ACA Premium Subsidies Made Permanent, But Federal Worker Pay Hikes Halted in Massive Funding Bill

This massive piece of legislation, officially titled the Continuing Appropriations and Extensions and Other Matters Act, 2026, is the government’s emergency brake and long-term planning tool rolled into one. At its core, it’s a Continuing Resolution (CR), meaning it keeps the lights on and the money flowing for most federal agencies during Fiscal Year 2026. It ensures everything from the Department of Education to the Department of Transportation can continue operating at roughly 2025 funding levels until Congress passes a full budget.

But this bill is far more than just a stopgap measure. It’s packed with short-term extensions for dozens of programs and a few heavy-hitting, permanent policy changes that will affect your wallet, your healthcare, and the security of federal buildings. Think of it as the government clearing its legislative calendar while simultaneously dropping a few policy bombs.

The Permanent ACA Fix: No More Subsidy Cliff

If you buy health insurance through the Affordable Care Act (ACA) marketplace, this is the biggest news in the entire bill. Starting in 2026, the bill makes the enhanced premium tax credits permanent (SEC. 2142). Previously, these enhanced subsidies were temporary, and anyone earning more than 400% of the federal poverty line faced a massive "subsidy cliff," where they suddenly lost all financial aid. This bill removes that 400% income cap permanently, ensuring that no one has to pay more than a set percentage of their income for a benchmark plan, regardless of how much they earn. This means if you’ve been holding back on a raise or worrying about your spouse's bonus pushing you off the cliff, that specific anxiety is gone. The change also smooths out the sliding scale for required contributions, making the system much more stable and predictable for middle-income families.

The One-Month Dash: Healthcare and Veteran Programs

Most of the dozens of programs extended in this bill—from funding for Community Health Centers and the National Health Service Corps to the Medicare-Dependent Hospital program and various veteran services—are only extended for one month, through October 31, 2025 (Title I, Title II). This short-term extension is typical for a CR, but it creates uncertainty. If you’re a veteran relying on the Staff Sergeant Parker Gordon Fox Suicide Prevention Grant Program (SEC. 2204) or a patient at a Certified Community Behavioral Health Clinic (SEC. 2132), your program is safe for now, but Congress will have to reauthorize it again in a few weeks. It’s a legislative game of chicken that keeps essential services on a tight leash.

The Budget Freeze: Federal Employees Take a Hit

Here’s a provision that will directly affect hundreds of thousands of federal workers, including those in the military and civil service: the bill temporarily halts automatic Cost-of-Living Adjustments (COLAs) for certain federal pay scales (SEC. 1507). Normally, these adjustments kick in automatically to keep pace with inflation. By overriding the law that triggers these automatic pay hikes, the government is effectively freezing the real wages of many federal employees during the period this Act covers. For a federal employee juggling rising costs, this temporary freeze feels like a real-wage cut, forcing them to absorb the full cost of inflation without relief.

The Security Surge: Emergency Cash for Key Agencies

This bill uses the powerful tool of “emergency requirement” designations to bypass normal budget caps and inject massive amounts of cash into specific security and defense agencies. This is where the bill gets expensive and specific:

• Judicial Security: The Supreme Court gets an extra $28 million for protecting Justices’ residences (SEC. 1509), and federal courthouses get an additional $52 million for security upgrades (SEC. 1510). The U.S. Marshals Service also receives $60 million extra for protective operations and judicial security (SEC. 1202, SEC. 1203).
• Congressional Security: The House and Senate Sergeant at Arms offices are allocated $120 million for enhanced Member security programs (SEC. 1506).

While the need for security is clear, classifying these funds as “emergency” means they are added outside of standard spending limits, a move that critics often flag as circumventing fiscal discipline.

The Defense Department’s Tight Leash

For the Department of Defense (DoD), the CR means business as usual, but with a serious restriction: they cannot use this funding to start new production lines or increase existing production rates beyond 2025 levels (SEC. 102). This is standard CR language, designed to prevent the military from making long-term commitments before a full budget is passed. However, it can create headaches for defense contractors and delay modernization. If you work in a factory supplying the military, don't expect any sudden ramp-ups in orders until the full 2026 budget is finalized.

Overall, this Act is a masterclass in legislative triage: it solves a big problem (the ACA subsidy cliff) while creating several smaller, immediate ones (the COLA freeze and the one-month program extensions). It keeps the government running, but it forces dozens of critical programs to live month-to-month, trading stability for speed.