How This Differs from Affordable Care Act Subsidies

One of the most important aspects of Hawley’s proposal is what it does not do: it does not replace or extend the Affordable Care Act’s premium tax credits.

Under the ACA, premium subsidies are delivered up front. When people enroll in marketplace plans, their subsidies immediately reduce their monthly insurance premiums based on income and plan cost. This makes coverage more affordable in real time, rather than months later at tax filing.

These subsidies were expanded during the pandemic through separate legislation, making premiums significantly cheaper for millions of Americans. However, those enhanced ACA subsidies are scheduled to expire at the end of 2025 unless Congress acts.

Hawley’s bill does not extend those enhanced subsidies and does not create a replacement credit system. Instead, it offers a deduction, which only takes effect at tax filing time.

That distinction is critical:

• A tax credit reduces the amount you pay directly (dollar-for-dollar).
• A tax deduction only reduces taxable income, meaning the actual savings depend on your tax bracket.

For higher-income households in the 22% or 24% tax brackets, a $10,000 deduction could translate into $2,200 to $2,400 in tax savings. But for lower-income households with little or no federal income tax liability, the value of a deduction may be minimal.

That means if ACA subsidies expire and Hawley’s deduction replaces them as the primary form of federal relief, many marketplace enrollees could face sharply higher premiums in 2026, with only partial compensation at tax time—if any.