Health insurance subsidy expiration puts Iowa small business owners in a bind
Many Iowans risk losing their subsidized health insurance without the ACA marketplace enhanced premium tax credits.
When Rachel Burns, a speech-language pathologist in Odebolt, decided to leave her job as a school speech therapist to start a private practice in 2020, she and her husband were able to purchase subsidized health insurance plans through the Affordable Care Act marketplace.
Based on their income, which is below 400% of the federal poverty level of $33,000 for a family of four, Burns and her family are currently eligible for subsidies under the Affordable Care Act of 2010. However, as small-business owners whose income is not predictable, Burns says, they are concerned that any increase in what they make could disqualify them from subsidized premiums. With the expiration of enhanced tax credits that raised the threshold for eligibility, expanded the number of eligible Americans, and helped more than 110,000 Iowans pay their health insurance premiums, Burns is worried that they could lose their insurance plans entirely.
“Being a business owner is a lot of unknown, trying to learn new things in healthcare is an unknown, and dealing with insurance on the provider end,” Burns told the Iowa Independent. “But that was a big piece that was like, OK, our kids can access the state CHIP [Children’s Health Insurance Program] or Medicaid, depending on how our year looks, and then we can get by on this option that we can access.”
“Right now, without the subsidy, I’m just not going to have healthcare insurance, like, that’s the black and white of it right now is I cannot afford a plan,” she said. “I would continue to accrue medical debt, which I already have, but I think I would just not have coverage, which is a slippery slope of not necessarily seeking out preventative care, being reactionary instead of preventative. And that ends up harming everyone in the community, because when we can’t seek treatment for illness or spreading it to others, and as small-business owners, if we’re sick, we’re losing income, which affects how much tax revenue we’re creating, and it affects the economy, because we don’t have money to spend.”
Shawn Phetteplace is national campaigns director for Main Street Alliance, a coalition of small-business owners advocating for a fair economy. He said in a phone interview that the Affordable Care Act of 2010 included a subsidy cliff, which meant that if people earned more than 400% of the federal poverty level in a year, they lost all subsidies for their marketplace insurance plans.
“Four hundred percent of poverty sounds high, but it’s really not,” Phetteplace said, noting that for individual filers with no spouse or dependents, that threshold falls somewhere between $60,000 and $70,000 a year. “The American Rescue Plan, and then the Inflation Reduction Act, extended enhanced subsidies that made it more affordable, both further down the income spectrum, but also got rid of the subsidy cliff, where it would transition, essentially — you know how, like, with the tax system, that you’re only taxed the percentage on the amount over a certain amount? It sort of changed it to be like that.”
The enhanced subsidies were temporary, however, and expired at the end of 2025.
“The problem with essentially having the subsidy cliff again is that people who bump up against 400% of poverty will potentially lose a huge amount of money as a result,” said Phetteplace. “We’re encouraging people to become less profitable, essentially, in order to remain eligible for their healthcare, and it’s a big issue, especially since for many folks, small-business owners have huge amounts of expenses that many people who are W-2s or employees of other organizations don’t have, and so if anything, it actually makes the problem much worse.”
In December, the U.S. Senate considered a proposal to extend the premium subsidies for three years. The proposal fell short of the required 60 vote threshold, 51-48, largely along party lines. Only two Republicans supported the proposal, and both of Iowa’s senators, Joni Ernst and Chuck Grassley, voted no. President Donald Trump wrote in a November Truth social post, “THE ONLY HEALTHCARE I WILL SUPPORT OR APPROVE IS SENDING THE MONEY DIRECTLY BACK TO THE PEOPLE, WITH NOTHING GOING TO THE BIG, FAT, RICH INSURANCE COMPANIES, WHO HAVE MADE $TRILLIONS, AND RIPPED OFF AMERICA LONG ENOUGH.”
Without the enhanced subsidies, the out-of-pocket price of health insurance plans in Iowa were to increase 173% in 2026, according to a September analysis by the nonpartisan Center for American Progress. The number of Iowans purchasing ACA marketplace plans dropped by about 10%, from 136,833 in 2025 to 123,304, according to KFF data. An estimated 20% of Americans who enrolled or renewed through the HealthCare.gov federal site were subsequently dropped after failing to pay their first month’s premium, according to a May 12 report on the news site NOTUS.
After 218 U.S. representatives signed a discharge petition to force a vote in the House over the opposition of President Donald Trump and the GOP leadership, House Democrats and 17 Republicans approved a bill in January to restore the subsidies through 2028. That bill has not come up for a vote in the Senate.
Iowa Republican Reps. Randy Feenstra, Ashley Hinson, and Miller-Meeks voted against consideration of the bill and against its passage. Republican Rep. Zach Nunn voted against bringing the bill to the floor for a vote, but then voted in favor of final passage.
Burns said that she is having to reevaluate her part-time second job for fear of losing eligibility for subsidized coverage: “I teach EMT class, so I need to be thinking about how many classes can I teach in a year without losing where I sit for health insurance for my family?”
“This is exactly why we’ve been raising the alarm about the expiration of the health care tax credits,” Amy Adams, director of Protect Our Care Iowa, said in an email. “Small business owners across Iowa are facing an impossible choice: earn enough to support their families and lose affordability of their coverage, or limit their income just to keep health insurance within reach. These policy decisions are hurting Iowans and putting families in an impossible bind.”
