, a decision that not only cost millions of Americans their health care, but increased the cost of premiums for remaining ACA recipients who received subsidies by an average of 114%, according to KFF.
The loss of these credits has created a wave of uncertainty for North Carolinians who get the ACA, as well as healthcare providers.
But before we get to that, here’s a quick refresher on the Affordable Care Act and how we got here.
A brief history of the Affordable Care Act
The Patient Protection and Affordable Care Act (commonly known as Obamacare or the ACA), was a law passed under the Obama administration in 2010, with the goal of lowering healthcare costs and expanding coverage. When the ACA was signed into law, 48 million Americans were uninsured. By the end of 2024, that number had dropped to around 27 million.
The ACA created a healthcare marketplace for both individuals and businesses to enroll in insurance plans for themselves and their employees. To expand coverage to lower-income Americans, it included an expansion of Medicaid that states can opt into, providing coverage to people whose income is 138% of the federal poverty level or below. North Carolina expanded Medicaid access on Dec. 1, 2023, and over 700,000 people have enrolled in the program since then.
What are the tax credits and why did they expire?
In 2021, Democrats passed the American Rescue Plan Act, which established tax credits to expand access to insurance plans through the ACA to households whose income is 400% of the federal poverty level or below. The 2022 Inflation Reduction Act later extended the subsidies through the end of 2025.
Last summer, President Donald Trump signed into law the ‘One Big Beautiful Bill,’ which included $1 trillion in cuts to Medicaid over a 10-year period. The law also failed to address the looming expiration of the tax credits.
During last fall’s federal government shutdown, Democrats urged Republicans—who hold a majority in both the US House and Senate—to extend the tax credits as part of any agreement to reopen the government. Republicans refused, and after a 43-day government shutdown, a small band of Democrats worked with Republicans to reopen the government in exchange for a promise to hold a floor vote on the credits.
In December, a Senate bill to extend the credits failed to gain the 60 votes needed to pass, and they expired at the end of 2025.
Soaring costs for North Carolinians
With the expiration of the tax credits, ACA enrollees in North Carolina face especially steep insurance cost increases this year, with the cost now out of reach for hundreds of thousands of residents.
Research from the Center on Budget and Policy Priorities (CBPP) estimates that in North Carolina, a 45-year-old earning $64,000 per year is seeing their annual premium costs rise by $3,210 this year. Meanwhile, a family of four whose income is $130,000 could pay as much as $24,478 for coverage this year, an increase of over $13,000.
CBPP also projects that a 60-year old couple earning just over 401% of the federal poverty level ($85,000) could see an increase of $25,000 in yearly costs.
Rural communities hit the hardest
Rural communities nationwide are projected to be hit particularly hard, with premiums expected to rise 28% more than in urban areas. And with millions of Americans losing their ACA coverage, rural hospitals also stand to see yearly losses of $1.5 billion due to unpaid care for services.
Dr. Ray Antonelli, who practices at a Federally Qualified Health Center (FQHC) in Halifax County, a rural community in Northeastern North Carolina, says people there will be severely affected by the loss of ACA tax credits.
Nearly 1 in 4 residents live below the poverty level, and even before the expiration of the tax credits, over 16% of adults in the county were uninsured.
“Historically in rural parts of the state, and especially Halifax County, we have a pretty high percentage of people who were uninsured pre-Affordable Care Act and pre-Medicaid expansion. A lot of people, especially with the subsidies, were able to afford coverage. Even in the five years I’ve been here, a number of my patients were able to get coverage through the ACA because they were just able to afford marketplace plans,” he said.
Antonelli says becoming uninsured or underinsured can have immediate negative consequences for patients.
“Especially when they lose coverage completely, diabetes is a really good example where you can be really well controlled, but insulin and a lot of the newer diabetes medicines are not cheap at all,” he said.
Antonelli says price hikes for the patients he serves in places like Halifax are harder to weather than for residents in wealthier parts of the state. Across North Carolina, household incomes are significantly lower in rural counties like Halifax than wealthier counties like Wake or Mecklenburg.
“They’re hustling, working two, three jobs. But they don’t have an employer giving them a plan. They also have more marginal incomes, so they just don’t have it in their budget to afford a huge premium increase,” he said.
Where do things stand?
While the credits expired at the end of 2025, in early January, the House of Representatives voted 230-196 to restore the tax credits after 17 Republicans joined Democrats to pass the bill. The legislation currently sits in the Senate, where 60 votes are required for passage.
For the tax credits to be restored, the Senate would have to pass the House bill, and then President Trump would need to sign it into law. While the odds of a bill passing the Senate and being signed into law are slim, a small group of bipartisan senators continues to negotiate.
Have you recently lost your health insurance? You can find out where you can still access health care here.
