Dropping your health insurance? Here’s how to pay for healthcare in 2026 – Insurance News

Health Insurance Penalties Return in 2026, But Alternatives to Coverage Exist

Millions of Americans may face a financial penalty for going without health insurance in 2026 as the individual obligation requirement of the Affordable Care Act (ACA) is reinstated.This marks a significant shift after a four-year hiatus, prompting individuals and families to reassess their healthcare coverage options and explore alternatives to customary insurance plans.

The return of the penalty, coupled with potential changes to ACA marketplace subsidies, is forcing a reevaluation of healthcare affordability. While health insurance remains a crucial safety net, rising premiums and deductibles are driving some to consider alternative methods for managing healthcare costs. Understanding these options – from direct primary care to hospital charity care – is becoming increasingly important for those contemplating dropping coverage.

What’s changing and Who is Affected?

The individual mandate, which requires most Americans to have health insurance or pay a penalty, was effectively eliminated in 2019. However, the Inflation Reduction Act of 2022 reinstated the penalty beginning in 2026. The amount of the penalty will be the greater of 2.5% of a household’s annual income above the federal tax filing threshold, or a fixed amount based on family size. For 2025 coverage (reported in 2026),that fixed amount is $795 per adult and $397.50 per dependent under 18, capped at $2,385 per family.

This change will primarily impact those who do not obtain coverage through an employer, Medicare, or Medicaid, and who do not qualify for subsidies in the ACA marketplaces. The decision to cancel health insurance in 2026 will likely hinge on the availability of those premium subsidies.

Alternatives to Traditional Health Insurance

For those choosing to forgo traditional health insurance, several options can definitely help manage healthcare expenses:

* Direct Primary Care (DPC): This model involves a monthly membership fee for access to a primary care physician, frequently enough offering more personalized care and lower costs for routine services.
* Cash Clinics: These clinics offer discounted rates for services paid for directly, without involving insurance.
* Tax-Advantaged Healthcare Accounts: Health Savings accounts (HSAs) and Flexible Spending Accounts (FSAs) allow individuals to set aside pre-tax money for healthcare expenses.
* Sliding-Scale care: Some healthcare providers offer reduced fees based on income.
* Patient Assistance Programs: pharmaceutical companies and other organizations offer programs to help patients afford medications and treatments.
* Hospital Charity Care: Many hospitals have programs to provide free or reduced-cost care to those who qualify.

State-Specific Considerations

While a federal penalty is returning, state approaches vary. Washington, D.C. will enforce the federal penalty. Vermont requires residents to report insurance status on their state taxes, but does not impose a financial penalty. Maryland also asks about insurance status during tax filing as a means of connecting residents with enrollment opportunities.

This story was produced by GoodRx and reviewed and distributed by Stacker.