One Million Americans Will Receive $500 Obamacare Rebates: What to Know

President Donald Trump announced $500 rebates for about 1 million Americans he said were overcharged through the Affordable Care Act Marketplace, commonly known as Obamacare.

The rebates stem from a little-known fee collected from consumers to operate the online insurance market.

Here’s what to know about the rebates, the surplus, and the little-known fee that created it.

How User Fees Work

The rebates come from a surplus in user fees, which the government imposes on consumers to fund the operation of the federal insurance marketplace. The fee covers operation of the system, including information technology, the consumer call center, and eligibility and enrollment services.

The government sets the fee every year as a percentage of monthly premiums. Insurance companies build the fee into the premiums they collect from enrollees, then send the fee to the government. So while the fee is ultimately paid by consumers who use the federal marketplace, the fee is largely invisible to them.

There are no user fees for people in states that operate their own Obamacare marketplace without federal support.

A surplus accumulated because the government collected more money in user fees than what it cost to operate the federal marketplace, according to the White House.

Who Gets the Rebate

Rebates will be sent to Obamacare enrollees, but not all of them, according to the White House.

Only those who enrolled from states that use the federally supported marketplace to manage Obamacare enrollment are eligible. 

Those states are: Alabama, Alaska, Arizona, Arkansas, Delaware, Florida, Hawaii, Indiana, Iowa, Kansas, Louisiana, Michigan, Mississippi, Missouri, Montana, Nebraska, New Hampshire, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, South Carolina, South Dakota, Tennessee, Texas, Utah, West Virginia, Wisconsin, and Wyoming.

Other states and the District of Columbia operate their own Obamacare marketplaces and do not pay federal user fees.

About 15.8 million people signed up for Obamacare in the 30 states listed this year, according to data from healthcare research group KFF. But not all of them will get a rebate.

Only enrollees who did not receive a government subsidy, called an advance premium tax credit, will receive a rebate. That’s because Obamacare users who receive a subsidy do not pay the user fee. Those who pay the full premium themselves also pay the user fee.

The White House did not specify which enrollment years are covered by the rebate, the amount of the surplus, or the years for which the rebates are applied. 

A White House spokesperson referred questions about the rebate to the Centers for Medicare and Medicaid Services, which declined to comment.

Here’s how the surplus came about.

Rates Increased

For 2025, the user fee was 1.5 percent of premiums for states using the federal system and 1.2 percent for states that ran their own exchange with support from the federal system. For 2026, the rates were increased to 2.5 percent and 2 percent.

The rate hike was tied to another change that happened in 2026, expiration of the enhanced premium tax credits. 

Those enhanced subsidies came online in 2021, bringing millions more people into Obamacare. But the subsidies were set to expire at the end of 2025. 

Some experts feared that a huge number of people would drop Obamacare coverage when the extra subsidies went away. If that happened, revenue from user fees would diminish also, but the cost of operations would remain.

With that in mind, the government increased the rate for 2026. Those rates were finalized on Jan. 13, 2025, one week before President Joe Biden left office.

Enrollment Didn’t Tank

Obamacare enrollment did go down in 2026, by about 6 percent. But that’s less than half the drop some experts predicted.

Even before 2026 enrollment took place, the government had projected an increase in user fees for the year, to $2.1 billion.

The higher-than-anticipated enrollment combined with the higher rates appear to have set the stage for a surplus. 

Previous Effort

Trump did not specify which years ran a surplus, saying only that it occurred under the Biden administration.

The cost of operating the federal marketplace is not available to the public. So it’s not clear which years may have been affected. Neither the Obama nor the Biden administration returned any excess user fees to the public.

However, the Biden administration did try to reduce the fees for certain insurance companies as a back-door reimbursement for providing free contraceptives. 

In 2023, the administration proposed a rule explicitly aimed at rescinding a conscientious objection written into the Affordable Care Act. That provision exempted employers and individuals with a moral objection to contraception from having to pay for health plans that provide it.

The Affordable Care Act otherwise requires all Obamacare and group health plans to provide contraceptives to enrollees at no cost to the individual.

Under the Biden plan, a person covered by an insurance plan that didn’t pay for contraception could get it free from any provider. The provider would then be reimbursed by any willing insurer that participated in the ACA Marketplace.

That insurer would in turn be reimbursed by the federal government through a reduction in their ACA Marketplace user fee.

The plan was dropped after some Republicans and a number of conservative groups objected.

When announcing the rebates, Trump called on Congress to pass his Great Healthcare Plan, which now is enforced through executive order, into law.

“We will stop all payments to big insurance and give the money directly to the people, who will then be able to buy better healthcare at a much lower cost and keep the difference,” Trump said.