ACA Marketplace Premiums Expected to Rise Sharply in 2026 as Subsidies Expire

Analysis by the non-partisan Kaiser Family Foundation (KFF) projects significant premium increases for health insurance plans sold through the Affordable Care Act (ACA) marketplace starting in 2026. The primary driver of these rising costs is the scheduled expiration of enhanced premium tax credits, which had been extended during the Covid-19 pandemic. These credits substantially lowered out-of-pocket costs for millions of enrollees and their removal is expected to prompt healthier individuals to exit the market, thereby increasing premiums for the remaining participants.

The Congressional Budget Office estimates that the termination of these subsidies could result in 4.2 million additional uninsured Americans. This shift could destabilize the individual insurance market by increasing the average risk pool, leading insurers to raise premiums significantly. KFF notes that premium hikes are anticipated to exceed those seen since 2018, a year marked by comparable policy uncertainty.

Enrollment in ACA marketplace plans more than doubled with the availability of enhanced subsidies, peaking at 24 million this January. The removal of these financial supports is expected to reverse this trend, as the reduced affordability will likely discourage continuous participation in the marketplace. While other factors like tariffs on medical supplies are also contributing, their effect accounts for a comparatively modest 3% increase in premiums.

The political context involves Republican opposition to the continuation of these subsidies, framing them as an undue taxpayer burden. However, the current policy trajectory directly impacts insurance affordability and coverage rates. Without legislative action to extend or replace the enhanced tax credits, the market faces a substantial contraction in coverage and a rise in insurance costs.

Insurers' rate filings with state regulators reflect this anticipated market contraction and higher premiums, underscoring the regulatory and compliance environment’s role in shaping insurer strategies. These developments suggest a need for ongoing monitoring by insurance professionals regarding regulatory changes and market dynamics ahead of the 2026 plan year.