What OBBBA and Expiring Tax Credits Mean for Your Employee Benefits Strategy

As open enrollment 2026 approaches, small business owners face a shifting healthcare landscape. Two major changes are now set in motion that could affect both your employees and your bottom line:

1. Enhanced premium tax credits (APTCs), the subsidies that make ACA marketplace plans more affordable, are still scheduled to expire at the end of 2025. Without them, many families could see premium costs rise by more than 75 percent.
2. The One Big Beautiful Bill Act (OBBBA), signed into law in July 2025, includes deep Medicaid funding cuts and tighter eligibility requirements, which could result in millions losing Medicaid coverage over the coming decade.

A Possible Extension?

Congressional Democrats have proposed extending the enhanced APTCs as part of a stopgap spending bill to keep the government funded through October 31, 2025. Their proposal would make the enhanced subsidies permanent while also reversing some Medicaid cuts.

Whether that measure succeeds is uncertain and until it’s resolved, employers should plan for the scenario where subsidies expire as scheduled.

What This Means for Employers

When workers lose Medicaid or can no longer afford marketplace coverage, they often turn to their employers first. That means:

• Higher enrollment in your plan — especially from lower-wage employees who previously qualified for Medicaid.
• Pressure on affordability — workers may struggle with their share of premiums, leading to requests for larger employer contributions or lower-cost plan designs.
• Dependent coverage growth — families who lose Medicaid/CHIP for children may add them to your plan, increasing overall claims exposure.

Risks and Opportunities

For small businesses, this shift can feel daunting. More employees enrolling means higher costs. But it also creates an opportunity: health benefits may become one of your most valuable tools to attract and retain workers in a tight labor market.

Some employers may see health insurance go from a “nice to have” to a must-have differentiator. Those who adapt quickly will stand out as employers of choice.

Why ICHRAs Matter Now

One option gaining traction among employers is the Individual Coverage Health Reimbursement Arrangement (ICHRA). With an ICHRA, you set a defined contribution toward employees’ health insurance, and they choose a plan that works best for them on the marketplace. This approach can:

• Help control employer costs
• Offer employees more choice
• Shift some risk away from the employer plan back to the individual market

The Bottom Line

With OBBBA now law — and enhanced premium tax credits at risk of expiring — the way millions of Americans get health insurance could change dramatically by 2026. Congress may still act by October 31, but uncertainty remains.

For small businesses, the question isn’t just how much benefits will cost — it’s how you’ll position them as part of your strategy to keep and attract talent.

Now is the time to evaluate your benefits approach. Employers who start planning for 2026 today — whether through traditional group coverage, new plan designs, or an ICHRA — will be better prepared for what’s ahead.