Expired ACA Subsidies Drive Employees Back to Group Plans

The enhanced ACA premium tax credits that made individual health insurance affordable for millions of Americans expired on December 31, 2025, creating an immediate shift in the health insurance landscape for Long Island small businesses. With Congress failing to extend these subsidies and marketplace premiums rising an average of 26% nationally, employees who previously opted out of employer-sponsored coverage may now find group plans more attractive than ever.

This change affects Nassau and Suffolk County employers directly. Employees who declined your group health plan in favor of subsidized marketplace coverage—particularly those with spouses and dependents receiving significant tax credits—are likely reconsidering their options as their individual premiums spike without government assistance.

The Numbers Behind the Shift

The subsidy expiration coincides with substantial premium increases across ACA marketplaces. While New York's state-run marketplace fares better than federal Healthcare.gov states—with benchmark premium increases of 17% compared to 30% nationally—these costs still represent a significant burden for employees previously cushioned by enhanced tax credits.

For context, employees who maintained Silver-tier marketplace plans with deductibles under $100 may now face a choice between paying dramatically higher premiums or switching to Bronze plans with deductibles exceeding $7,000. This cost pressure makes employer-sponsored group coverage increasingly competitive, even for employees who previously found individual coverage more affordable.

What This Means for Long Island Employers

Medical practices, dental offices, accounting firms, and other professional service businesses across Long Island should prepare for potential enrollment increases in their group health plans. Employees who waived coverage during your last open enrollment may request to join mid-year, though this typically requires a qualifying life event or your plan's specific enrollment rules.

The timing creates budget pressure for 2026 renewals. If more employees enroll in your group plan than anticipated, your premium calculations and contribution strategies may need adjustment. This is particularly relevant for smaller employers where each additional participant significantly impacts the risk pool and associated costs.

As we discussed in our recent analysis of strategic benefits planning, employers who proactively evaluate their coverage options are better positioned to manage these unexpected changes.

Immediate Action Items

First, review your current plan's mid-year enrollment provisions with your benefits administrator. Understanding when and how employees can join your group plan helps you respond quickly to requests and avoid compliance issues.

Second, assess your contribution strategy. If several employees switch from individual coverage to your group plan, you may want to evaluate whether your current employer contribution percentage remains sustainable and competitive.

Third, communicate proactively with your workforce. Employees may not realize their marketplace subsidies have expired or understand how this affects their 2026 coverage costs. Providing clear information about your group plan options demonstrates value and helps employees make informed decisions.

Finally, consider this an opportunity to enhance your benefits package's competitive advantage. With individual market options becoming less attractive, a well-structured group health plan becomes a stronger recruitment and retention tool for attracting quality employees in Nassau and Suffolk County's competitive professional services market.

The subsidy expiration represents a significant shift in health insurance dynamics that smart employers can leverage. By understanding these changes and preparing for increased group plan participation, Long Island businesses can turn this challenge into a strategic advantage for employee retention and satisfaction.

Benton Oakfield helps Long Island employers navigate these evolving health insurance dynamics, from mid-year enrollment management to strategic plan design that maximizes value for both employers and employees in this changing landscape.

Compliance Note: Benefit plan rules and tax implications vary based on company size and location. This summary is for informational purposes only. Please contact your Benton Oakfield representative to review how these changes impact your specific plan documents.

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