“It’s insane. It’s unbelievable,” said Parsons, a 59-year-old retiree living in South Lake Tahoe.

The couple is not alone as open enrollment begins and 1.7 million Californians are facing an average 97% surge in premiums for next year’s health insurance plans available on the open marketplace.

Covered California, the state’s health care exchange, expects prices to increase 10% on average for all enrollees using the marketplace. But the increased costs are exponentially higher for people like Delifner and Parsons thanks to the end of a Joe Biden-era tax credit.

That tax credit passed in 2021 offered health care subsidies for middle-class people who cannot buy coverage through their workplaces.

Covered California has called the end of the tax credits “a catastrophic cost” for enrollees in the program that will result in 361,000 people losing health insurance, according to a 2022 analysis.

Return of the subsidy cliff

People like Parsons and Delfiner are facing sky-high costs because of the expiration of the “enhanced premium tax credit,” which was created in 2021 to help lower health care costs for middle-class Americans. It is set to expire at the end of 2025.

Lower-income Americans will still get health care subsidies regardless of what Congress decides this fall. The Affordable Care Act passed in 2010 gave free health care for millions of the poorest Americans by expanding Medicaid to anyone making up to 138% of the federal poverty level, which equates to $21,597 for an individual or $44,367 for a family of four.

The Affordable Care Act also provided subsidies for people making up to 400% of the federal poverty level, or up to $62,600 for a single individual and $128,600 for a family of four.

But the landmark law, commonly known as Obamacare, did not provide any direct support for people making above 400% of the poverty level. This lack of help for middle-class earners created a “subsidy cliff,” where making a dollar over that threshold meant you could suddenly be spending tens of thousands of dollars more for health care coverage. This cliff was criticized as a key failing of the law.

In 2021, President Joe Biden’s administration eliminated that cliff by removing the 400% limit on eligibility for the tax credit. The 2021 law also increased the subsidy amount by ensuring that no one would pay more than 8.5% of their income on health care premiums.

The expiration of the enhanced tax credits will hit working families the hardest, according to Jonathan Greer, a health insurance broker and owner of Rockridge Health Benefits in Alameda. He said a typical family of four making more than $128,600 could see its monthly premiums go up from $1,500 a month to $3,500 a month without the subsidies. Greer said these families are already cash-strapped trying to raise children on that income in the Bay Area.

“That’s not a lot of money in this area. It doesn’t go very far around here. It’s those folks who are in the worst situation,” Greer said.

Congress could still lower health care costs

Democrats in Congress tried to include an extension of the tax credits in Donald Trump’s “Big Beautiful Bill” passed earlier this year. While the law included tax cuts for nearly every American and allocated roughly $170 billion for increased border security and deportations, it did not extend the enhanced premium tax credits.

Democrats are demanding the tax credits, which the Congressional Budget Office estimated cost the federal government $33 billion a year, be extended before they agree to reopening the federal government.

Congress could still decide to approve the tax credits before the new health care premiums go into effect in January, which would likely return the health care costs for people like Parsons and Delfiner closer to 2025 levels. That’s why Greer is encouraging his clients to wait to make a decision about next year’s health insurance until there is more clarity from the federal government.

“It’s worth waiting to see what happens with Congress before you have to make personal financial decisions,” Greer said.

Older Americans hit hard

Older Americans will be hit especially hard if the subsidies are not extended because health care premiums increase as people age, according to Christine Eibner, a senior economist at Rand Health.

She said a 64-year-old has monthly health care costs that are already three times higher than a 24-year-old’s.

“For example, a 64-year-old with income just above [400% of] the federal poverty line ($62,600 in 2026) could face annual premium increases of over $10,000 in California,” Eibner said in an email.

Parsons and Delifner, who are retired and on fixed income, are seeing an even bigger increase. They spent $4,200 on health care premiums last year but will spend $26,652 on the same plan next year, according to a Covered California letter dated Oct. 21. If they buy that policy, it will amount to 28% of their total income, drastically above what the Biden-era subsidies would have prevented.

Parsons said they are already using the cheapest plan they could find, which has a $14,000 deductible for both of them.

“It’s not even like we’re getting Cadillac health care. That’s just catastrophic insurance with basic care,” she said.

Delfiner said the couple is now considering moving to a foreign country where health care is more affordable, or just going uninsured.