You can expect dramatic cost increases for ACA marketplace health insurance if federal subsidies are not renewed
If you have health insurance through the Affordable Care Act marketplace, you are likely to see dramatic increases in your costs next year. This is due to a combination of factors that a July 18, 2025, article from CBS News calls a “one-two punch” of “double-digit premium increases along with a sharp drop in the federal subsidies that most consumers depend on to buy the coverage.”
Insurance companies participating in the marketplace are requesting the largest premium increases in more than five years. At the same time, temporary enhanced federal subsidies, first expanded in response to the pandemic, expire at the end of 2025.
During the pandemic, emergency provisions extended eligibility up the income scale and streamlined the process for calculating subsidy amounts. The “One Big Beautiful Bill” terminates these supports. It limits who qualifies and reintroduces documentation requirements and eligibility verification, steps that are likely to reduce enrollment. Unless Congress intervenes to extend the enhanced subsidies, out-of-pocket costs for consumers will revert to pre-pandemic levels.
The Kaiser Family Foundation projects that ACA enrollees will see premium payments rise by over 75 percent on average in 2026 if enhanced subsidies are not renewed. The temporary credits reduced annual premiums by an average of $705 and helped increase marketplace enrollment from 11 million in 2020 to more than 21 million in 2024.
The expiration of these tax credits eliminates the price cap that previously limited ACA benchmark premiums to 8.5 percent of household income. Many families who receive subsidies will face double-digit premium increases or lose coverage entirely.
An article by Elisabeth Buchwald in MarketWatch cites Congressional Budget Office projections of a 93 percent average premium increase for subsidized enrollees and a projected 4.2 million increase in the number of uninsured Americans by 2034. The greatest impact would likely fall on young adults, older enrollees, and those living in rural areas.
Lawmakers and administration officials have described these moves as “eliminating waste, fraud, and abuse.” Independent policy analysis, however, does not support the assertion that the scale of these subsidy cuts is explained by rooting out fraud.
If you expect these changes to affect your health insurance costs, here are some suggestions you might consider:
First, don’t wait until the November 1 open enrollment period begins or until you get a premium notice. Log in now to your state or federal ACA exchange account and review the projected premium estimates for both 2025 and 2026 to calculate your new estimated monthly cost.
Then, if you are likely to see a significant increase, begin now to consider your options. The following might give you a place to start.
1. Can you tighten your budget and scale back nonessential spending to build a reserve fund to help cover next year’s premiums?
2. Given the job market in your community and your qualifications and skills, would it make sense to try applying for jobs that offer health care coverage?
3. Are there any medical procedures or preventive care (such as mammograms or colonoscopies) you may want to schedule now in case you lack adequate coverage next year?
4. Since Congress does still have the ability to extend the enhanced subsidies or make other changes, would it be worthwhile for you to contact your representatives?
Finally, pay attention to the very real emotional and financial impact of this kind of change. You may feel fear, anger, and other emotions, much as you would with a job loss or other financial setback. The prospect of a large increase in your costs for healthcare is a real-world change that requires the same level of attention and preparation as any major loss of income.
Rick Kahler, CFP, is a fee-only financial planner and financial therapist with a nationwide practice, Kahler Financial Group, based in Rapid City. His co-authored books include Coupleship Inc. and The Financial Wisdom of Ebenezer Scrooge.
Photo: public domain, wikimedia commons
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