New Mexico is moving to cushion residents from significant health insurance cost increases after Congress allowed enhanced Affordable Care Act premium tax credits to expire Dec. 31, 2025. State officials said New Mexico will use its own Health Care Affordability Fund to backfill federal subsidies and maintain lower premiums for most people enrolled through BeWell, the state’s health insurance marketplace.
The move comes amid federal inaction on extending the expanded ACA tax credits, which were first expanded under pandemic-era legislation and later extended through 2025. Without those enhanced credits, analysts warned that New Mexicans could face substantial premium increases, averaging more than $1,500 per person per year, while many small-business owners and middle-income households reconsider their coverage decisions.
New Mexico’s Health Care Affordability Fund was created in 2021 to reduce the cost of coverage for individuals and families on the health insurance marketplace, including reducing premiums and out-of-pocket expenses. The fund has been tapped repeatedly in recent years to expand access and shield residents from rising health care costs.
Under the state plan for 2026, lawmakers approved roughly $17.3 million from the Health Care Affordability Fund to subsidize premiums and cost-sharing for enrollees who purchase coverage through BeWell through June 30. Additional funding has been proposed in the fiscal 2026–27 budget to extend assistance further if the federal government continues to withhold expanded tax credits.
State officials and health care authorities emphasized that New Mexico’s action protects coverage for residents across a wide range of income levels. Unlike most federal subsidies, which typically phase out at 400% of the federal poverty level (FPL), state premium assistance can extend protections to some enrollees above that threshold.
What New Mexico’s Marketplace Assistance Does
Key features of the state’s approach include:
- Premium subsidies replacement: Funds from the Health Care Affordability Fund lower monthly health insurance premiums for most BeWell enrollees who would otherwise face increases due to the expiration of enhanced federal tax credits.
- Income broad protection: Assistance applies to households above the traditional federal subsidy cutoff of 400% FPL, reducing the risk of coverage loss for middle-income residents.
- Out-of-pocket cost reduction: The Marketplace Affordability Program also includes subsidies that reduce deductibles and other out-of-pocket expenses for certain plan types on BeWell.
Taken together, these measures aim to preserve affordable access to health insurance in New Mexico’s individual market, even without additional federal support.
State health officials noted that absent these actions, thousands of residents could lose coverage or face premium shocks that exceed their budgets. New Mexico estimates that without state assistance, roughly 27,100 residents could have been at risk of dropping marketplace coverage due to unaffordable premiums.
The reliance on state funds comes as federal policymakers remain at odds over whether to extend the enhanced tax credits nationally. Negotiations in Congress have stalled, leaving New Mexico and a few other states with their own subsidized programs. National health policy analysts have said that state programs can mitigate some cost increases but may not fully substitute for broad federal action.
For residents already enrolled in BeWell plans, open enrollment continues through mid-January, with certified enrollment assisters available to help people understand their options and potential savings. Officials said that state premium assistance, when combined with existing federal tax credits, will keep many monthly premiums significantly lower than they would be otherwise.
The fiscal and political stakes are high as New Mexico weighs further appropriations. Governor Lujan Grisham’s budget proposal for fiscal years 2026–27 includes additional Health Care Affordability Fund resources to sustain subsidy backfilling beyond June if federal inaction persists. Advocates for coverage expansion say ongoing state support could become an essential safety net if federal tax credits are not restored.