Affordable Care Act subsidy extension progresses, but many questions persist (updated Jan. 13)

Note: A section of this article has been updated with the latest ACA enrollment numbers for 2026

Momentum in Congress is building toward an extension of the enhanced subsidies for buying Affordable Care Act (ACA) marketplace coverage, although successful passage would not negate the ongoing uncertainty.

On Jan. 8, the House of Representatives passed a three-year extension of the subsidies, which expired Jan. 1. The bill drew a modicum of bipartisan support as 17 Republicans sided with Democrats.

While the legislation seems unlikely to succeed in the Senate, which failed to pass a similar bill in December, supporters of the House bill hope it will spur the upper chamber to find some type of solution. A bipartisan Senate group has made progress on agreeing to the terms and conditions of a compromise.

As described in reports, the Senate’s yet-to-be released bill language would maintain the enhanced subsidies through 2027 while addressing concerns of Republicans by incorporating income-based eligibility limits and requirements for all enrollees to make a premium payment each month. The latter provision is an anti-fraud measure to eliminate situations where people are unaware that a broker has enrolled them in a zero-dollar ACA plan.

Enrollees would have the option starting in 2027 to divert their subsidies to health savings accounts (HSAs), an approach widely favored in the GOP caucus. The bill also would reinstate federal cost-sharing reduction payments for low-income enrollees.

One obstacle to reaching a final accord could be partisan disagreements over abortion. Some Republicans are seeking increased restrictions that would prohibit ACA plans from covering elective abortions.

President Donald Trump recently told House Republicans they should be “flexible” in negotiating abortion-related terms of a healthcare bill, according to reports.

Looming challenges for ACA enrollment and risk pools

If Congress passes a bill into law, attention would turn to the challenge of renewing the subsidies retroactively. The process would include a special enrollment period, given that the 2026 open-enrollment period ends Jan. 15.

It would not be surprising if confusion is widespread during enrollment. There would have to be a marketing push to reach prospective enrollees who may not be following the news. The state-based ACA marketplaces and Healthcare.gov would have to make administrative adjustments, including for people who have made a nonsubsidized premium payment but now would be eligible for the renewed subsidies.

In addition, insurers would have to figure out what to charge for premiums based on the projected enrollment numbers and composition of the risk pool. Many ACA plans tried to hedge their bets going into open enrollment, submitting two sets of premiums to reflect scenarios where the enhanced subsidies were and were not renewed. But a circumstance where the subsidies are reinstated so late in the process would diverge from both of those situations.

“Even the [premiums] in states where they did provide two rate options, I think neither of those rates would then be actuarily sound in this context,” said David Brueggeman, managing director with BRG.

Jan. 13 update: On Jan. 12, CMS released ACA enrollment numbers showing that 22.8 million signed up for coverage through Jan. 3. That’s 800,000 fewer than at the same point in 2025 enrollment. Enrollment of new consumers is roughly 350,000 fewer.

One aspect to be determined is how many of the 20 million returning enrollees ultimately maintain their coverage. That group includes an unannounced number of auto-reenrollments who will drop off the rolls if they do not pay their first premium within 90 days.

Revenue cycle and billing risks for providers

Providers have plenty of issues to track as the situation unfolds. One concern pertains to people who enroll in ACA plans but do not pay their premiums amid the doubt surrounding the subsidies. If no premium has been paid through three months, the ACA plan can issue a coverage termination retroactive to months two and three.

Providers should be aware of the potential for billing complications if those enrollees seek healthcare during that window, Brueggeman noted.

“The claims for Jan. 1 to Jan. 31 continue to be paid,” he said. “[For] the claims subsequent to that, the dollars would be drawn back from the providers. At that point, the provider is behind the 8-ball, ultimately trying to find those individuals, contact them and then get those payments as self-pay.”

Given the likelihood of coverage losses relative to 2025 regardless of what Congress does, hospitals are preparing to provide more charity care and take on more bad debt, Brueggeman said. He suggests considering a two-pronged mitigation strategy.

“From a charity care perspective, are their policies updated? Do they reflect the realities financially and then the values of the organization?

“And then from a preservice collection perspective, making sure that their revenue cycle is prepared to capture funding as best as possible [and] identify those who are eligible for charity care, because there is a significant expectation of a jump in those applications. But then how will they ultimately collect the money from a self-pay perspective?”

That consideration had been less urgent in recent years as the number of uninsured Americans fell. The current situation “has been used as a catalyst to reflect on those self-pay policies and make sure that they’re capturing dollars as quickly as possible,” Brueggeman said.

Expanded role of health savings accounts and catastrophic plans

Providers also should prepare for a landscape in which HSAs are more prevalent. The Senate bill would establish the accounts as an alternative to receiving subsidies that at least partially cover premiums. HSAs allow enrollees to invest funds to pay for healthcare costs such as deductibles and copays.

The 2025 legislation known as the One Big Beautiful Bill Act already has made HSAs a more viable option for ACA plan enrollees, expanding availability to all enrollees in bronze and catastrophic plans. In an issue brief, KFF reported that 35% of plans sold on Healthcare.gov for 2026 are HSA-eligible, up from 4% in 2025.

As noted in the report, the IRS interpreted the expansion of HSA eligibility to apply to non-ACA bronze and catastrophic plans as well. That potentially gives new incentives to HSA vendors to promote plans outside the ACA marketplaces.

New CMS regulations are another reason why enrollment in catastrophic plans may turn out to be more common this year. The plans, which carry out-of-pocket costs of up to $10,600 for 2026, previously were limited to enrollees younger than 30 or those with a hardship exemption. In anticipation of the possible expiration of the enhanced subsidies, CMS made the plans available to everyone who loses eligibility for subsidized premiums (except for residents of California, Connecticut, Maryland and Washington, D.C., due to existing policies around hardship exemptions in those states).

“More consumers choosing catastrophic plans could have implications for the Marketplace risk pool,” according to the KFF report. “To the extent that catastrophic plans pull enough healthy people out of metal-level plans or off the Marketplace, premiums for these plans, which would be left with more sick people, could increase in the future.”