Affordable Care Act health insurance premium increase 2026: What Americans Pay After Subsidy Expiration
Affordable Care Act health insurance premium increase 2026:The envelope arrives in November, and the number inside makes your stomach drop. Your health insurance premium for 2026 has doubled—or worse, tripled. For millions of Americans who buy coverage through the Affordable Care Act marketplaces, this wasn’t a hypothetical scenario. It became reality.
Insurance companies raised their rates by an average of 26% for 2026, marking one of the steepest increases since the ACA marketplaces opened over a decade ago. That alone would be jarring. But the real shock comes from the enhanced premium tax credits that expired on December 31, 2025. Without congressional intervention to extend them, people who receive subsidies face average premium payment increases of 114%—meaning their out-of-pocket costs more than doubled overnight.
A 60-year-old couple in Wyoming earning $85,000 annually saw their monthly premium skyrocket from $602 to $4,777—a 693% increase. That’s nearly $50,000 per year for health insurance. In West Virginia, similar couples faced increases exceeding 650%. Even in states with smaller jumps, premiums more than doubled for many middle-income households who suddenly lost all subsidy eligibility when the “subsidy cliff” at 400% of the federal poverty level returned.
This represents the most dramatic shift in American health insurance affordability since the ACA’s inception, affecting over 24 million marketplace enrollees. The financial strain extends beyond individual budgets—economists predict 340,000 job losses across the country, billions in lost state tax revenue, and between 2.2 and 4.2 million newly uninsured Americans by 2027. Small businesses face impossible choices between maintaining health benefits and staying solvent.
Understanding what happened, why premiums exploded, which states got hit hardest, and what you can actually do about it requires untangling a complex web of expired policies, rising healthcare costs, political gridlock, and strategic financial planning opportunities that most people don’t realize exist.
What Changed and Why Premiums Doubled
The enhanced premium tax credits that Congress passed during the COVID-19 pandemic fundamentally changed how affordable marketplace coverage became. Introduced in 2021 through the American Rescue Plan and extended through 2025 by the Inflation Reduction Act, these enhanced subsidies did two critical things. First, they increased financial assistance for people already eligible for help—those earning between 100% and 400% of the federal poverty level. Second, they eliminated the “subsidy cliff” by extending eligibility to anyone earning above 400% of poverty, as long as their premium exceeded 8.5% of household income.
The impact was immediate and dramatic. Marketplace enrollment more than doubled from 11 million in 2020 to 24 million by 2025. People with modest incomes who previously faced $300-$500 monthly premiums after subsidies suddenly paid $10 or nothing at all. Four out of five federal marketplace consumers found plans for $10 or less per month with these enhanced credits. A 45-year-old earning $28,000 paid just $325 annually for coverage—barely 1% of their income.
When those enhanced credits expired on December 31, 2025, the formula reverted to pre-pandemic rules. That same 45-year-old earning $28,000 now pays $1,562 annually—nearly six times more. The subsidy structure still exists for people under 400% of poverty, but it’s substantially less generous. Someone earning $65,000 (415% of poverty) who previously paid around $5,500 annually for a benchmark silver plan will pay roughly $8,000 in 2026—losing all subsidy eligibility entirely.
Insurance companies factored the subsidy expiration into their 2026 pricing, assuming healthier people would drop coverage when premiums spiked. This created a vicious cycle: insurers raised base premiums by an additional 4 percentage points specifically because they expected the enhanced credits to expire. Their logic was straightforward—if affordable premiums disappear, healthy people leave first, making the remaining pool sicker and more expensive. So they preemptively increased everyone’s rates to cover projected higher costs from a less healthy enrollment base.
On top of this policy change, underlying healthcare costs continued their relentless climb. Hospital prices increased faster than nearly any other sector of the economy, driven by consolidation that reduced competition and gave large hospital systems outsized pricing power. In about 80% of hospital markets, concentration reached levels that economists consider anticompetitive. When hospitals merge or acquire physician practices, research consistently shows prices rise—often by 20% or more.
Prescription drug costs, particularly for a specific class of medications, added unprecedented pressure. GLP-1 drugs like Ozempic, Wegovy, Mounjaro and Zepbound—originally developed for diabetes but now widely prescribed for weight loss—cost between $800 and $1,400 monthly before rebates. These medications now account for over 15% of annual claims for a quarter of employers, and their rapid adoption in both employer and individual markets forced insurers to build massive cost increases into 2026 premiums. Blue Cross Blue Shield research found that covering GLP-1s could increase employer premiums by up to 14% from this single drug class alone. Several ACA marketplace insurers cited these drugs explicitly when justifying 2026 rate increases.
General inflation in medical wages, supplies, and administrative costs piled on. Healthcare worker wages rose faster than the national average, while hospital systems struggled with razor-thin margins that averaged just 2.1% in 2024 compared to 7% before the pandemic. Those financial pressures translated directly to higher negotiated rates with insurers, who then passed costs to consumers through higher premiums.
The Numbers Behind the Sticker Shock, Affordable Care Act health insurance premium increase 2026
Benchmark silver plan premiums—the second-lowest-cost silver plans that determine subsidy amounts—rose 21.7% on average nationally. But this masks enormous state-by-state variation. In Healthcare.gov states (those using the federal platform), benchmark premiums jumped 30% on average. In states running their own marketplaces, the increase averaged 17%.
Individual state averages reveal just how disparate the impact became. Vermont has the highest average benchmark premium at $1,299 monthly for a 40-year-old. Wyoming follows at $1,090, then West Virginia at $1,073, Alaska at $1,032, and Connecticut at $870. At the opposite end, New Hampshire has the lowest average at just $401, followed by Maryland at $414 and Minnesota at $448.
Premium increases from 2025 to 2026 varied even more wildly. Arkansas saw benchmark premiums surge 67%—from $494 to $823. New Mexico experienced a 51% jump, Tennessee saw 38% increases, and Mississippi faced 37% higher rates. These dramatic state-level swings reflect differences in insurer competition, hospital pricing, state regulations, and local healthcare utilization patterns.
For people receiving subsidies, the real damage comes from what they actually pay out of pocket. The Kaiser Family Foundation’s detailed analysis shows someone earning $45,000 annually who paid $2,475 in 2025 will pay $4,311 in 2026—a 74% increase. The average subsidized enrollee’s payment rises from $888 in 2025 to $1,904 in 2026—that 114% increase representing an additional $1,016 annually that must come from somewhere in already tight household budgets.
The demographic and geographic disparities make certain groups particularly vulnerable. Older adults face the steepest increases because age-based pricing means their premiums start much higher. That 60-year-old couple in Wyoming isn’t an outlier—older couples earning just above 400% of poverty face some of the most catastrophic cost increases anywhere in the country. A couple in their early 60s earning $90,000 could see annual premiums jump by over $14,000 in many states. When you’re five or ten years from Medicare eligibility, losing affordable coverage can force impossible decisions between health insurance and basic financial survival.
Middle-income households above 400% of poverty—roughly $63,000 for an individual or $130,000 for a family of four—lost all subsidy eligibility entirely when the enhanced credits expired. These families previously qualified for help if their premiums exceeded 8.5% of income. Now they pay full price regardless of cost, facing both the loss of their entire subsidy and the 26% base premium increase from insurers. For a family of four earning $130,000, monthly premiums can easily exceed $1,600 compared to $500 with enhanced credits—a $13,200 annual increase.
Geographic clustering of the hardest-hit populations creates political pressure points that explain some of the congressional dynamics around extending subsidies. Texas, Florida, Georgia and North Carolina account for roughly half of all marketplace enrollment growth since enhanced subsidies began. Most marketplace enrollees live in states that voted Republican in 2024. The political calculus becomes complicated when constituents in red districts face $20,000 annual premium increases for coverage they previously bought for $6,000.
What’s Actually Driving Healthcare Costs Higher, Affordable Care Act health insurance premium increase 2026
Hospital consolidation represents one of the most significant structural forces pushing costs upward across the entire healthcare system. From 1998 to 2017, 1,573 hospital mergers occurred, followed by another 428 from 2018 to 2023. These aren’t just hospital-to-hospital mergers. Large health systems are acquiring physician practices, outpatient clinics, laboratories, imaging centers, and entire networks of affiliated providers. Nearly 10% of the nation’s physicians now work for or are affiliated with Optum, a division of UnitedHealth Group.
When hospitals consolidate into large systems controlling 30%, 40%, or 50% of a region’s healthcare capacity, they gain enormous leverage in negotiations with insurance companies. They can credibly threaten to leave an insurer’s network, knowing that doing so would make that insurer’s plans virtually unmarketable in the region. The result is consistently higher negotiated rates. HCA Healthcare’s hospitals in New Hampshire, for example, operate at the highest prices in the state according to publicly reported data. Almost immediately after HCA purchased Catholic Medical Center assets, the company demanded “higher-than-average prices” from insurers.
The American Hospital Association disputes these characterizations, arguing that consolidation responds to insurer market power and financial necessity. Hospital margins have indeed been squeezed by rising costs, workforce shortages, and regulatory burdens. Many rural hospitals operate on the edge of closure. But independent analyses consistently show that hospital pricing increases following mergers outpace any efficiency gains.
The GLP-1 drug phenomenon deserves particular attention because it represents a genuinely new cost driver that barely existed three years ago. Total prescriptions for these medications in Medicaid alone increased sevenfold from 2019 to 2024, while spending rose ninefold—from $1 billion to nearly $9 billion. In commercial insurance, GLP-1 claims jumped from 6.9% of total claims in 2023 to 10.5% in 2025. By 2024, these drugs accounted for over 8% of all Medicaid prescription spending before rebates.
Part of what makes GLP-1s such a budget pressure is that they’re often prescribed as ongoing, chronic treatments rather than short-term interventions. A patient starting Ozempic or Wegovy for weight loss may stay on it indefinitely. At $800 to $1,400 monthly per patient, the lifetime cost adds up quickly. More than 57 million privately insured adults qualify for GLP-1 drugs based on clinical criteria like obesity, diabetes, or overweight with risk factors. Even if only a fraction of eligible patients actually receive prescriptions, the aggregate cost becomes staggering.
Insurers have responded with increasingly restrictive coverage. The number of people with commercial insurance who lack any coverage for Wegovy increased 42% from 2025 to 2026, leaving over 41 million without coverage. Zepbound lost coverage for an additional 12 million people. Over 88% of people with coverage for weight-loss GLP-1s face restrictions like prior authorization or step therapy requirements. Some insurers, like Blue Cross Blue Shield of Massachusetts, dropped coverage for obesity medications entirely in 2026, projecting a 3% premium reduction from that decision alone.
The November 2025 deal announced by the Trump administration with Eli Lilly and Novo Nordisk aimed to lower GLP-1 prices for Medicare, Medicaid, and direct-to-consumer purchases. Medicare Part D will begin covering these drugs for weight loss through pilot programs, with monthly costs around $245 and patient copays capped at $50. However, this agreement doesn’t directly affect private insurance rates, which means the cost pressure on employer and ACA marketplace premiums continues.
Beyond specific drug classes, general pharmaceutical innovation yields remarkable treatments but at prices that strain health budgets. Cancer therapies, gene treatments, and other specialty medications now account for over half of pharmacy spending in many plans despite representing a small fraction of prescriptions. The New Hampshire Insurance Department reported that pharmacy costs spiked nearly 13% in a single year in the individual market, with specialty drugs representing 54% of pharmacy spending.
Labor shortages and wage pressures throughout healthcare contribute ongoing inflationary pressure. Hospital and health system wages increased faster than the national average in 2024, reflecting tight labor markets for nurses, technicians, and other clinical staff. These costs can’t easily be reduced without affecting quality of care, creating persistent upward pressure on premiums year after year.
Where Congress Stands and What Might Happen
The enhanced premium tax credits became a political football throughout late 2025, with Democrats pushing for extensions and most Republicans opposing them despite bipartisan recognition that premium increases would hit their constituents hard. In mid-December 2025, the Senate voted on competing proposals. A Democratic bill to extend enhanced credits for three years failed to reach the 60 votes needed to advance, garnering only 51 votes. A Republican alternative that would have replaced enhanced credits with health savings account funding also failed with 51 votes.
On January 8, 2026, the House passed legislation granting a three-year extension of the enhanced premium tax credits by a 230-196 vote. Seventeen Republicans crossed party lines to vote with Democrats, including representatives from competitive districts in Pennsylvania, Ohio, Texas, New York, New Jersey, Iowa, Florida, California and Wisconsin. The bill now goes to the Senate, where it faces an uncertain future requiring 60 votes to overcome procedural hurdles.
President Trump indicated he would veto legislation extending enhanced credits, framing opposition in terms of fiscal responsibility and philosophical objections to expanding government involvement in healthcare. This creates a difficult path forward even if the Senate could muster 60 votes—a veto override requires two-thirds majorities in both chambers, a much higher bar.
Some Republican lawmakers signed a discharge petition compelling the House to vote on extension, suggesting genuine concern about constituent backlash. The petition secured the required 218 signatures to force a vote, demonstrating that political pressure from affected voters created cracks in party unity. However, forcing a vote differs substantially from actually extending the credits through enacted legislation.
Various compromise proposals circulated through late 2025 and into 2026. Some suggested extending enhanced credits with modifications like stricter income eligibility or work requirements. Others proposed partial extensions—perhaps one or two years instead of three—to create fiscal savings while preventing the steepest increases. Alternative approaches included replacing enhanced credits with different structures like expanded HSA contributions or fixed-dollar subsidies rather than income-based sliding scales.
None of these proposals gained sufficient momentum before Congress recessed in December 2025, allowing the enhanced credits to expire. The January 2026 House vote provided Democrats with what one observer called a “symbolic political victory”, but symbolic victories don’t pay insurance premiums for families facing $10,000 or $20,000 annual increases.
The political dynamics are complicated by the realities of who benefits from enhanced credits. Roughly half of marketplace enrollment growth since 2021 occurred in Texas, Florida, Georgia and North Carolina—states that haven’t expanded Medicaid and tend to vote Republican. Over 90% of marketplace enrollees receive subsidies, meaning premium increases affect an enormous constituency. This creates pressure on Republican lawmakers from affected voters even as party leadership opposes extension.
The Bipartisan Policy Center’s executive vice president for economic and health policy noted that “The health policy debate in recent years has really centered on costs, as the coverage challenge had largely been addressed. The conclusion of the enhanced subsidies has reopened that coverage debate”. Translation: Washington thought it had largely solved the uninsured problem, allowing focus to shift to cost control. The subsidy expiration threw millions back into unaffordability territory, forcing policymakers to confront coverage gaps they believed were resolved.
How States Are Responding
Some states, particularly those operating their own marketplaces, moved proactively to cushion the blow. New Mexico went furthest, advancing measures to completely backfill lost enhanced credits for all consumers in 2026. BeWell, New Mexico’s marketplace, replaces 100% of lost federal assistance for people earning up to 400% of poverty, and caps premiums at 8.5% of income for higher earners—exactly mirroring the enhanced credit structure.
Maryland adopted a single-year program replacing 100% of lost subsidies for people below 200% of poverty and partial replacement for those between 200% and 400% of poverty. However, Maryland offers no help for people earning above 400% of poverty who lost all eligibility. California allocated funds to fully replace credits for people up to 150% of poverty and partially replace them between 150% and 165%. Given that California received about $2 billion annually in enhanced federal credits, state-funded replacement covers only a small fraction of what was lost.
Colorado and Washington created or retooled programs providing flat-dollar amounts to enrollees, though these typically fall short of fully replacing lost subsidies. Colorado provides up to $80 monthly for individuals (plus $29 per additional family member) for households between 100% and 400% of poverty—backfilling about 40% of lost federal assistance. Washington adjusted its Cascade Care Savings program with new fixed maximums of $55 per member monthly for those receiving federal credits and $250 monthly for those without subsidies.
Several states operate Section 1332 reinsurance programs that reduce unsubsidized premiums by reimbursing insurers for high-cost claims. Maryland, Colorado, New Jersey, Georgia and Oregon run such programs. Maryland’s reinsurance has lowered premiums by as much as 35% relative to what they would be otherwise. Colorado and New Jersey report their programs reduce statewide unsubsidized premiums by roughly 20%, with even greater relief in rural areas. These don’t replace lost subsidies but help stabilize base premiums that everyone pays.
States like New York, Connecticut, Vermont, Massachusetts and New Jersey already had state-funded subsidies supplementing federal assistance before enhanced credits existed. These programs remain in place regardless of federal subsidy changes, providing some insulation against the expiration. New York and Oregon operate basic health plans or similar programs covering certain low-income residents who would otherwise buy marketplace plans, offering lower premiums and cost-sharing regardless of federal subsidy policy.
The stark reality is that state-level actions, while helpful, cannot replace federal policy at the necessary scale. Collectively, the state programs described above represent a small fraction of the roughly $35 billion annually it would take to extend enhanced credits nationwide. States face constitutional and practical limits on their ability to run sustained multi-billion-dollar subsidy programs without federal support. Most states lack the fiscal capacity to backfill losses, particularly non-expansion states in the South and Midwest where marketplace dependence is highest but state resources are most constrained.
Strategies You Can Actually Use to Lower Your 2026 Costs
The premium increases are real, but what you actually pay isn’t set in stone. Most households can reduce their monthly costs—sometimes dramatically—through strategic planning and taking advantage of rules most people don’t understand.
Updating your projected 2026 income carefully might be the single most impactful action you can take. ACA subsidies calculate based on projected income, not last year’s tax return. Even small adjustments significantly impact premium tax credits. Lower projected income means larger subsidies. Higher projected income means smaller subsidies. If your income varies year to year or you expect 2026 to be lower than 2025, updating your marketplace application to reflect accurate projections can save hundreds monthly.
For people still working who earn close to subsidy cliffs, strategic use of pre-tax retirement contributions can push income below critical thresholds. The 400% federal poverty level represents $62,600 for individuals, $84,600 for couples, or $128,600 for families of four in 2026. A single person earning $65,000 loses all subsidy eligibility—but maximizing a 401(k) contribution of $24,500 plus an age-50-and-over catch-up contribution of $8,000 drops adjusted gross income to $32,500, well below the threshold and qualifying for substantial subsidies.
Health Savings Account contributions work similarly. In 2026, individuals can contribute $4,400 to an HSA, while those with family coverage can contribute $8,750. These are above-the-line deductions that reduce household income for subsidy calculations. If you’re $3,000 or $5,000 over a subsidy cliff, maxing out HSA contributions might push you into eligibility for premium tax credits worth thousands annually.
Self-employed individuals have additional tools. Self-employed health insurance deductions, business expense timing, and solo 401(k) contributions (both employee and employer portions) all reduce adjusted gross income. A self-employed person earning $200,000 might contribute $24,500 in employee deferrals, $8,000 in catch-up contributions, and up to $40,000 in employer contributions, reducing countable income by over $72,000. Combined with the self-employed health insurance deduction and half of self-employment tax, total AGI reductions can easily exceed $80,000 or $90,000, potentially qualifying for subsidies that would otherwise be unavailable.
Never assume your current plan remains your best option. Staying in the same plan without shopping is one of the most expensive mistakes people make. For 2026, Bronze plans may cost less than last year’s Silver. Certain Gold plans might drop below Silver pricing. New carriers may enter your county with lower rates. A 15-minute plan comparison can uncover hundreds in monthly savings.
Metal tiers don’t always behave as expected. Bronze plans offer lowest premiums but higher deductibles, best for low medical usage. Silver plans remain the only tier eligible for Cost-Sharing Reductions—a separate form of assistance that dramatically lowers deductibles and out-of-pocket costs for people earning up to 250% of poverty. If you qualify for CSRs, Silver plans often deliver the best overall value despite not having the lowest premium. Gold plans feature lower deductibles and out-of-pocket costs, and in certain counties, Gold plans actually cost less than Silver due to quirks in insurer pricing strategies.
The benchmark silver plan—second-lowest-cost silver in your area—determines your subsidy amount. When benchmark plan prices rise substantially, subsidies increase proportionally for eligible enrollees. This means you might newly qualify for $0 or very low-cost plans in 2026 even if you didn’t before. Running the numbers through Healthcare.gov or your state marketplace reveals whether premium increases triggered higher subsidies that make coverage affordable.
Household composition updates matter enormously. Marriage, divorce, births, adoptions, dependents moving in or out, income changes, or ZIP code changes all affect subsidy calculations. Small updates can produce big premium changes. A family experiencing any life changes must update their marketplace profile to ensure accurate subsidy calculations.
Income timing strategies for retirees or people with flexibility over withdrawal sources can preserve subsidy eligibility. Someone living partially on savings might strategically draw from Roth IRAs (not counted as income) rather than traditional IRAs (counted as income) to stay below 400% of poverty. Delaying Social Security or pension start dates might keep income low enough for subsidies. These strategies require coordination with tax advisors and careful attention to required minimum distribution rules, but they can save tens of thousands in premium costs for people in their early 60s waiting for Medicare.
For people whose premiums simply became unaffordable regardless of planning, alternative coverage options exist. Catastrophic plans available to people under 30 or those qualifying for hardship exemptions offer very low premiums and protect against worst-case medical expenses. Health sharing ministries aren’t insurance but provide community-funded coverage for qualifying medical expenses at substantially lower monthly costs. Short-term limited duration insurance costs much less than ACA plans but offers fewer protections and may exclude pre-existing conditions.
What This Means for Small Businesses and the Self-Employed
About 3.3 million small business owners and self-employed workers held marketplace coverage in 2022, with 82% receiving premium tax credits. Small business employees account for a large share of marketplace enrollment. When you combine owners, self-employed workers, and employees of businesses not offering health coverage, roughly half of all marketplace enrollees have direct connections to small business.
Small businesses now face excruciating decisions. Premiums for small group employer plans are rising too—with a median proposed increase around 11% for 2026. Large employers expect health benefit costs to increase 9%, marking the steepest rise in several years. Businesses already operating on thin margins have limited options when health insurance costs jump by double digits year after year.
Many small businesses don’t offer group coverage, instead allowing employees to buy marketplace plans and sometimes providing stipends or bonuses to help offset costs. When those marketplace premiums double, employees face financial emergencies. Do businesses increase compensation to help cover the gap? Cut elsewhere to free up resources for health benefits? Accept higher turnover as employees leave for companies offering group coverage?
A survey of 620 small business owners found that 84% worry about affording healthcare in 2026 if enhanced credits remained expired. Nearly 40% said premium increases would create severe financial strain threatening their operations. About a quarter indicated they’d be forced to drop employee coverage. These aren’t hypothetical projections—these are business owners looking at actual premium notices and calculating whether they can continue operating under those conditions.
Individual Coverage Health Reimbursement Arrangements (ICHRAs) gained attention as one solution. Instead of offering traditional group coverage, businesses provide employees with tax-advantaged stipends to purchase individual marketplace plans. When enhanced credits made marketplace plans extremely affordable, ICHRAs became attractive—businesses gained budget predictability while employees accessed subsidized coverage. The subsidy expiration complicates this strategy, as gross marketplace premiums (before subsidies) increased substantially, requiring larger employer ICHRA contributions to keep coverage affordable for employees.
Association health plans allow small businesses to band together for purchasing power, sometimes achieving better rates than individual small businesses could access alone. The CHOICE Arrangement Act pending in Congress would codify ICHRAs into tax code and expand small business flexibility around health benefits. Passage would provide additional tools, though it wouldn’t address underlying premium inflation.
The removal of the repayment cap for premium tax credits in 2026 creates additional complexity for business owners whose income fluctuates. Previously, if you underestimated income and received too much advance credit, repayment obligations were capped at amounts ranging from $325 to $2,800 depending on income level. Starting in 2026, you must repay the full amount of any excess subsidy received. For a business owner estimating $50,000 in annual income who ends up earning $75,000 after a strong performance year, the surprise tax bill from repaying excess subsidies can reach thousands or tens of thousands of dollars.
The Economic Ripple Effects
Coverage losses from unaffordable premiums don’t just affect individuals—they create cascading economic impacts. The Commonwealth Fund projects that subsidy expiration could lead to nearly 340,000 jobs lost across the United States in 2026. These aren’t jobs in health insurance—they’re jobs throughout the economy that disappear when healthcare spending contracts due to people dropping coverage or delaying care.
The mechanics work like this: When people have health insurance, they use healthcare services. That spending supports hospitals, physician practices, pharmacies, medical equipment suppliers, and the entire healthcare ecosystem. When millions drop coverage or reduce usage due to unaffordability, healthcare spending declines. Providers respond to declining revenue by cutting staff, reducing hours, or closing facilities. Those job losses ripple through local economies as unemployed workers reduce spending at restaurants, retailers, and service businesses.
States face substantial revenue losses too. The Commonwealth Fund estimated Texas would lose almost 70,000 jobs, approximately $410 million in state and local tax revenue, and nearly $8.5 billion in state GDP if enhanced subsidies remained expired. Florida would lose almost 50,000 jobs, over $300 million in tax revenue, and more than $5.5 billion in GDP. These figures reflect both the direct impact of healthcare sector contraction and the multiplier effects as reduced economic activity spreads across industries.
States that haven’t expanded Medicaid face disproportionate economic impacts because more residents depend on marketplace coverage as their only option. In Medicaid expansion states, people below 138% of poverty qualify for Medicaid regardless of marketplace premium levels. Non-expansion states leave low-income residents in the coverage gap—earning too much for traditional Medicaid but unable to afford marketplace coverage without substantial subsidies. When those subsidies evaporate, coverage gaps widen dramatically in non-expansion states.
Uncompensated care—medical services provided without payment—rises when uninsurance increases. The expiration of enhanced credits is projected to increase uncompensated care by $6.3 billion nationally. Hospitals absorb these costs through a combination of charity care, cost-shifting to insured patients, and operating losses. Safety-net hospitals serving low-income communities face particular strain. Many rural hospitals already operate on razor-thin margins and could face closure if uncompensated care surges.
Higher uncompensated care ultimately means higher premiums for people who remain insured, as hospitals negotiate higher rates with insurers to cover unreimbursed costs. This creates a death spiral dynamic—premiums rise, healthy people drop coverage, remaining pool becomes sicker, premiums rise further, more people drop coverage. The ACA was specifically designed to prevent such spirals through its subsidy structure and individual mandate. The subsidy expiration threatens to restart cycles the law was meant to eliminate.
Frequently Asked Questions
Why did ACA premiums increase so much in 2026?
ACA premiums increased for two distinct reasons that compounded each other. First, insurance companies raised their base rates by an average of 26% due to rising healthcare costs, expensive GLP-1 drugs, hospital consolidation, and because they expected healthier people would drop coverage when subsidies expired. Second, the enhanced premium tax credits that helped people afford coverage expired on December 31, 2025. These credits had reduced premiums substantially since 2021. When they expired, subsidies reverted to much less generous pre-pandemic levels, causing out-of-pocket costs for subsidized enrollees to more than double—averaging 114% increases. The combination of higher insurer rates and reduced subsidies created the dramatic premium shock people experienced.
How much will my ACA insurance cost in 2026?
Your actual 2026 cost depends on your age, location, income, household size, and which plan you choose. The average benchmark silver premium ranges from $401 monthly in New Hampshire to $1,299 in Vermont for a 40-year-old. If you earn between 100% and 400% of federal poverty level ($15,650 to $62,600 for an individual in 2026), you qualify for subsidies that reduce your costs—though these subsidies are less generous than in 2025. Someone earning $45,000 who paid $2,475 in 2025 will pay approximately $4,311 in 2026. The average subsidized enrollee’s payment increased from $888 annually to $1,904. People earning above 400% of poverty lost all subsidy eligibility and now pay full premium costs, which can reach $10,000 to $20,000 or more annually depending on age and location.
What happened to the enhanced premium tax credits?
Enhanced premium tax credits introduced during the COVID-19 pandemic in 2021 and extended through 2025 expired on December 31, 2025. Congress did not pass legislation to extend them despite multiple attempts. These enhanced credits had made subsidies more generous for people earning 100-400% of federal poverty level and extended eligibility to anyone earning above 400% of poverty whose premiums exceeded 8.5% of household income. When they expired, the subsidy structure reverted to pre-pandemic rules: less generous assistance for those under 400% of poverty, and zero subsidies for anyone earning above that threshold. On January 8, 2026, the House passed a three-year extension with bipartisan support, but it faces an uncertain path in the Senate and a potential presidential veto.
Which states have the highest ACA premium increases?
Arkansas experienced the steepest premium increases, with benchmark plans jumping 67% from 2025 to 2026. New Mexico saw 51% increases, Tennessee experienced 38% growth, and Mississippi faced 37% higher rates. However, the premium increases that individuals actually pay depend more on household income and subsidy eligibility than raw premium growth. States where many residents earn above 400% of federal poverty level experienced the harshest impacts because those residents lost all subsidy eligibility. Wyoming, West Virginia, and Connecticut have particularly high absolute premium costs, making subsidy loss especially painful. A 60-year-old couple earning $85,000 in Wyoming saw monthly premiums jump from $602 to $4,777—a 693% increase.
Can I reduce my 2026 ACA premium costs?
Yes, multiple strategies can substantially reduce 2026 costs. First, update your marketplace application with an accurate 2026 income projection—lower income means higher subsidies. Second, maximize pre-tax retirement contributions (401k, IRA, HSA) to reduce adjusted gross income below critical subsidy thresholds. Third, never assume your current plan remains cheapest—compare all available plans as Bronze, Silver, and Gold plans may have shifted pricing. Fourth, if you earn under 250% of poverty, choose Silver plans to access Cost-Sharing Reductions that dramatically lower deductibles. Fifth, verify whether household changes (marriage, new children, address moves) qualify you for higher subsidies. Many people can save $200-$500 monthly through strategic plan shopping and income planning.
What if I can’t afford my 2026 ACA premium?
If marketplace coverage became genuinely unaffordable, several options exist. First, work with a tax advisor to determine if pre-tax retirement or HSA contributions could reduce your income enough to qualify for subsidies. Second, explore whether you qualify for Medicaid or CHIP in your state—income limits vary by state. Third, consider switching to a catastrophic plan if you’re under 30 or qualify for hardship exemptions. Fourth, check whether your employer offers coverage or if you qualify for a spouse’s employer plan. Fifth, evaluate short-term limited duration insurance as a temporary bridge, though these plans offer fewer protections. Finally, contact FindHelp.org to identify community organizations providing healthcare assistance. Some states also have state-funded premium assistance programs that help specific populations.
Are small business owners affected by ACA premium increases?
Absolutely. About 3.3 million small business owners and self-employed workers rely on marketplace coverage, with 82% receiving premium tax credits. Approximately half of all marketplace enrollees are small business owners, self-employed individuals, or small business employees. Small group employer plans also face premium increases, with median proposed increases around 11% for 2026. A survey found that 84% of small business owners worry about affording healthcare if subsidies remained expired, nearly 40% said increases would create severe financial strain threatening operations, and about 25% indicated they’d drop employee coverage. Many small businesses now explore alternatives like Individual Coverage Health Reimbursement Arrangements or association health plans to manage costs.
Will Congress extend the enhanced premium tax credits?
As of late January 2026, the outlook remains uncertain. The House passed a three-year extension on January 8, 2026, by a 230-196 vote with 17 Republicans joining Democrats. However, the bill needs 60 votes to advance in the Senate, where a similar measure failed in December 2025 with only 51 votes. President Trump indicated he would veto legislation extending enhanced credits, requiring a two-thirds majority in both chambers to override—a very high bar. Some lawmakers continue discussing compromises like shorter extensions, modified eligibility criteria, or alternative subsidy structures. The political pressure is real given that millions of voters face dramatic premium increases, but whether that pressure translates to enacted legislation remains to be seen.
How do I update my income for subsidy purposes?
Log into your marketplace account at Healthcare.gov (or your state marketplace website) and navigate to your application. Look for the income section and update your projected 2026 household income. The marketplace will recalculate your premium tax credit based on the updated figure and adjust your future monthly subsidies accordingly. You can update income anytime during the year—you’re not locked into your original estimate. If your income changes significantly mid-year due to job loss, pay cuts, business performance, or other factors, update your application immediately to ensure you receive the correct subsidy amount. At tax time when filing Form 8962, you’ll reconcile actual income with estimated income and either receive additional credit or repay excess subsidies received. Starting in 2026, there’s no longer a cap on repayment amounts if you underestimated income.
What are Cost-Sharing Reductions and how do they work?
Cost-Sharing Reductions (CSRs) are a separate form of financial assistance beyond premium tax credits. They’re only available on Silver plans and only to people earning between 100% and 250% of federal poverty level—roughly $15,650 to $39,125 for an individual in 2026. CSRs dramatically reduce your deductible, copayments, and out-of-pocket maximum. For someone earning under 150% of poverty, a Silver plan with CSRs might have a $100 deductible instead of $5,000. For those between 150-200% of poverty, deductibles and cost-sharing are cut roughly in half. If you qualify for CSRs, Silver plans often deliver better overall value than Bronze plans despite Bronze having lower premiums, because you pay dramatically less when you actually use healthcare. CSRs don’t reduce your premium—that’s what premium tax credits do—but they make healthcare much more affordable when you need care.
Final Sum-
- The 2026 ACA premium crisis didn’t happen overnight, and it won’t resolve quickly. Rising healthcare costs, expired federal subsidies, political gridlock, and structural problems in American healthcare delivery all converged to create the perfect storm of unaffordability. Whether Congress extends enhanced credits, partially restores them, or leaves the expiration in place will determine whether 2026 represents a temporary shock or a permanent return to the coverage gaps that plagued the pre-pandemic individual insurance market. For the millions of Americans navigating these increases right now, understanding what changed, which strategies can reduce personal costs, and where policy might evolve matters more than abstract debates about the proper role of government in healthcare. The numbers on the premium notices are real. The financial strain is real. And the need for both individual action and policy solutions is urgent.
