White House Proposes Two-Year Extension of Obamacare Subsidies Amid Expiration Deadline

White House Seeks to Avert Premium Hikes

The White House has put forth a proposal to extend subsidies for Affordable Care Act (ACA) coverage for an additional two years. This initiative aims to prevent a substantial increase in health insurance premiums for millions of Americans, as the current enhanced tax credits are set to expire on December 31, 2025. The draft plan suggests that President Donald Trump is open to extending this provision of Obamacare, even as his administration and congressional Republicans seek broader healthcare solutions.

Without congressional action, analyses indicate that the average subsidized enrollee could see their premium costs more than double in the coming year. The uncertainty surrounding the subsidies' future has already led to consumers facing higher prices for 2026 plans, with open enrollment having commenced on November 1, 2025.

Understanding the Enhanced Subsidies

The enhanced ACA subsidies were initially introduced through the American Rescue Plan Act (ARPA) in 2021 and subsequently extended by the Inflation Reduction Act (IRA) in 2022. These enhancements significantly increased financial assistance for individuals purchasing health insurance through the ACA marketplaces. Key changes included:

• Eliminating the 'subsidy cliff' for individuals earning more than 400% of the federal poverty level (FPL), ensuring they still received assistance if premiums exceeded 8.5% of their income.
• Increasing subsidies for lower-income individuals, with some qualifying for free or nearly free 'silver' plans.
• Broadening eligibility to include households with incomes above 400% of FPL, a cap that existed in the original ACA.

The enhanced subsidies have been credited with driving record enrollment in the ACA marketplaces, with nearly 25 million Americans enrolled in 2025, more than double the approximately 11 million in 2020.

Potential Impact of Expiration and Proposed Changes

If the enhanced subsidies are allowed to expire, the Congressional Budget Office (CBO) projects that up to 4 million people could lose their health coverage. Many middle-income families could see their monthly costs more than double, with a 40-year-old earning $50,000 a year potentially paying around $2,000 more annually for a benchmark silver plan.

The White House's current proposal, which is still in draft form, includes several modifications. It suggests capping eligibility for subsidies at 700% of the federal poverty level. Additionally, the plan may require all Obamacare enrollees to pay a minimum premium for their plans, such as 2% of their income or at least $5 per month. This would effectively eliminate 'zero-premium' plans for those with lower incomes, addressing concerns from some Republicans about potential fraud.

Political Landscape and Costs

The extension of these subsidies has been a point of contention in Washington. Democrats had previously insisted on a straight extension of the tax credits during a recent government shutdown fight. While the White House is circulating this proposal, congressional Republicans have historically sought to repeal or significantly alter the ACA. Some Republicans are reportedly pressuring the White House to delay or modify the plan, viewing the subsidies as 'government bloat' and expressing concerns about fraud.

Extending the enhanced subsidies for two years is estimated to cost approximately $60 billion. A full extension over a decade could cost around $350 billion. The White House has emphasized that no plan is final until President Trump officially announces it.