Understanding Health Insurance Subsidy Changes: What Employees Should Expect in 2026
The health insurance landscape is set for important changes in 2026. One of the most significant shifts will be the scheduled expiration of enhanced premium tax credits, which have made coverage more affordable for millions of people who buy their plans through the ACA Marketplace.
As these enhanced subsidies end, many people are wondering what changes they might see—and what it could mean for their budgets.
What Are Health Insurance Subsidies?
Health insurance subsidies, also known as premium tax credits, are designed to make Marketplace health plans more affordable. These subsidies adjust based on income and household size, capping how much an individual or family has to pay for their monthly premium.
Since 2021, expanded subsidy enhancements introduced by pandemic-related federal relief efforts have enabled record-high enrollment and lower premiums for most Marketplace participants.
You can learn more about who qualifies for subsidies and how they work from this summary by KFF.
What’s Changing in 2026?
Unless Congress acts to renew or adjust the current policy, the expanded subsidy rules will sunset at the end of 2025. For 2026, insurers are preparing for notable premium increases and higher out-of-pocket costs.
Premiums for ACA Marketplace plans are projected to rise between 10% and 27% on average, with a median proposed increase of 18%.
And if subsidy enhancements expire, the net premium that enrollees pay could rise by over 75% on average compared to 2025, according to industry analysis at StretchDollar.
Out-of-pocket maximums will also move upward. In 2026, the out-of-pocket limit for individual coverage is expected to increase to $10,600 (from $9,200 in 2025), while the family coverage limit will climb to $21,200 (from $18,400)—an increase of about 15%.
The Return of the “Subsidy Cliff”
From 2021 through 2025, enhanced subsidies have eliminated the so-called “subsidy cliff”—where anyone earning just above 400% of the federal poverty level would lose all subsidy eligibility.
For 2026, this rule returns: there will again be an income cutoff, above which Marketplace consumers will pay the full premium cost themselves.
Who Could Be Most Affected?
Most Marketplace enrollees (over 90% in 2025) receive federal subsidies, which have dramatically lowered costs.
If the enhanced credits expire, millions could face higher monthly premiums—sometimes by several hundred dollars per month.
Some enrollees may switch to lower-cost plans with higher deductibles and more out-of-pocket expense, while others will weigh the cost of continuing coverage versus going without.
Populations such as early retirees, part-time workers, self-employed individuals, and people in high-turnover industries may feel these changes most acutely.
Recent lawfully present immigrants with low incomes—a group that became eligible for subsidies under pandemic-era policy—will lose this access in 2026 due to new legislative changes.
Why Are Insurers Raising Rates?
Insurers point to the expiration of enhanced tax credits as a major reason for proposed premium increases.
Most are preparing for higher costs, both because of anticipated losses of healthier enrollees (who may drop coverage as premiums rise) and because smaller risk pools tend to drive rates higher for those who remain.
Projected Numbers and Trends
ACA Marketplace enrollment reached nearly 23 million in 2025 thanks to these expanded subsidies.
If the enhancements lapse, estimates suggest Marketplace enrollment could drop below 19 million next year.
For those who do not qualify for a subsidy, premiums for the most popular ACA plans will increase substantially.
Out-of-pocket maximums will climb to historic highs.
The open enrollment window will be shorter in most states, increasing the importance of timely plan selection (Venteur).
What Steps Can Employees and Employers Take?
Review plan options carefully during open enrollment, and use available decision-support tools to compare total costs for premiums, copays, and deductibles.
Employees offered employer-sponsored insurance may want to compare those plans—especially if Marketplace options become less affordable.
Employers may want to re-evaluate benefits packages, especially if they have staff who have traditionally relied on Marketplace subsidies.
Stay alert for further updates; Congress may still consider extensions or modifications to these policies.
Final Thoughts
Change is coming, but being informed can help employees and employers make the best choices for their needs. Reviewing available resources, comparing options early, and seeking expert advice can all make a difference.
If you’re unsure how these changes may affect your team, or want guidance on selecting next year’s coverage, consider booking a meeting for personalized support.