Compliance Calendar
Congress let the enhanced ACA premium tax credits lapse on January 1, 2026. Employers are not the ones who lost the subsidy, but their employees are now weighing marketplace coverage against the company plan, and some of the effects land on HR.
Key takeaways
- The enhanced premium tax credits expired at the end of 2025 and, as of mid-October 2026, we have not seen an extension enacted.
- Marketplace enrollment fell by roughly 3 million people in early 2026, and many enrollees who stayed moved to bronze plans with higher deductibles.
- The employer mandate has not changed. The 2027 affordability percentage is 10.22%, up from 9.96% in 2026.
- Expect more questions about the company plan, more mid-year enrollment requests, and more need for accurate eligibility tracking.
What changed on January 1
The enhanced credits were created in 2021 and extended through 2025. When they expired, the original ACA subsidy rules came back: the extra help for middle-income households ended, and households above 400% of the federal poverty level lost eligibility entirely. The House passed a three-year extension in January 2026, but the Senate did not follow, and we have not seen any extension become law since.
Federal and independent data show the effect. Effectuated marketplace enrollment in early 2026 was about 19.2 million, down roughly 3 million from a year earlier, the first decline in seven years. KFF reported that average premiums paid by enrollees rose about 58% after people switched plans, and that bronze plan selections rose from about 30% to about 40% of enrollment. Insurers have also filed notably higher 2027 rates. Part of the drop reflects federal eligibility verification, so the exact split between price and verification is still being sorted out.
Why an employer should care
The subsidy is not part of your compliance obligation, but the market around it affects your plan in three ways.
- Some employees who declined the company plan because the marketplace was cheaper may now look at it again, often at open enrollment, sometimes sooner
- Employees who lose marketplace coverage may ask to enroll mid-year. Losing a subsidy is not by itself a qualifying event for your plan, but losing the coverage can be, depending on your plan terms and the circumstances
- Enrollment behavior is shifting toward lower-premium, higher-deductible choices, which makes your own plan-design and contribution decisions more visible to employees
The employer mandate is unchanged. Applicable large employers must still offer affordable, minimum-value coverage to full-time employees. For 2027 the affordability percentage is 10.22% of the applicable income measure, up from 9.96% in 2026. Our affordability explainer has the full table and the safe harbors.
What to do now, before open enrollment
- Check your plan document for how mid-year changes and special enrollment are handled, so HR gives consistent answers
- Make sure eligibility and hours tracking for variable-hour and part-time staff is current, because more people will ask for coverage and the IRS cross-reference to marketplace credits may change in volume
- Re-test affordability for 2027 using your chosen safe harbor, particularly if you are near the line on your lowest-cost plan
- Decide whether your contribution strategy still fits the market, or whether an ICHRA or a different tier structure would serve lower-wage employees better
- Plan the open enrollment message: employees comparing prices need a clear side-by-side with deductibles and out-of-pocket maximums, not just premiums
Questions we get
Does the subsidy lapse change what I owe under the employer mandate?
No. The penalty tests are the same. The IRS triggers an employer penalty review when an employee receives a marketplace premium tax credit, so fewer credits may mean fewer inquiries, but it does not reduce your obligation to offer affordable coverage.
Can an employee join my plan mid-year because their marketplace premium went up?
Generally not. A price increase on its own is not a special enrollment event under HIPAA. Loss of other coverage, a marriage, a birth and similar events are. Your plan document controls the details, so confirm before you answer.
Will Congress restore the credits?
We cannot know. Plan 2027 on current law and treat any retroactive fix as a complication to handle if it arrives.
Sources: KFF analyses of 2026 marketplace enrollment and premiums; HHS ASPE issue brief on 2026 exchange enrollment (June 2026); congressional records on the January 2026 House vote; IRS Rev. Proc. 2026-26 for the 2027 affordability percentage (confirm current figures with your advisers).
Related Reading
Not sure where your plan stands against the market? Send us your renewal and we will show you how your contribution strategy compares and what an affordability test looks like for 2027.
