ACA Subsidy Expiration Significantly Impacts Enrollment Trends

With the expiration of certain health insurance subsidies under the Affordable Care Act (ACA), the Kaiser Family Foundation (KFF) projects a significant decline in ACA marketplace enrollment this year. In 2025, over 22 million Americans were covered through these marketplaces, but current forecasts suggest this figure could drop to 17.5 million.

Although initial enrollment and renewal figures showed a reduction of approximately one million at the beginning of 2026, KFF notes that the number of insured individuals may decrease further due to higher premiums. This could lead to a potential drop of up to five million below last year's enrollment levels.

During the Biden administration, enhanced premium tax credits were introduced, expanding financial assistance for ACA coverage. These credits allowed those earning more than 400% of the federal poverty level to receive benefits if their insurance costs exceeded 8.5% of their income. However, starting in 2026, individuals above this income threshold will no longer qualify for subsidies, resulting in increased out-of-pocket costs.

For individuals whose earnings are between their state’s Medicaid eligibility limit and 400% of the federal poverty level, there are slight increases in the income caps for premium tax credits. Coupled with significant inflation in insurance plan prices, the affordability of health insurance has become a pressing issue for many ACA marketplace participants. KFF's analysis highlighted potential additional costs ranging from $400 for lower incomes to $2,400 for those slightly above the subsidy cliff. For a 60-year-old couple losing enhanced credits, cost increases could range from $19,000 to $22,000 annually.

KFF's data indicates a sharp 44% decline in ACA marketplace enrollees with incomes between 400-500% of the federal poverty level during the 2026 enrollment period. Those with incomes above 500% of the poverty level saw a 27% decline in enrollment.

Enrollment reductions exceeded 20% in South Carolina and ranged between 15-20% in states like Ohio, Indiana, and Arizona. However, some states saw an increase in enrollment, bolstered by localized subsidies. Texas experienced a 5% increase, while Massachusetts and Connecticut both saw 4% rises. New Mexico recorded the largest growth at 18%, supported by $40 million in state funding to compensate for the expired federal subsidies.

Despite receiving premium tax credits, numerous individuals have opted out of coverage due to rising insurance costs. Although these groups experienced a smaller relative decrease, their significant presence within the ACA marketplaces has resulted in notable absolute losses in insured numbers. Meanwhile, reports from Mercer suggest that the costs of employer-sponsored health plans are expected to rise by nearly 7% this year, driven partly by increased utilization of high-cost GLP-1 weight loss medications. This poses additional challenges for both employers and employees.