AFFORDABLE CARE ACT (ACA) SUBSIDIES & MINNESOTACARE
According to the nonpartisan CBO, the following provisions in the OBBBA are estimated to, collectively, cut ACA premium subsidies and cost-sharing reductions by $379 billion and result in 7 million Americans losing health insurance in the next 10 years. This guide lists the provisions in order of effective date and discusses how Minnesota will be uniquely impacted by each.
ACA tax credits and other subsidies are only available to Minnesotans who purchase coverage via MNsure, Minnesota’s health insurance marketplace. In 2025, roughly 167,000 Minnesotans (i.e., 2.9% of the state population) purchased health insurance coverage from private plans sold on MNsure; over half of those purchases qualified for income-based premium subsidies (i.e., advance premium tax credits) that reduce the cost of insurance by an average of $6,000 per year per household. Moreover, about one in 10 Minnesotans who purchased coverage via MNsure qualified for additional subsidies in the form of cost-sharing reductions to reduce their selected plans’ deductibles and/or out-of-pocket maximums.
Minnesotans covered by MNsure plans are far less likely to delay or forgo care due to cost compared to uninsured Minnesotans (i.e., 30% and 53%, respectively).
Importantly, these provisions are expected to affect MinnesotaCare as well. MinnesotaCare, Minnesota’s version of a Basic Health Program, is a joint federal-state program that provides subsidized health insurance to low-income Minnesotans whose household incomes are slightly too high for Medicaid coverage (i.e., between 138% and 200% of the federal poverty line; $21,597 to $31,300 for a single adult). Since MinnesotaCare enrollees would otherwise have been eligible for ACA premium subsidies and cost-sharing reductions from MNsure-purchased plans, the federal government provides Minnesota with virtually equivalent federal funds for each MinnesotaCare enrollee through what is called “federal pass-through funding.” In 2023, 91% of MinnesotaCare’s $676.5 million costs were financed through federal pass-through funding. Cuts to federal premium subsidies and cost sharing reductions will result in decreased federal pass-through funding for MinnesotaCare, which limit MinnesotaCare coverage in the future.
Effective Date: January 1, 2026
Estimated Federal Savings: $335 billion
Estimated Number of Americans to Lose Insurance: 4.2 million
Background
The American Rescue Plan (2021) and the Inflation Reduction Act (2022) (a) increased the size of premium subsidies offered to those already eligible for premium subsidies under the ACA and (b) expanded subsidies to middle-income people making over 400% of the federal poverty level. According to KFF, these enhanced subsidies have cut premium payments by an average of 44% ($705 annually) across eligible enrollees. The enhanced subsidies are set to expire on January 1, 2026, unless Congress extends them.
The OBBBA did not extend the enhanced premium subsidies authorized under the American Rescue Plan and the Inflation Reduction Act.
Impact in Minnesota
Starting in 2025, 62% of MNsure enrollees (89,000 Minnesotans) will see a decrease in their federal premium subsidies. Roughly 19,501 of these enrollees will lose all financial assistance. Minnesota households that purchase insurance through MNsure can expect an average premium increase of $177 per month (i.e., $2,124 per year). As subsidies expire and effective premiums increase, some Minnesotans will no longer be able to afford coverage.
Effective Date: January 1, 2026
Estimated Federal Savings: $4.7 billion
Estimated Number of Americans to Lose Insurance: 1 million
Background
Historically, lawfully present immigrants have been eligible for premium subsidies and cost-sharing reductions for coverage purchased via MNsure. While premium subsidies are available to U.S. citizens with incomes less than the federal poverty line (because of their eligibility for Medicaid), premium subsidies have been available to lawfully present immigrants with incomes less than the federal poverty line who did not qualify for Medicaid due to immigration status.
The OBBBA restricts lawful immigrant eligibility for ACA premium subsidies to green card holders, Compact of Free Association (COFA) migrants living in the US, or Cuban or Haitian entrants (effective January 1, 2027), consistent with ACA income requirements. The law also eliminates ACA subsidies for all lawfully present immigrants with incomes under 100% of the federal poverty level (effective January 1, 2026).
Impact in Minnesota
While the number of non-U.S. citizens enrolled via MNsure plans is unclear, this OBBBA provision is expected to reduce their MNsure enrollment and restrict their access to healthcare.
Effective Date: January 1, 2026
Estimated Federal Savings: $39.4 billion
Estimated Number of Americans to Lose Insurance: 1.8 million
Background
To enroll in a MNsure plan, customers must typically enroll during an open enrollment period (e.g., November to mid-January each year). Exceptions to this rule are called special enrollment periods (SEPs), which are usually triggered by qualifying life events (QLEs). Some states also offer SEPs that are based on income as a percentage of the federal poverty line. Historically, anyone who enrolls during open enrollment or an SEP is eligible for federal premium subsidies and cost-sharing reductions.
The OBBBA bars people who enroll during a non-QLE SEP from receiving federal premium subsidies or cost-sharing reductions.
Impact in Minnesota
MNsure does not offer non-QLE SEPs to people based on income. However, MNsure offers at least one non-QLE SEP that is triggered when Minnesotans file their taxes and check a box indicating interest in MNsure offerings. While the conversion rate of this SEP is unclear, it is expected that the removal of this SEP will reduce the number of MNsure enrollees in future years.
Effective Date: January 1, 2027
Estimated Federal Savings: Unclear (nested under Medicaid work requirements)
Estimated Number of Americans to Lose Insurance: Unclear (nested under Medicaid work requirements)
Background
The OBBBA stipulates that if a person is denied or disenrolled from Medicaid due to new work requirements, they are also ineligible for individual market premium subsidies.
Impact in Minnesota
At least 243,000 Minnesotans on MA will be subject to the work requirements imposed by the OBBBA. A significant portion of these Minnesotans are expected to lose MA coverage because they will either (a) not meet the requirements or (b) fail to process the appropriate paperwork demonstrating compliance every six months. Minnesotans who lose MA coverage in this way will have to purchase unsubsidized individual plans – which are cost-prohibitive in many cases – or go uninsured.