Half of ACA Marketplace Enrollees Connected to Small Businesses
Insurers are projecting an 18% increase in gross health insurance premiums for 2026, partially driven by the anticipated expiration of enhanced premium tax credits. This rise will impact both government costs for subsidies and individuals who do not receive premium assistance.
While discussions surrounding the Affordable Care act (ACA) Marketplaces often focus on individual consumers, a notable portion of enrollees are linked to small businesses or are self-employed.A recent analysis by KFF revealed that 38% of adult individual market enrollees under age 65 with incomes exceeding 400% of the federal poverty line (FPL) are self-employed, a considerably higher rate than the 7% observed nationally among all adults (ages 19-64) with comparable incomes. The expiration of enhanced premium tax credits would eliminate eligibility for these credits for individuals and families earning over 400% FPL, leaving them responsible for the full cost of their premiums.
analysis of data from the Current Population Survey (CPS) Annual Social and Economic Supplement indicates that 48% of adults under age 65 enrolled in individual market coverage – the majority of which is purchased through the ACA Marketplaces – are either employed by a small business (fewer than 25 workers), self-employed entrepreneurs, or small business owners. This contrasts sharply with the 16% of all adults under age 65 nationwide who are employed by a small business or are self-employed.
For many small business employees and self-employed individuals,the individual market serves as a primary source of complete health insurance,filling a gap where traditional employer-sponsored coverage is unavailable. Small businesses are less likely than larger firms to offer health benefits to their employees, increasing reliance on the affordability and stability of the individual market.
The enhanced premium tax credits have played a crucial role in lowering costs for Marketplace enrollees. If these subsidies expire as scheduled at the end of 2025, individual market enrollees – including a considerable number connected to small businesses – will face increased out-of-pocket premium expenses.
Methods
The data presented is based on KFF analysis of the 2024 CPS Annual Social and Economic Supplement. The analysis includes adults under age 65 who directly purchase their health insurance and are not currently students. Individuals were categorized as self-employed or employed by a small business if they self-reported being self-employed or working at a business with between one and 24 employees. Employer size is measured for the primary job in the previous year,and might potentially be different at the time of the survey.
