New Jersey health insurance premiums could soar if Congress doesn’t extend tax credit

New Jersey families could see their health insurance premiums more than double next year if Congress does not extend federal tax credits that are currently helping nearly half a million Garden State residents afford health coverage, state officials say.

More than 450,000 New Jerseyans receive the enhanced premium tax credits, which Congress enacted in order to help people afford health insurance purchased through state marketplaces as Americans were losing jobs and their insurance in the early days of the COVID pandemic.

Now, however, those tax credits, which were an expansion of Affordable Care Act subsidies and provided through the American Rescue Plan of 2021 and the Inflation Reduction Act of 2022, are set to expire at the end of 2025 unless Congress extends them. Democratic lawmakers have called to continue the credits; they’ve resulted in millions more people enrolling in health care nationwide through the marketplaces created by the Affordable Care Act. Republicans, who control the House and Senate, had a chance to extend the credits in their One Big Beautiful Bill Act but did not do so.

Premium costs for the hundreds of thousands of people benefiting from the tax credits will soar by 110% in the Garden State if Congress allows the credits to lapse, according to the New Jersey Department of Banking and Insurance. Premium costs would increase by $1,260 per person per year on average, or $4,168 for a family of four, the department said.

“If Congress does not act to extend the enhanced premium tax credits that are expiring at the end of this year, New Jerseyans will lose over half a billion dollars in federal support that currently lowers the cost of health insurance for hundreds of thousands of residents in our state,” Justin Zimmerman, commissioner of the Department of Banking and Insurance, wrote in a May 8 letter to New Jersey’s congressional delegation.

Brittany Holom-Trundy, the research director at the New Jersey Policy Perspective think tank, said Congress had a chance to extend the credits as part of the Republicans’ One Big Beautiful Bill Act but did not. That legislation, which President Donald Trump signed into law on July 4, slashes funding for Medicaid and could result in 300,000 New Jersey residents losing health care coverage.

“The One Big Beautiful Bill Act, when it comes to the enhanced premium subsidies, essentially it was a chance for them to include an extension of the enhanced premium subsidies,” Holom-Trundy said. “So that’s where it comes into play here for the subsidies is that it wasn’t included, and they are letting them expire at the end of the year as of now. They haven’t taken any action.” 

Every New Jersey Republican in Congress voted for the One Big Beautiful Bill Act; no Democratic lawmaker voted for it.

In addition to premiums increasing, health insurance rates for marketplace consumers are also poised to increase by an average of about 16% next year, the New Jersey Department of Banking and Insurance said in an Aug. 21 press release. Health insurance companies that provide plans through the state marketplace told state officials that the double-digit increases are due to rising medical and pharmacy costs and the anticipated expiration of the enhanced premium tax credits, according to the same press release. 

The projected average rate increase in 2026 for AmeriHealth is 15.5%, 17% for Horizon, 4.6% for Oscar, 18.4% for United Healthcare, and 17.1% for Ambetter from WellCare of New Jersey.

These rising health care costs come at a time when New Jersey residents are already struggling to make ends meet. Half or more of New Jerseyans are already having difficulties affording basic necessities like health care, rent and groceries, according to a Rutgers survey released in July. Increased premiums will only exacerbate families’ financial problems, Holom-Trundy said.

“With people already struggling to afford these things, they’re already faced with a choice that they shouldn’t have to face, which is: Do I pay for medicine? Do I pay for food? Do I pay my utility bill? Do I pay my rent?” Holom-Trundy said. “So that choice, again, is already happening due to affordability challenges, and as health insurance becomes less and less affordable, families will be faced with those choices more.”

When people are forced to cut costs, health insurance can often be on the chopping block, Holom-Trundy said. 

“They may not be going to the doctor tomorrow, but they do need to keep their housing,” she said. “They do need to put food on the table. So health insurance ends up becoming a lower priority, and then, again, we end up with more and more people who are uninsured and end up with more and more people who face potential crises of health care costs.”

An increase in uninsured patients who are unable to pay for their care would financially strain hospitals Holom-Trundy said. If people don’t have insurance, they may not be going to routine preventive doctor visits and will have to turn to hospitals for emergency care, she explained.

“They end up with issues, illnesses that maybe could have been caught earlier on and need more advanced care, need more costly care. That will add additional financial strain on the hospital as they’re trying to cover everyone as needed,” Holom-Trundy said. “And then, on top of that, that leads to more financial strain on the state because the state does help to cover those uncompensated care costs so that hospitals can remain in business, so that hospitals can keep providing care and ensure that people at least can get through emergency care.”