Personal Finance
Democrats seek ACA enhanced subsidy deal as retirees face premium hikes
Bill and Shelly Gall
Bill and Shelly Gall
Bill and Shelly Gall say they’d be rich if it weren’t for their medical bills.
The early retirees, who are on an insurance plan purchased through the Affordable Care Act marketplace, spent upwards of $20,000 on health-care expenses and insurance premiums in 2023 and in 2024, largely due to chronic health issues and emergency eye surgeries. The couple is on pace for a slightly smaller sum this year, if they’re lucky, Bill said.
But next year, the Galls, who live in Meridian, Idaho, are bracing for their costs to grow significantly.
Based on figures available through Idaho’s online insurance marketplace, Bill, 61, and Shelly, 60, expect to pay almost $1,700 in monthly health insurance premiums in 2026 if enhanced premium tax credits expire at the end of this year as scheduled. That sum — a nearly 300% increase from their current $442 premium — would add $15,000 a year to their household medical costs.
CNBC reviewed the Gall family’s household financial records, including tax returns and health and insurance documents.
The Galls are among roughly 22 million ACA marketplace enrollees — about 92% of all enrollees — who face the prospect of higher premiums in 2026, according to KFF, a nonpartisan health policy research group.
Democrats are pushing Republicans to extend the enhanced subsidies that make enrollees’ health premiums cheaper, as part of a deal to end the federal government shutdown that began Oct. 1. Republicans have said they want to negotiate any extension of ACA subsidies outside of legislation that would reopen the government.
‘Most vulnerable’ to cost hikes
Early retirees such as the Galls face a bigger financial hit than most if Congress doesn’t act.
The average ACA marketplace enrollee faces a 114% increase in premium payments without the enhanced subsidies, according to KFF.
But older middle- to high-income adults who are too young to qualify for Medicare face the largest dollar increases in premium payments, according to analyses by KFF.
They are perhaps “the most vulnerable population” when it comes to expiring subsidies, said Lynne Cotter, senior health policy research manager at KFF.
Such ACA enrollees who opt to keep their insurance plans might pay 30% of their total annual household income toward health premiums alone, Cotter said.
For comparison, the average household with employer-sponsored coverage spent about 2% of its annual income on premiums in 2024, according to an analysis by KFF and the Peterson Center on Healthcare. That same year, ACA premiums were capped at 8.5% of a household’s income.
“People like us, we need insurance,” said Bill, a civil engineer who retired in 2022.
If the Gall family’s health insurance premiums jump and their medical expenses remain steady, the tally would likely represent more than a quarter of their annual income.
With significantly higher health premiums, the couple said, they would have to make tough financial and lifestyle decisions: pulling more money from retirement savings; claiming Social Security earlier than planned, which would lock in a lower lifetime benefit; putting off non-mandatory medical care; and traveling less.
“If there are no subsidies, we’ll pay the difference. We’ll be out there paying the $1,700 a month,” Bill said. “You do the math. It’s a lot.”
How ACA enhanced premiums work
Subsidies — also known as premium tax credits — have been available since the early days of the Affordable Care Act.
They were originally available for households with incomes between 100% and 400% of the federal poverty level. For a family of two, that equates to an annual income of $21,150 to $84,600 in 2025, according to federal guidelines.
Initially, ACA enrollees whose income went even one dollar over the 400% income threshold weren’t eligible for premium tax credits — a point known as the “subsidy cliff.” In this case, they’d pay the full unsubsidized cost of insurance premiums on the marketplace.
U.S. House Minority Leader Hakeem Jeffries (D-NY) speaks during a press conference at the U.S. Capitol on the third day of a partial government shutdown, on Capitol Hill in Washington, D.C., U.S., October 3, 2025.
Nathan Howard | Reuters
In 2021, the American Rescue Plan Act, a pandemic relief law, raised the value of the premium tax credits and expanded the group of households eligible for them.
These “enhanced” subsidies became available to households with incomes exceeding 400% of the federal poverty line. A household’s financial obligation for premiums was also capped at 8.5% of its income.
In 2022, the Inflation Reduction Act extended the enhanced subsidies and made them available through 2025.
The enhanced tax credits meant families like the Galls qualified.
The couple had a modified adjusted gross income of about $123,000 in 2023 and $136,000 in 2024, mostly from pensions and some from individual retirement account withdrawals, according to their tax returns. Modified adjusted gross income is an income measure used to calculate eligibility for premium tax credits.
U.S. House Speaker Mike Johnson (R-LA) holds a press conference weeks into the continuing U.S. government shutdown in Washington, D.C., U.S., Oct. 15, 2025.
Elizabeth Frantz | Reuters
Enrollment in the ACA marketplace more than doubled since the introduction of the enhanced credits, to 24 million people from about 12 million, according to KFF.
While the percentage of Americans who have ACA marketplace health insurance is small, the share could be large enough to swing a close election, KFF reported in October.
Most ACA marketplace enrollees — 57% — live in congressional districts represented by Republicans, according to the KFF report. At least 10% of residents in all of the congressional districts in Florida, Georgia, Mississippi and South Carolina, and almost all of the districts in Texas and Utah, have Marketplace plans, according to KFF.
The KFF report said that in the 10 most competitive districts in the last election, the margin of victory was fewer than 6,000 votes and that there are at least 27,000 enrollees in each of these districts.
Why early retirees face higher premiums
Extending the enhanced subsidies would cost $350 billion over 10 years, according to the Congressional Budget Office. That’s an average of about $35 billion a year.
If Congress opts to let the enhanced subsidies lapse, many households would still be eligible for premium tax credits, though they’d receive less assistance.
The subsidy cliff would also return, meaning families like the Galls wouldn’t qualify for any premium tax credits.
Without enhanced subsidies, the average 60-year-old couple making $85,000 a year — 402% of the federal poverty line — would see their premiums increase by about $1,900 per month, according to a KFF analysis. Their annual premiums would rise by nearly $23,000 in 2026, KFF found.
About 51% of ACA market enrollees with incomes exceeding the threshold of four times the poverty level are ages 50-64, according to KFF.
Bill, who worked for more than 31 years in local and state government in Nevada and Idaho, said he expects their household to get pension income of about $127,000 in 2026, exceeding the 400% threshold.
The KFF analysis also accounts for the general growth in health-care premiums from year to year; KFF expects a median increase of 18%.
Insurers can generally raise costs more for older adults than younger ones due to the practice of age rating, KFF’s Cotter said. Older people tend to have more health conditions and use their insurance more often; insurers in all states except New York are allowed to charge them higher premiums, she said.
Coping with higher premiums
Bill Gall has what he calls “old eyes”: He’s had more than 10 eye surgeries over the past decade and is now blind in one eye, he said.
Shelly has had two spinal fusion surgeries and suffers from chronic pain, which has prevented her from working full-time since 2015, the couple said. Before that, she had various roles at banks and then in state employment, interspersed by time outside the workforce raising their three sons.
Bill decided to retire early so the couple could enjoy nonworking years together while they’re still in relatively good health, they said.
The couple said they’re limited in their choice of health plan on the ACA marketplace. For example, their various doctors don’t accept certain plans that might be cheaper, they said.
They are enrolled in a high-deductible health plan, with a $12,500 annual deductible and a $15,000 out-of-pocket maximum. They generally budget for that maximum, and reached that ceiling in 2024.
If they lose the enhanced subsidies and their financial load becomes too challenging, Bill could try to find part-time work, he said.
“I don’t want to,” he said. “I have one eye, and it doesn’t work very great.”
Ultimately, Bill said he expects Congress to extend the enhanced subsidies at the last minute.
But he said he worries about the damage it could cause if lawmakers wait too long. People in most states can start signing up for 2026 health-care coverage through the ACA marketplace on Nov. 1.
People may choose not to sign up if lawmakers were to pass an extension far beyond this date, according to analysts.
The Center on Budget and Policy Priorities, a nonpartisan research and policy institute, said in a Sept. 22 report that if the tax credit enhancements are extended before ACA open enrollment begins, people who visit the ACA Marketplace site to shop for coverage will see accurate premium estimates for 2026. If they see the higher premiums that will kick in if the credits are not extended, many will decide coverage is financially out of reach, and getting them to return to the site will be difficult, the report said.
But the Galls are cautiously hopeful.
“I think we’ll get the subsidy,” Bill said. If that doesn’t happen, “it would be a significant cost to us,” he said.
The Federal Reserve held interest rates steady at the conclusion of its policy meeting on Wednesday.
In what could be Jerome Powell’s last as chair before President Donald Trump’s yet-to-be-confirmed nominee Kevin Warsh takes the helm, central bankers maintained the federal funds rate in a target range of 3.5% to 3.75%.
Inflation has surged since the war with Iran began, leaving policymakers with limited room to act, according to Sean Snaith, the director of the University of Central Florida’s Institute for Economic Forecasting. “We’re in a kind of suspended animation — between Iran and the Fed transition,” Snaith said.
Before the oil shock, inflation was holding above the Fed’s 2% target but not worsening. Now the jump in energy costs could have longer-term inflationary effects, economists say.
For Americans struggling in the face of higher gas prices and overall affordability challenges, the central bank’s decision to keep interest rates unchanged does little to ease budgetary pressures. “The cavalry isn’t coming anytime soon,” Snaith said.
How the Fed decision impacts you
The Fed’s benchmark sets what banks charge each other for overnight lending, but also has a trickle-down effect on many consumer borrowing and savings rates.
Short-term rates are more closely pegged to the prime rate, which is typically 3 percentage points above the federal funds rate. Longer-term rates, such as home loans, are more influenced by inflation and other economic factors.
Credit cards
Most credit cards have a short-term rate, so they track the Fed’s benchmark.
After the Fed cut rates three times in the second half of 2025, the average annual percentage rate has stayed just under 20%, according to Bankrate.
“Without Fed rate cuts, there’s not much reason to expect meaningful declines anytime soon, so carrying a balance will remain very expensive,” said Matt Schulz, chief credit analyst at LendingTree.
Mortgage rates
Fixed mortgage rates, on the other hand, don’t directly track the Fed but typically follow the lead of long-term Treasury rates.
Concerns about how the Iran war will impact the U.S. economy have already pushed the average rate for a 30-year, fixed-rate mortgage up to 6.38% as of Tuesday, from 5.99% at the end of February, according to Mortgage News Daily.
That leaves homeowners with existing low mortgage rates “feeling stuck,” said Michele Raneri, vice president and head of U.S. research and consulting at TransUnion. “Mortgages, more than any other credit type, work on a churn,” she said, referring to how a dip in rates can boost borrowing activity.
Student loans
Federal student loan rates are also fixed and based in part on the 10-year Treasury note, so most borrowers are somewhat shielded from Fed moves and recent economic uncertainty.
Current interest rates on undergraduate federal student loans made through June 30 are 6.39%, according to the U.S. Department of Education. Interest rates for the upcoming school year will be based in part on the May auction of the 10-year note.
Car loans
Auto loan rates are tied to several factors, including the Fed’s benchmark. Because financing costs remain elevated, new car buyers are taking on longer loans to keep their monthly payments manageable, according to the latest data from Edmunds.
Even so, with the rate on a five-year new car loan near 7%, the average monthly payment on a new car rose to $773 in the first quarter of 2026, an all-time high.
“Car buyers are in a tough spot right now because they’re getting squeezed from both ends: high sticker prices and high interest rates, with neither showing any signs of letting up,” said Joseph Yoon, consumer insights analyst at Edmunds.
“Until the rate picture shifts, buyers will keep stretching loan terms to make payments work, which only adds to the total cost of ownership down the road,” Yoon said.
Savings rates
While the Fed has no direct influence on deposit rates, the yields tend to be correlated with changes in the target federal funds rate. So, although rates on certificates of deposit and high-yield savings accounts have fallen from recent highs, they are holding above the annual rate of inflation.
For now, top-yielding online savings accounts and one-year CD rates pay around 4%, according to Bankrate.
“Yields on high-yield savings accounts and certificates of deposit are down from their peaks of a few years ago, but they’re still strong compared to what we’ve seen for most of the past decade,” Schulz said.
Milan Markovic | E+ | Getty Images
The average tax refund is 11.2% higher this season, compared with about the same period in 2025, according to the latest IRS filing data.
As of April 10, the average refund amount for individual filers was $3,397, up from $3,055 about one year ago, the IRS reported on Friday.
The IRS data reflects about 114 million individual returns received, out of about 164 million expected through Tax Day. Next week’s filing update is expected to include data through the April 15 deadline.
President Donald Trump‘s 2025 legislation, rebranded to the “working families tax cuts,” was a key talking point for Republicans on Tax Day.
With the November midterm elections approaching and Republicans defending slim majorities in Congress, many GOP lawmakers have highlighted Trump’s tax breaks and higher average refunds.
Meanwhile, affordability has been top of mind for many Americans amid rising costs of gas, electricity, food and other living expenses.
For filers who expected a refund this season, nearly one-quarter, or 23%, planned to use the funds to pay down credit card debt, and the same share said they would save the payment, according to the CNBC and SurveyMonkey Quarterly Money Survey, released in April. It polled 3,494 U.S. adults at the end of March.
Who benefited from Trump’s ‘big beautiful bill’
“It’s been a great tax season for the American people,” many of whom have benefited from Trump’s tax breaks, Treasury Secretary Scott Bessent said during a White House press briefing on Wednesday.
More than 53 million filers claimed at least one of Trump’s “signature new tax cuts” — the deductions for tip income, overtime earnings, seniors and auto loan interest — the Department of the Treasury also announced on Wednesday.
Those filers, who claimed the deductions on Schedule 1-A, have seen an average tax cut of over $800, according to the Treasury. Tax cuts can trigger a higher refund or reduce taxes owed, depending on the filer’s situation.
Some filers who itemize tax breaks have also seen benefits from the bigger federal deduction limit for state and local taxes, known as SALT. Trump’s legislation raised that cap to $40,000, up from $10,000, for 2025.
The latest SALT deduction limit change is expected to primarily benefit higher earners, according to a May 2025 analysis of various proposals from the Tax Foundation.
The Treasury has not released data on how many filers have claimed the SALT deduction during the 2026 filing season.
Traders work at the New York Stock Exchange on April 16, 2026.
NYSE
U.S. stocks climbed to record highs on Thursday against a backdrop of war, an oil supply shock and economic forecasts warning of stunted growth amid a protracted conflict.
Many investors may be thinking: Why?
Largely, it’s because the stock market is a barometer of what investors think will happen in the future, rather than an assessment of the present day, according to economists and market analysts.
Investors are essentially shrugging off the Middle East conflict as a blip that will be resolved relatively quickly, they said.
“The stock market isn’t trying to price what’s happening today,” said Joe Seydl, a senior markets economist at J.P. Morgan Private Bank. “The stock market is always trying to price what the world is going to look like six to 12 months from now.”
Why stocks have been ‘resilient’
The S&P 500, a U.S. stock index, fell about 8% in the initial weeks of the Iran war, from the start of the conflict on Feb. 28 to a recent low on March 30.
But stocks have rebounded since then, erasing all losses since the beginning of the war. The S&P 500 closed at an all-time high on Thursday — about 11% higher than its nadir at the end of March. That followed a record close on Wednesday.
“The market has remained very resilient in the face of the war and has rallied strongly on the prospect that it will be resolved,” said Mark Zandi, chief economist at Moody’s.
A ship waits to pass through the Strait of Hormuz following the two-week temporary ceasefire between the US and Iran, which is conditional on the opening of the strait, in Oman on April 8, 2026.
Shady Alassar | Anadolu | Getty Images
And while investors cheered the possibility of a diplomatic off-ramp to the conflict, the temporary ceasefire has appeared tenuous, with the U.S. and Iran each accusing the other of breaking the agreement.
Nations haven’t been able to reach a peace deal ahead of the ceasefire’s end. Vice President JD Vance said U.S. officials left peace talks in Pakistan over the weekend after the Iranian delegation refused to agree to American demands not to develop a nuclear weapon.
The markets ‘have memory’
Ultimately, the stock market is signaling a collective belief that tensions will ratchet down, the war will end in the near term and oil flows through the Strait of Hormuz will normalize, economists said.
That’s largely because investors have been conditioned to believe that President Donald Trump will back off if the economic pain becomes too intense, economists said — the so-called “TACO” trade, shorthand for “Trump always chickens out.”
“Investors strongly believe — and have been conditioned to believe — he’s going to stand down, find a way to pivot, declare victory and move on,” Zandi said.
Trump has pushed back on the notion of backing down, framing his brinkmanship as a savvy negotiating tactic.
Economists pointed to a recent example of this dynamic: in April 2025 during so-called liberation day, when the Trump administration levied a host of tariffs on U.S. trading partners.
Within days — after the stock market had cratered more than 12% — Trump announced a 90-day pause on those tariffs. Stocks then saw one of their biggest daily rallies in history following Trump’s reversal.
Investors remember that Trump often de-escalates geopolitical shocks — which is why they’ve seized on positive headlines that hint at progress in peace talks, for example, Seydl said.
“The markets have memory,” Seydl said.
AI stocks and the ‘tech boom’
Traders celebrating at the New York Stock Exchange on April 15, 2026, as the S&P 500 closed above the 7,000 level for the first time.
NYSE
There are other factors underpinning market resilience during wartime, economists said.
One is the investors’ enthusiasm for artificial intelligence and technology stocks, which account for almost half of the S&P 500’s market capitalization, Zandi said.
“Those stocks run on their own dynamic independent of anything, including the war in Iran,” Zandi said. “I think we would have been down a lot more and it would have been harder for us to recover had it not been for the very, very optimistic perspectives on AI.”
We’re in the middle of a “tech boom” — and investors are likely to remain optimistic until they think the tech cycle has run its course, Seydl said.
More broadly, stock investors are essentially making a bet on the future earnings growth of a company — and the earnings backdrop has been “pretty solid,” Seydl said.
Consumer spending appears to be stable, for example, economists said. And companies are getting a boost to their after-tax earnings from the GOP’s so-called “big beautiful bill,” which, among other things, made it easier to write off investments upfront and therefore reduce their tax liability, Zandi said.
Going forward
Experts said there will be an economic hit from the Iran war, though.
“Despite the recent news of a temporary ceasefire, some damage is already done, and the downside risks remain elevated,” Pierre-Olivier Gourinchas, director of research at the International Monetary Fund, wrote Tuesday.
A protracted conflict risks deep and global economic pain, he wrote.
Even if the conflict is short-lived — as the broad market expects — stocks are unlikely to march much higher until it’s clear the U.S. is on the other side of the war and its economic fallout, Zandi said.
If investors are incorrect, and President Trump doesn’t back down or quickly extricate the U.S. from the war, the stock market may see a “full-blown correction” or worse, Zandi said. A stock market correction is a decline of at least 10% from recent highs.
“Everyone thinks they know what the script is,” Zandi said. “Now they just need to follow the script. If they don’t, the market will have some real problems.”
The uncertainty provides yet another example of why the average investor with a long time horizon should stick to their investment plan and ignore the noise, experts said.
“Trying to time the market is very difficult if not impossible for the average investor,” Seydl said. “It’s better to take a long-term perspective and ride out bouts of volatility.”
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