Virginia will have to pay nearly a quarter of a billion dollars annually to maintain health insurance premium tax credits for plans purchased through the state’s marketplace if Congress does not act by the end of the year.
If Congress fails to act and Virginia is unable to shoulder the cost, 203,057 people who currently benefit from enhanced premium tax credits will see a dramatic increase in how much they pay for health insurance in the coming year, according to data from the Virginia State Corporation Commission’s Bureau of Insurance and Virginia’s Insurance Marketplace, provided to Cardinal News by Sen. Scott Surovell, D-Fairfax County.
The cost for Virginia to fund the tax credits at their current level would be $234,650,902.10 annually, according to the data.
“These health insurance policies are not nearly as affordable for working Virginia families without the benefit of these tax credits,” Surovell said in a text message on Friday. “We have driven Virginia’s uninsured population down to record levels with Medicaid expansion and the Virginia Healthcare Exchange. This will undo that success and the cost of uninsured care will get pushed on to business, people will be less healthy because they can’t get medical care and we will all pay more.”
Under the existing tax credit program, people whose income falls between 100% and 200% of the federal poverty level — earning between $15,650 and $31,300 annually for a household of one — pay on average between $27 and $59 per month, or between $324 and $708 per year, for their health insurance plan through the marketplace.
Insurance premiums through the marketplace could cost $792 per month in 2026, absent all tax credits, for people whose incomes fall between 100% and 200% of the federal poverty level. The individual contribution would increase with a person’s yearly income.
The data was compiled by the Virginia State Corporation Commission’s Bureau of Insurance and Virginia’s Insurance Marketplace at Surovell’s request. That new information comes as the state is bracing for other increased costs as the federal government continues to cut spending.
What are the enhanced premium tax credits?
Federal premium tax credits were created under the Affordable Care Act in 2010 to make health insurance plans more affordable. The subsidies were originally only available to people who earned up to 400% of the federal poverty level. In 2021, the American Rescue Plan Act removed the cap so that no one would need to spend more than 8.5% of their income on marketplace health insurance. Subsidies were also enhanced for people whose incomes fell between 100% and 400% of the federal poverty level. Since then, enrollment in marketplace plans has nearly doubled.
The Inflation Reduction Act extended the enhanced credits in 2022, but they are set to expire in December. Without them, subsidies will shrink and fewer people will qualify. Enrollees could struggle to afford insurance and choose to go without, according to the Virginia Bureau of Insurance.
If more people go without health insurance, health care providers like Virginia’s hospitals could be affected.
“When more people are uninsured, it leads to more uncompensated health care into the system — under federal law, hospitals are required to provide care to people who present at the emergency room regardless of insurance status or ability to pay. That can lead to less optimal health outcomes for patients as well as increasing health costs for businesses, families, and governments,” said Julian Walker, spokesperson for the Virginia Hospital and Healthcare Association.
The health care system — including providers and insurance companies — has to make up the cost of uninsured care. Historically, that system has done so by pushing the cost of the uninsured care onto people who have private insurance, and that is typically paid for by businesses, Surovell said. Surovell, the state Senate Majority Leader, sits on the Senate Appropriations Committee.
People whose income falls between 150% and 400% of the federal poverty level will still qualify for some tax credits, even if the enhanced credits disappear. However, as income rises, the subsidies get smaller. Those with incomes over 400% of the federal poverty level will no longer be eligible for any subsidy once the enhancements expire. For a single-person household, 400% of the federal poverty level is about $62,600 a year. For a family of four, it’s roughly $128,600.
“It gets a lot more expensive as you go up the chain,” said Deepak Madala, director of Enroll Virginia and a lawyer with the Virginia Poverty Law Center.
An online calculator by KFF estimates how the expiration of enhanced subsidies in 2025 might affect premium payments. Users can enter their state, ZIP code, income and number of children to see an estimate of their premiums without the enhanced tax credits.
For example, two 40-year-old parents with children ages 8 and 10, earning $100,000 annually in Roanoke, could see premiums rise by $178 per month, a 33% increase, starting in 2026.
End of enhanced tax credits could trigger costly repayment
Another looming change tied to enhanced premium tax credits could be especially painful for Virginians in the coming years: the way subsidies are reconciled at the end of the year.
Marketplace subsidies are based on income estimates for the year ahead, which applicants provide during open enrollment from November through January. The Virginia marketplace and the IRS send the estimated subsidies directly to the insurer every month. At tax time, the IRS checks the enrollee’s income against the estimate, Madala said.
If they earned more than they estimated, they may have to repay some of the subsidy.
Right now, under the enhanced program, there’s no income cap for subsidies. Even if income rises, enrollees are not expected to contribute more than 8.5% of their income toward premiums.
That protection could disappear in 2026. Once the enhanced credits expire, anyone earning over 400% of the federal poverty level in the last month of the tax year will lose all eligibility. That means they’ll have to repay any subsidies they received during the year — sometimes thousands of dollars, Madala said.
“A very common thing, we see this all the time, is that they lose their job or they have a purchase of some type, like they had damage to their house or flooding or something like that, and so they take a distribution on their retirement. All of a sudden they jump way over 400%,” Madala said.
Other times, small business owners might make a large sale or get a surge of orders in December, suddenly changing their income at the end of the year.
Virginia lawmakers weigh in on expiration of tax credits
State Sen. Creigh Deeds, D-Charlottesville and a member of the Senate Appropriations Committee, said the General Assembly would likely discuss taking on the cost to maintain some of the enhanced tax credits, should the legislature opt to gavel in for a special session before year’s end.
“The reality is that the state does not have the resources to match federal cuts in spending dollar for dollar, but we are resolved to address this as best we can,” he said in an email. “We have worked too hard to reduce the number of uninsured Virginians, and we are exploring all avenues to ensure people continue to have access to care. Elections have consequences, and we cannot undo all of the consequences of the 2024 election.”
Del. Ellen Campbell, R-Waynesboro, who sits on the House of Delegates Appropriations Committee, said it’s important for state legislators to remain in contact with federal representatives about the issue.
“We certainly can’t control what happens in Congress, but it is our responsibility to our constituents to make adjustments at the state level if needed,” she said in an email. “I’m confident that the money committees can work together and find a solution that works for all Virginians.”
Del. Sam Rasoul, D-Roanoke, who also sits on the House Appropriations Committee, said that the state would be unable to “clean up” after federal funding cuts to the enhanced premium tax credits and other programs, like Medicaid and the Supplemental Nutrition Assistance Program, or SNAP. Costs to maintain the current level of funding for those programs in Virginia would be ongoing, year after year.
“We need our federal officials and our governor and other statewide leaders to stand up and tell Washington enough is enough,” he said in an interview on Thursday. “The reality is, we are being hit from so many different angles and with unemployment rising we would just not be able to clean up from the devastation that’s coming from the [Trump] administration.”
He added that Virginia’s next governor and the next House of Delegates will likely have a difficult task before them, to balance the federal cuts against the state budget.
2026 insurance prices are already set. Can Congress still act?
Even if Congress voted to extend the tax credits before Dec. 31, a lot of insurance companies had already submitted paperwork with 2026 pricing ahead of Nov. 1 open enrollment, under the assumption that the credits would expire.
The Bureau of Insurance required rates with and without enhanced subsidies, ahead of open enrollment, said Douglas Gray, executive director of the Virginia Association of Health Plans.
Insurance companies may be able to adjust pricing if Congress were to vote to extend the tax credits before the end of the year, but it is unclear how complicated that process could be.
The Virginia Bureau of Insurance reported in August that marketplace rates will climb by 20.5% in 2026, the steepest increase since 2018. Insurers expect some healthy Virginians to drop coverage due to higher premium costs, which would destabilize the risk pool and raise rates for those who remain.
“The Republicans chose to extend tax breaks for the rich while phasing out enhanced health insurance premium subsidies for everyday people. We fought to maintain those subsidies but Republicans refused to do so and now millions may lose their health insurance. We’ll keep fighting to restore them,” U.S. Sen. Tim Kaine, D-Va., said in a statement Thursday.
“For many families, Affordable Care Act tax credits make all the difference between having access to health care, or going uninsured,” U.S. Sen. Mark Warner, D-Va., said in a statement on Thursday. “Especially now, as insurance companies and states work to finalize the cost of their premiums for next year, Congress must act. We cannot afford to go back to the days where folks only saw a doctor when they ended up in an emergency room.”
“I think Congress needs to take up issues related to enhanced tax credits and financial supplements for various levels of the Obamacare exchanges,” Rep. Morgan Griffith, R-Salem, said in a statement on Thursday. “The House-passed version of the reconciliation bill contained a lot of good provisions to reduce premiums and give more insurance options. We must reevaluate policies while examining tax credits and/or financial supplements before the end of the year.”
Republican Reps. Ben Cline, R-Botetourt County, and John McGuire, R-Goochland County, did not respond when asked if they expect Congress to take up the issue before the year’s end.
______________
Clarification 6 p.m. Sept. 3: Insurance premiums through the marketplace could cost $792 per month in 2026, absent all tax credits, for people whose incomes fall between 100% and 200% of the federal poverty level, and individual contribution would increase with a person’s yearly income. These details have been clarified from an earlier version of this story.