What the Potential Expiration of ACA Subsidies Means for Health Plan Costs in 2026
A new analysis from the Kaiser Family Foundation (KFF) warns that premiums for Affordable Care Act (ACA) marketplace plans could more than double in 2026 if enhanced federal subsidies expire at the end of this year. The report highlights the potential for widespread disruption in coverage and affordability across the individual health insurance market—an issue now at the center of a congressional budget standoff.
According to KFF, subsidized ACA enrollees would see their average premiums rise from $888 in 2025 to $1904 in 2026—a staggering 114% increase—if Congress fails to renew the enhanced premium tax credits. These expanded subsidies were originally introduced in 2021 during the COVID-19 pandemic to bolster coverage affordability. They not only boosted financial assistance for lower-income enrollees but also extended eligibility to middle-income households earning above 400% of the federal poverty line.
Since these measures took effect, ACA enrollment has surged, reaching a record 24 million enrollees for 2025, with most receiving enhanced subsidies. However, this success may be short-lived. Without legislative intervention, the enhanced financial support will lapse at the end of the year—just as insurers are finalizing 2026 rates and open enrollment looms.
The subsidies have become a flashpoint in Washington, contributing to a recent federal government shutdown. Democratic lawmakers have pushed to include an extension in funding legislation, arguing it is vital to maintaining access to affordable coverage. Republicans, however, have cited the $358 billion price tag over 10 years, according to the Congressional Budget Office, as fiscally unsustainable. They have urged postponing the debate until after a short-term spending plan is enacted.
Meanwhile, insurers are preparing for the uncertainty. KFF noted that many carriers have proposed rate increases averaging 18% for 2026, reflecting not only rising medical costs but also the potential expiration of federal support. This compounding effect means that, in the absence of the enhanced subsidies, actual out-of-pocket costs for many consumers could soar even higher than prior projections.
KFF’s analysis underscores how the expiration would affect Americans across the income spectrum. For example, a 60-year-old couple earning $85 000 could face an annual premium hike exceeding $22 600, while a 45-year-old earning $20 000 would see their monthly premium jump from $0 to $420. Complicating matters further, recent regulatory changes to the way tax credits are calculated could magnify the financial impact.
For payers, providers, and policymakers the implications of these findings are significant. A sudden reversal in ACA affordability could lead to coverage erosion, increased uncompensated care burdens, and shifts in payer mix across the healthcare system. Managed care organizations may face renewed volatility in membership and revenue streams, particularly if millions of consumers are priced out of the individual market.
As Congress deliberates the future of premium subsidies, managed care leaders must prepare for multiple scenarios—ranging from renewed federal support to substantial market contraction. The KFF report serves as a stark reminder that the stability of the ACA exchanges remains deeply intertwined with federal fiscal policy and political will.
Reference
Olsen E. ACA premiums could rise 114% if enhanced subsidies lapse: KFF. Healthcare Dive. Published October 1, 2025. Accessed October 7, 2025. https://www.healthcaredive.com/news/aca-premiums-rise-114-percent-enhanced-subsidies-lapse-kff/761615/
Lo J, Levitt L, Ortaliza J, Cox C. ACA marketplace premium payments would more than double on average next year if enhanced premium tax credits expire. KFF. Published September 30, 2025. Accessed October 7, 2025. https://www.kff.org/affordable-care-act/aca-marketplace-premium-payments-would-more-than-double-on-average-next-year-if-enhanced-premium-tax-credits-expire/
