Small businesses are facing a daunting prospect as a key tax credit, which has been a lifeline for many, is set to expire. This expiration could have a devastating impact on their ability to provide healthcare for their employees and themselves.
The Cost of Healthcare: A Looming Crisis for Small Businesses
Chrysa Ostenso, a small business owner from Wisconsin, is facing a difficult decision. After the passing of her husband, she is now navigating the challenges of running the business alone. With the end of the enhanced tax credits under the Affordable Care Act, she expects to pay a staggering $1,500 per month for health insurance, a far cry from the $500 she paid previously.
"It's absolutely insane," she exclaimed. "Nothing else has seen such a massive increase in cost."
Approximately 22 million Americans, like Chrysa, rely on these enhanced subsidies to make their healthcare premiums more affordable. Without these credits, the average recipient could see their insurance costs more than double in 2026, according to KFF, a leading health policy research group.
The Impact on Small Business Owners and Entrepreneurs
KFF's data reveals that around half of the recipients of these subsidies are small business owners, employees of small businesses, or self-employed individuals. The expiration of these credits could force many to make difficult choices, such as closing their businesses or forgoing their entrepreneurial dreams.
"The implications of this are far-reaching," said Katherine Hempstead, a senior policy officer at the Robert Wood Johnson Foundation. "The marketplace has become increasingly vital for small businesses and the self-employed."
Data from the Treasury Department shows that nearly one in five small business owners and self-employed workers aged 21-64 relied on the Affordable Care Act Marketplaces for coverage in 2022. Hempstead believes that the expiration of these credits could lead to a ripple effect throughout the economy, with potential job losses and a decline in community economic well-being.
A Success Story at Risk
Andrew Volk, a 42-year-old entrepreneur from Portland, Maine, is a perfect example of how these tax credits have fostered entrepreneurship. His access to affordable health insurance through the marketplace gave him the confidence to open his own cocktail bar 12 years ago. He credits the security provided by the Affordable Care Act (ACA) with the success of his business, especially when his daughter had a complicated birth a year later.
"My business wouldn't exist without the ACA," Volk said. "I'm concerned that without the enhanced tax credits, many aspiring entrepreneurs will be unable to pursue their passions."
A Temporary Solution, or a Necessary Long-Term Measure?
The enhanced tax credits were initially introduced by Congress in 2021 to ensure Americans could afford healthcare during the COVID-19 pandemic. The number of people purchasing insurance through the marketplace has more than doubled since 2020, with the majority of users residing in states that voted for Trump in 2024, such as Florida, Georgia, and Texas.
According to KFF, about 92% of the 24.3 million Americans using the marketplace receive some form of subsidy. If these credits expire, out-of-pocket premiums could rise by more than 75% on average. The enhanced tax credits expanded eligibility to include those earning more than four times the federal poverty level, which in 2025 is $62,600 for an individual or $124,800 for a family of four.
The Congressional Budget Office estimates that 4.2 million more people will be uninsured by 2034 if the enhanced credits end. Expanding these credits would cost nearly $350 billion over the next decade.
Republicans argue that these credits were always intended to be temporary and that the government shouldn't be subsidizing health insurance for millions. Democrats, on the other hand, plan to hold Republicans accountable during the midterm elections for any spike in health insurance costs for low- and middle-income Americans.
The Personal Stories Behind the Statistics
Steve Gomez, a 44-year-old from Gilbert, Arizona, ran his own project management business while his wife worked a job with employee-sponsored benefits. Their arrangement worked well, especially when their son, Anthony, needed a heart transplant just six weeks after birth. The extended hospital stay and surgery would have cost them millions without insurance.
In the years since, his wife joined him in self-employment, allowing them the flexibility to manage their son's medical needs. However, with the changes to their insurance plan, they are now considering whether it's worth her returning to a more traditional job with benefits.
The Gold Plan offered by Blue Cross BlueShield in Arizona no longer allows them to have a Health Savings Account, and it moves all of Anthony's doctors, including the only pediatric cardiologists in the Southwest, out of network. This means the family will bear a greater financial burden for Anthony's ongoing medical expenses, including his annual catheterization procedure.
Chrysa Ostenso, too, is contemplating returning to a traditional job just for the insurance benefits until she qualifies for Medicare at 65. However, she's not keen on the idea of trading her independence for a 40-hour workweek.
"I've been self-employed my whole life," she said. "Punching a clock just doesn't sit well with me."
And this is the part most people miss...
The expiration of these tax credits could have a profound impact on the lives and livelihoods of millions of Americans, especially those in the small business community. It's a complex issue with potential long-term consequences for the economy and the well-being of communities across the nation.
What are your thoughts on this matter? Do you think the government should extend these tax credits, or is it time for a different approach to healthcare subsidies? We'd love to hear your opinions in the comments below!
