ACA Premium Tax Credit Hike and Farmers

OMAHA (DTN) -- Iowa farmers warned Monday that the expiration of enhanced premium tax credits under the Affordable Care Act (ACA) will sharply raise health insurance costs in 2026, forcing painful tradeoffs that could slow farm growth, strain rural hospitals and push some producers out of business altogether.

Monday was the deadline to enroll in ACA plans for 2026 coverage. The deadline comes as people signing up for plans are seeing premium spikes, and it's expected enrollment will dramatically fall without enhanced premium tax credits. Nearly everyone enrolled in ACA marketplace plans will face higher out-of-pocket costs next year as the enhanced credits expire, affecting about 4 million people in rural America and an estimated 24 million Americans nationwide.

Congress has failed to act, as Republicans and Democrats have put forward opposing plans, and President Donald Trump has largely declined to get involved. The House of Representatives could vote on Wednesday, but the plans laid out so far do not detail any specific extension for the premium tax credits.

During a livestream event on Monday, members of the Iowa Farmers Union who rely on marketplace coverage said the refusal to extend the enhanced subsidies will expose families to sudden premium spikes -- in some cases exceeding $20,000 a year -- without addressing the underlying cost of health care.

Farmers and other self-employed workers are among the most vulnerable because they lack access to employer-based insurance.

"This is a gut punch to working families," said Matt Russell, executive director of the Iowa Farmers Union. "Raising health insurance premiums by thousands -- sometimes tens of thousands -- of dollars doesn't fix what's broken in health care. It just shifts the cost onto families and small businesses."

HEALTH COSTS AS A FARM RISK

Seth Watkins, a beef and sheep farmer in southwest Iowa, said the looming premium increases rival weather and markets as the biggest threats to farm survival.

"I really want people to understand, it's not markets or weather that will put me as a farmer out of business," Watkins said. "It's a catastrophic health issue."

Watkins said his family's premiums could jump from about $600 a month to more than $2,300, with total health care costs exceeding $40,000 a year once deductibles and out-of-pocket limits are factored in.

"That's $25,000 a year less that I've got to spend," he said, adding he and others wouldn't be upgrading pickups or buying other equipment as a result.

RISING ACA PREMIUMS SPUR INTEREST IN FARM BUREAU PLANS

There are some options for farmers to consider outside of ACA policies.

Farm Bureaus in at least 13 states offer health plans. Those states include Alabama, Arkansas, Florida, Indiana, Iowa, Kansas, Missouri, Nebraska, North Dakota, Ohio, South Dakota, Tennessee, Texas and Wisconsin.

Most of those Farm Bureau health plans have been launched in the past couple of years. A handful of states are selling plans for the first time this year after getting approval from their state legislatures. In each state, anyone signing up for a Farm Bureau plan also must be a Farm Bureau member.

With concerns about the status of the ACA subsidies, the Farm Bureau plans are drawing more interest this year.

"We're getting a lot of activity and calls and interest," said Rob Robertson, chief administrator for the Nebraska Farm Bureau. "Just with all of the uncertainties and price hikes with the ACA plans ... the applications for our product are probably up twofold from last year."

The plans are considered non-ACA compliant because people can be excluded from coverage for certain pre-existing conditions or face waiting periods because of those conditions. The plans also might not cover any out-of-network costs.

Still, Robertson said most people qualify for coverage and are seeing premiums at roughly half the cost of an unsubsidized ACA plan.

"It works for a lot of people who are self-employed, farmers, ranchers and others who don't have the benefit of a large employer health plan that most of us do," Robertson said.

Robertson noted the entire issue around health coverage for farmers and rural small businesses has been a challenge since before the ACA began. Health coverage is one of the biggest reasons at least one spouse works off-the-farm so the family can get coverage through an employer plan.

"We're still trying because it seems farmers and small-business people get kind of discriminated against in health care if they don't have the benefit of being part of a large health-insurance plan," Robertson said.

Another benefit of the Farm Bureau plans is that they do not have defined enrollment periods. Producers could still look at enrolling in one of those policies if lawmakers don't come to an agreement to lower the ACA premium costs.

"A lot of people are going to be shellshocked when they see their premiums in January if Congress doesn't do anything. We're still going to be open for business," Robertson said.

RETURN OF PREMIUM CLIFF

One of the biggest concerns with the ACA premium tax credits expiring is the return of the so-called "400% poverty cliff," which eliminates subsidies entirely once household income crosses 400% of the federal poverty level.

Beth Hoffman, who raises grass-finished beef and goats with her husband on a 570-acre farm in Monroe County, said the cliff punishes even modest income gains.

"If we make $84,999, we get the credit," Hoffman said. "If we make $85,000, we literally fall off this cliff. A $300-a-month premium turns into owing roughly $16,000 retroactively."

Since at least 2021, subsidies tapered down gradually as income rose. With that protection gone, Hoffman said her family chose a bare-bones bronze plan with an $8,300 deductible for each adult -- insurance she described as inadequate but financially safer than upgrading.

"We decided to stay with really pretty crappy insurance," she said. "Because if we upgrade and make a little more money, suddenly we're talking about paying $20,000 a year."

HEALTH CARE AND RURAL ECONOMY

Aaron Lehman, president of the Iowa Farmers Union, said the ACA has been one of the most important rural economic policies of the past decade.

"The Affordable Care Act has allowed farmers and rural entrepreneurs to take risks," Lehman said. "To start businesses, expand farms, replace equipment, and bring the next generation into the operation."

Lehman cited estimates showing roughly 27% of farm operators relied on individual ACA coverage in 2023. Without affordable marketplace plans, he said, many families would again need off-farm jobs solely to secure insurance.

Lehman also credited the ACA with protecting families with pre-existing conditions. His wife is a breast cancer survivor.

"Without the Affordable Care Act, she likely wouldn't have even been offered an insurance plan," he said.

Lehman testified about the ACA and the higher premium impacts last week before a U.S. Senate Homeland Security and Governmental Affairs Committee hearing examining health care options.

As open enrollment closed Monday night, farmers said they are waiting to see whether Congress acts before higher premiums take effect Jan. 1.

"This isn't just a farmer problem," Russell said. "It's a problem for millions of Americans who don't have employer-based insurance. But farmers are right in the middle of it -- and the cost is very real."

Also see "Rural America Could See Steep Health Insurance Hikes Without ACA Credits" here: https://www.dtnpf.com/….

Chris Clayton can be reached at Chris.Clayton@dtn.com

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