Why ACA health insurance premiums may see ‘sharp’ increase in 2026
Republicans recently passed a $4 trillion tax cut for Americans in a bill signed by President Donald Trump. This bill, often referred to as the “big beautiful bill,” extended several tax provisions that were set to expire in 2026. However, health policy experts have pointed out a significant omission in the bill – the extension of a tax break that lowered health insurance premiums for millions of people.
The enhanced premium tax credits, which have been in place since 2021, have played a crucial role in reducing the cost of health insurance premiums for individuals purchasing coverage through the Affordable Care Act marketplace. These tax credits allow enrollees to lower their premium costs upfront or claim the credits at tax time. Unfortunately, these credits are set to expire after 2025.
According to the Kaiser Family Foundation (KFF), more than 22 million people, accounting for about 92% of ACA enrollees, received a federal subsidy this year that helped reduce their insurance premiums. Cynthia Cox, the ACA program director at KFF, warned that these recipients would experience a significant premium increase starting on January 1.
On average, marketplace enrollees saved $705 in 2024, thanks to the enhanced tax credits, resulting in a 44% reduction in premium costs. Without these credits, average out-of-pocket premiums in 2026 could rise by over 75%, as highlighted by Larry Levitt, KFF’s executive vice president for health policy.
Additionally, if the enhanced subsidies were to expire, 4.2 million Americans could become uninsured over the next decade, according to the Congressional Budget Office. This increase in the uninsured population would be in addition to nearly 12 million people expected to lose health coverage due to over $1 trillion in spending cuts made by Republicans to health programs like Medicaid and the ACA.
The enhanced premium tax credits were established by the ACA and were initially available for individuals earning between 100% and 400% of the federal poverty level. These credits were expanded and made more generous under the American Rescue Plan signed by President Joe Biden in 2021. The plan also extended these policies through 2025 via the Inflation Reduction Act signed in 2022.
The expiration of enhanced subsidies would impact all recipients of the premium tax credit, but certain groups, like Black and Latino individuals, lower-income households, self-employed workers, and small business owners, would be disproportionately affected. These enhancements have been crucial in increasing enrollment among these groups and have played a significant role in making insurance more affordable for millions of Americans.
