How cuts to Medicaid and ACA Premium Tax Credits could hurt your small business
The United States Congress recently passed sweeping budget legislation that makes deep cuts to Medicaid and fails to extend tax credits that make healthcare premiums through the Affordable Care Act (ACA) marketplaces more affordable. Without these safeguards, many small business owners and their employees will see their healthcare costs increase, and some could even be left without healthcare coverage.
We want to hear your story
How would losing access to affordable healthcare impact your business and your employees? Share your experience — your voice can help shape how policymakers respond.
To help you better understand how these changes could hurt your small business, we’ve compiled key information you need to know as you navigate potential changes to healthcare policy this year.
What is Medicaid?
Medicaid is a joint federal and state program that offers free or low-cost health insurance for people with limited income, including children, pregnant women, seniors, people with disabilities and low-income adults. In each state, Medicaid can have different names such as Medi-Cal, MassHealth, TennCare and more.
Medicaid helps one in four Americans, including more than 7 million small business workers. If the federal government reduces the amount of funding that state Medicaid programs receive, states will likely be unable to supplement this lost federal revenue, leading to fewer healthcare options at higher prices for small businesses and their employees.
Cuts to Medicaid may also eliminate enhanced federal funding for state coverage of low-income, working-age adults who were made eligible for Medicaid under the Affordable Care Act. Reducing this access will lead to lower income self-employed entrepreneurs and small business employees losing access to coverage through their state’s Medicaid program.
What are healthcare premium tax credits, and why do they matter?
Healthcare premium tax credits (PTCs)—also known as premium assistance and subsidies—are discounts on health insurance premiums for plans purchased through the Affordable Care Act (ACA) marketplaces, or Healthcare.gov, based on your income and family size. These tax credits, which help eligible individuals and families cover the cost of their health insurance, were temporarily enhanced in 2021 under the American Rescue Plan Act (ARPA) to make coverage more affordable during the COVID-19 pandemic. The enhancements were later extended through 2025 by the Inflation Reduction Act (IRA).
The enhanced subsidies expanded eligibility to include individuals making more than 400% of the Federal Poverty Level (FPL), while also increasing the amount of assistance for those making under 400% of the FPL. More than half of all ACA marketplace enrollees own or work for a small business. If these enhancements expire, individuals above 400% of the FPL will lose eligibility for any subsidy, and those under 400% of the FPL will see their subsidies shrink. As a result, insurance premiums could rise by 25–100%, causing millions of enrollees—including small business owners, their employees, and their families—to lose access to affordable health coverage.
To see how much premiums could rise for you and your family if the enhanced subsidies expire, explore this interactive calculator from KFF: How Much More Would People Pay in Premiums if the ACA’s Enhanced Subsidies Expired?
How would losing access to affordable healthcare impact your business?
Sharing your lived experience helps show lawmakers how healthcare cuts affect real people. Tell us your experience by filling out our survey to help shape the future of healthcare policy for small businesses! Access additional health care resources to help you better navigate these changes.