Colorado Adjusts 2026 Individual Market Rates Amid New State Funding and Federal Subsidy Uncertainty

Colorado is requiring health insurers to revise their proposed 2026 rate increases to reflect newly available state funding aimed at improving insurance affordability. This funding, approved during the state legislature's special session, is expected to reduce premium hikes for individuals purchasing coverage on the individual market.

Although the average proposed rate increase was initially 28%, the new state subsidies could lower this to around 16%. However, the impact of federal enhanced subsidies expiring at the end of the year poses a significant affordability challenge. Without federal subsidy extensions, many consumers could face substantial premium increases despite the state's actions, as those subsidies currently help offset consumer costs significantly. The state-funded programs include aid to insurers for high-cost claims and direct premium subsidies for lower-income residents, which work to moderate rates and support enrollment.

The legislature's funding plan is a one-year measure, with the expectation that longer-term solutions will be needed in the future. Insurance Commissioner Michael Conway emphasized the urgency for Congress to extend federal enhanced premium tax credits to avoid severe cost burdens on consumers, which could otherwise lead to coverage losses and destabilize the insurance pool. The individual market, covering approximately 300,000 Coloradans, remains vulnerable to these changes, particularly in rural areas, where increases may be higher. This development reflects broader national issues related to health insurance affordability and the interplay between federal and state policy measures.