Historic Numbers Enroll in Health Insurance through State-Based Marketplaces, With Consumers Benefitting from Premium Tax Credits

by Christina Cousart, Hemi Tewarson
May 5, 2025 - NASHP

In 2025, more than 24 million Americans signed up for health insurance through the health insurance marketplaces, setting a new record for marketplace enrollment and marking the fifth straight year of their continued enrollment growth. One key driver of this growth has been the availability of federal premium tax credits, which significantly lowered health insurance premiums for millions of consumers across the country.

New data collected from 20 state-based marketplaces (SBMs) by the National Academy for State Health Policy (NASHP) show high enrollment across the SBMs in 2025. More than 7 million individuals enrolled in health coverage through SBMs, including more than 1.2 million new enrollees. (See Appendix 1 for a state-by-state summary)

What are health insurance marketplaces, and who do they serve?

Health Insurance Marketplaces provide public, transparent platforms for individuals to shop for private health insurance while also determining eligibility for federal tax credits to reduce the cost of that insurance. States may opt to operate their own state-based marketplace (SBM) or defer to the federally facilitated marketplace (FFM). Currently, 20 states operate SBMs, with two additional states actively transitioning to the SBM model.

A number of different types of consumers enroll in health coverage through marketplaces. These consumers include:

• Working individuals and families who do not have access to employer-sponsored insurance because coverage is not offered, they do not qualify (e.g., part-time workers), or it is unaffordable.
• Small business owners, sole proprietors, and freelancers who must purchase insurance on their own, including many people living in rural areas.
• Pre-retirees who do not yet qualify for Medicare but are no longer eligible for their employers’ plan.
• Young adults, especially those who have aged out of their parents’ coverage and may be in school or working in early career jobs with few benefits.

Updated Federal Tax Credits Improve Affordability for Marketplace Consumers

Consumers who enroll in health insurance through the marketplaces must pay a monthly premium, with federal tax credits available to qualifying consumers to reduce the cost of coverage. Most enrollees opt to receive tax credits in the form of an advance payment to reduce their monthly premium expenses, while others receive them as a tax rebate at the end of the year.

SBMs consistently report affordability as the top concern prohibiting access to coverage. Originally, tax credits were only available to households with income from 100-400% of the federal poverty level (FPL) (e.g., individuals making $15,060-$60,240 per year in 2025). In 2021, Congress updated the federal tax credit formula to:

1. increase the amount of tax credits available for households from 100-400% FPL¹, and
2. cap health insurance premiums at 8.5% of income for all enrollees², expanding access to tax credits for thousands of middle-income families.

Since the federal tax credits were updated in 2021, more than 3.2 million Americans have enrolled in marketplace coverage across the US.

SBM Data Highlight Impact of Updated Tax Credits

The updated tax credits have significantly lowered health insurance premiums for SBM consumers. As shown in the figure below, in 2025, SBMs’ consumers are saving an average of $68 to $446 per month in premium costs due to the updated tax credit formula, resulting in hundreds, if not thousands, of dollars in savings this year.

SBMs Anticipate Significantly Higher Costs for Consumers if Tax Credits Expire

The updated federal tax credits expire at the end of 2025. Without federal action to extend these consumer cost-saving measures,SBMs anticipate premium increases, coverage losses, and additional strain on providers and health systems resulting from increased uncompensated care.

As shown in Appendix 1, SBMs estimate that consumers would have paid significantly higher monthly premiums this year if not for the updated tax credits. If the updated premium tax credits expire at the end of this year, the Congressional Budget Office estimates that nearly 4 million Americans will disenroll from marketplace coverage next year. SBMs warn that worsened risk pools caused by disenrollments, combined with additional factors such as medical inflation, will further raise premiums and amplify the impact on consumers next year.

For more information about the potential impacts on marketplace consumers if the updated federal tax credit formula expires, please see the resource library available from theState Marketplace Network.

Notes: Based on total plan selections for the 2025 open enrollment period as reported by the state-based marketplaces (SBMs).

Tax Credit Recipients: Numbers reflect the number of enrollees who elect to receive advanced premium tax credits (APTCs). May not reflect the total number of individuals who qualify for and will receive tax credits.

Average Monthly Premium: Based on average monthly premiums reported for all marketplace enrollees. For DC, average is based on APTC recipients.

Average Monthly Enrollee Payment: Based on average monthly payments made by enrollees receiving APTCs. For PA, average is based on all enrollees.

ESTIMATED Monthly Enrollee Payment Without Updated Tax Credits: Based on SBM estimates of average premium costs if the original (pre-2021) tax credit formula was applied to current enrollees receiving APTCs (and for all enrollees in the case of PA). Does not account for additional factors that would influence premium costs if the updated premium tax credits were not in place such as issuer price adjustments and likely changes in plan selections.

¹ $15,060-$60,240 for an individual or $46,800-$124,800 for a family of four. Figures correspond to income for those at 100-400% of the federal poverty level for the 2025 plan year.

² Based on the purchase of a benchmark plan, otherwise known as the second-lowest-cost silver-level health plan available to a marketplace enrollee; consumers may pay more for coverage if they opt to enroll in a higher value plan available through their marketplace.