New York Faces Major ACA Insurance Premium Hikes and Coverage Changes in 2026

Changes in federal health policy and budgetary decisions are poised to significantly affect health insurance affordability in New York State starting in 2026. The Affordable Care Act (ACA) had enabled many, including small business owners in the Hudson Valley, to access affordable health insurance via marketplace subsidies and the state’s Essential Plan. This plan offers free or low-cost insurance to approximately 1.7 million New Yorkers, including many low- and middle-income individuals and legal immigrants who do not qualify for Medicaid under federal rules. The recent Republican tax and spending plan passed in July and ongoing congressional debates over extension of Covid-era ACA subsidies are creating budgetary challenges that will raise premiums sharply for hundreds of thousands of New Yorkers. Specifically, the Essential Plan’s eligibility is expected to contract, causing about 450,000 people to face higher premiums or lose coverage mid-2026. The program’s current expansion and its resultant budget surplus were made possible by federal incentives allowing New York to enroll a younger, healthier population at a lower per capita cost than originally projected. Governor Hochul’s administration is responding to federal subsidy cuts by proposing to lower the income eligibility threshold for the Essential Plan from 250% to 200% of the federal poverty level, impacting middle-income families currently benefiting from the plan. This adjustment is intended to maintain coverage for the state’s poorest residents and legal immigrants, consistent with a 2001 court order obliging New York to provide health insurance to low-income legal immigrants. The Essential Plan currently covers a broad demographic including part-time workers, non-unionized laborers, and an estimated 725,000 legal immigrants. However, the July federal legislation restricts subsidy eligibility, excluding legal immigrants with less than five years’ permanent residency from federal support, increasing the state’s financial responsibility. Premium estimates indicate that families like Elizabeth and John’s in the Hudson Valley could see annual health insurance costs increase by over $10,000, a 50% premium hike compared to 2024. This shift signals a return to marketplace plans with higher deductibles and out-of-pocket expenses, contrasting starkly with the previously nearly-free Essential Plan coverage. Beyond premium increases, the state anticipates further systemic disruption beginning January 2027 when new work and eligibility requirements for Medicaid may lead to coverage losses for an estimated 1.5 million New Yorkers, potentially undermining gains in reducing uninsured rates from 12% in 2010 to under 5% currently. New York has been a leader in maximizing ACA provisions to expand coverage, but federal policy shifts and budget impasses underscore ongoing tensions in maintaining this trajectory. The state's combined Medicaid and Essential Plan enrollment currently comprises 44% of New Yorkers, reflecting a complex interplay of state-federal funding mechanisms and policy decisions. Stakeholders anticipate that these evolving conditions could challenge the sustainability of New York’s innovative health insurance models, highlighting the need for strategic planning and advocacy within the insurance and healthcare sectors. Monitoring federal subsidy negotiations and state-level responses will be crucial for insurers, providers, and policymakers navigating the upcoming changes.