As Connecticut and Rhode Island health insurance providers seek rate increases for 2026, their governors are asking Congress to extend tax credits set to expire at the end of the year that could contribute to an increase in rates for the state’s poorest residents.
Govs. Ned Lamont and Dan McKee were among 18 governors from around the country who signed a letter asking Congressional leaders to extend the Affordable Care Act’s (ACA) enhanced premium tax credits, which are set to expire at the end of 2025.
The tax credit was originally passed as part of the ACA and was available to individuals who purchased a plan through the ACA marketplace and made between 100 and 400 percent of the federal poverty limit. The American Rescue Plan Act expanded eligibility by capping premiums for benchmark plans at 8.5 percent of income for households earning over 400 percent of the federal poverty limit.
That expansion was initially set to expire in 2022 but was extended through the Inflation Reduction Act (IRA) and is set to expire at the end of 2025.
“If [the tax credits] expire, premiums will rise by thousands of dollars for many families, million will lose coverage, and people will be forced to make impossible choices between paying for healthcare, rent, or groceries. Hard-working American families, older Americans not yet on Medicare, small business owners, and rural communities—where marketplace coverage is often the only option—will be hit the hardest.” the letter, which both Malloy and McKee signed, states.
It also urged Congress to take action quickly, as insurers are currently setting rates for 2026. While Connecticut insurers are seeking significant rate increases this year, the state has yet to approve them. Rhode Island recently approved double-digit rate increases.
Data from the Kaiser Family Foundation shows that the vast majority of individuals whose health insurance comes from the ACA marketplace utilize the credit, 19.7 million out of 21.4 million enrollees in 2024. The enhanced credits have driven growth in the marketplace, which has grown by 88 percent since 2020.
Data also shows that the majority of that growth is driven by low-income earners, with 15.9 million making 250 percent of the federal poverty level.
Should the enhanced tax credit for households making more than 400 percent of the federal poverty line expire at the end of 2025, that same group will see the largest increases in insurance costs.
The Congressional Budget Office (CBO) has estimated that enrollment in the marketplace will drop by almost 4 million between 2025 and 2026.
While the expanded tax credit helps reduce costs, it’s because federal taxpayers are subsidizing a larger portion of premium payments. The CBO estimates that permanently extending the enhanced tax credit will cost taxpayers $335 billion over the next ten years. According to the Kaiser Family Foundation, the IRA reduced net premium costs by an average 44 percent, saving about $705 per enrollee in 2024.
But premium prices haven’t changed that much in recent years. On average, annual premiums cost $7,132 in 2020 and $7,320 in 2024. Savings for enrollees come primarily because federal taxpayers are paying more of the premium due to the expanded tax credit.
Data on the amount of money states have received in subsidies for health care plans through the IRA is available for states that use Healthcare.gov, but both Connecticut and Rhode Island have their own state healthcare exchanges.
The Kaiser Family Foundation estimates that around six percent of residents in both Connecticut and Rhode Island are enrolled in ACA marketplaces and are likely to see premium increases in 2026 should the enhanced tax credit expire.
Access Health CT estimates 30 to 35 percent of the 150,000 enrollees in Connecticut’s health care exchange will be affected by the tax cut expiration and may lose their coverage by 2034.
At the same time residents are facing the prospect of insurance premiums increasing due to the expiration of the tax cuts, Connecticut insurers are also seeking approval of rate hikes from the Connecticut Insurance Department (CID). The department announced in June that they had received requests to increase rates in 2026 from seven insurers. On average, the requested rate hikes for individual plans are 17.8 percent and 13.1 percent for small group rate plans.
Attorney General William Tong called the proposed hikes unaffordable and said he would review the applications and demand that “insurers justify every penny and every step they have taken to curb these out-of-control costs.”
Rhode Island’s Office of the Health Insurance Commissioner (OHIC) recently approved rate hikes for 2026. On average, the state approved a 21 percent increase for the individual market, a 17.6 percent increase for the small group market, and a 19.3 percent increase for the large group market. OHIC rejected administrative costs, charged per member per month, from all insurer proposals in order to “reduce the financial burden on Rhode Islanders.”
Additionally, state residents will have to pay a new approximately $50 per person annual fee passed as part of the fiscal year 2026 state budget. The Rhode Island General Assembly approved the fee as a means of funding primary care rate increases for Medicaid. OHIC added the fee to the amount sought by rate hikes.
McKee estimates that the approximately 40,000 enrollees on Rhode Island’s state exchange could see an increase of up to 85 percent in the cost of premiums if the IRA tax credit expires.
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