Expected Decline in ACA Enrollment Amid Phasing Out Subsidies

As subsidies for health plans purchased through Affordable Care Act (ACA) marketplaces gradually phase out, forecasts suggest a significant decline in ACA enrollment for the current year. In 2025, over 22 million Americans were enrolled through these marketplaces, but estimates now predict a decrease to approximately 17.5 million.

During the initial open enrollment period for 2026, sign-ups and renewals experienced a drop of about one million, according to reports from KFF. The reduction in enrollment is largely attributed to individuals facing affordability challenges with higher premiums, projecting the number of insured individuals might fall by five million compared to the previous year.

Under the Biden administration, expanded subsidies allowed a greater portion of the population to benefit from enhanced premium tax credits. These credits permitted individuals earning more than 400% of the federal poverty line to secure tax relief on health plan costs exceeding 8.5% of their income. However, starting in 2026, those surpassing this income threshold would need to pay the full price for their insurance, a change expected to significantly affect affordability.

For individuals earning between 100-138% and 400% of the federal poverty line, premium tax credit rules have slightly adjusted income caps. Combined with inflation, these factors have increased the cost of health insurance for various income levels. KFF determined last year that a 45-year-old with a modest income might see an additional annual cost ranging from $400 to $2,400. For a 60-year-old couple losing enhanced credits, the increase could range between $19,000 to $22,000.

Further data reveal a 44% decrease in ACA enrollees with incomes around 400-500% of the federal poverty level during the 2026 enrollment period, while those above 500% experienced a 27% decline. Enrollment reductions were notable in states like South Carolina, Ohio, and others. However, some states saw increases, attributed to additional state-sponsored subsidies, such as New Mexico, where enrollment rose by 18%.

Higher premiums have also discouraged many eligible for remaining tax credits from maintaining coverage. Even though the relative decline among these groups was less pronounced, their significant representation among ACA users equated to a substantial absolute loss in coverage. Mercer reports that employer-sponsored plan costs are anticipated to rise by nearly 7% this year, partly due to increased utilization of high-cost pharmaceuticals, adding financial strain to both employees and employers.