If healthcare tax credits expire, Vermonters face the biggest losses in the U.S.

One of the main issues at stake in the federal government shutdown was the expiration of enhanced healthcare premium tax credits, which help people buy insurance through the state marketplace. If Congress does nothing, the credits will expire at the end of 2025, and millions of Americans will see large increases in the cost of their healthcare.

Over 30,000 Vermonters get health coverage through the state exchange. And because Vermont has the highest premiums in the country, Vermonters no longer qualifying for the credits will see the biggest increases. Middle-income participants are looking at an additional $10,000 a year for an individual and $32,000 for a family of four.

How the credits work

Vermont’s health insurance marketplace launched in 2014 as part of the Affordable Care Act of 2010 (ACA). The goal was to provide access to affordable health insurance to consumers who can’t get it through work or public programs. The ACA requires every state to operate an exchange with multiple qualified health plans and helps cover the cost of the premiums.

Taxpayers on the exchange receive federal premium tax credits (PTCs) based on the cost of the benchmark silver plan and reduced by a percent of their income (see table). Recipients pay any additional costs. If their plan’s premium is below the value of their credit, they pay nothing.

The 2021 American Rescue Plan Act—enacted to help people weather the financial insecurity of the pandemic—enhanced the PTCs for 2021 and 2022 by providing larger subsidies to eligible households and expanding the number of households eligible. The Inflation Reduction Act of 2022 then extended the enhanced benefits through 2025.

The enhanced credits cover the full cost of the benchmark silver premium for those earning less than 150 percent of the federal poverty level. They decrease the cost for those between 150 and 400 percent of poverty and expand assistance to people with incomes over 400 percent of poverty.

Vermont is one of a handful of states that provide additional assistance with the cost of premiums, targeted at those under 300 percent of the federal poverty level. It also provides assistance to lower out-of-pocket costs for services.

Who gets them, and how much

In 2025, over 30,000 Vermonters on the exchange received an estimated total of $350 million to help cover the cost of care. Most of these funds come from federal tax credits, including at least $65 million from the enhanced credits. Vermont provides just under 2 percent of the assistance ($6.2 million). Participants range across income and age; a third are between 55 to 64 years old.

Over 90 percent of exchange participants qualify for federal subsidies, and about a third receive the additional state support. The average federal credit for Vermonters is $11,400. That’s a big increase over 2015, before the enhanced credits took effect. Then, 22,500 Vermont recipients received an average credit of $3,300. Much of the increase occurred in 2024 and 2025, after the temporary pandemic expansion of Medicaid ended.

What losing the credits means for Vermonters

Many Vermonters receiving credits will pay more for healthcare if the enhanced credits expire. Those with incomes under 400 percent of poverty would pay between 0.5 percent and 4.6 percent more of their income for the benchmark plan, after accounting for state assistance. Middle-income Vermonters, earning more than 400 percent of poverty, would no longer receive assistance. They would pay the full cost of their premiums if they continue to buy healthcare on the exchange.

Because Vermont has the highest premiums in the country and some of the fastest growth in costs in recent years, Vermonters will be hit particularly hard. An individual making $63,000 would pay $15,000 a year for the benchmark plan—nearly a quarter of their income. A family of four at the same poverty level could see an increase of over $30,000 a year.

Conclusion

While the enhanced credits do not expire until the end of the year, the enrollment period for 2026 began on Nov. 1. Vermonters looking to enroll will be facing serious sticker shock. In the absence of federal action, many states are considering how to fill the gap and ensure healthcare access for their residents. With the highest hikes in the country, Vermont must take action to ensure access to care and to bring down its cost.

Without action, many Vermonters will be priced out of healthcare on January 1, 2026.