ACA Marketplace Premiums Set to Rise, But Impact on Enrollees Hinges on Tax Credit Extension
WASHINGTON – Insurers offering plans through the Affordable Care Act (ACA) Marketplace are requesting premium increases averaging 26% for 2026, however, the actual cost impact on the vast majority of enrollees will depend heavily on whether Congress extends enhanced premium tax credits set to expire at the end of this year.
Currently, 22 million of the 24 million individuals enrolled in ACA Marketplace plans receive financial assistance through these tax credits. Unlike the premiums insurers charge, the amount subsidized enrollees pay is calculated on a sliding scale based on household income, as steadfast by a congressional formula. If the enhanced tax credits are extended, monthly payments for these enrollees are expected to remain roughly the same despite the insurer rate hikes.
Though, if the credits expire, the Kaiser Family Foundation (KFF) estimates that currently subsidized enrollees will face a dramatic increase in their monthly premiums – more than doubling, with an average rise of 114%. this increase stems from reduced financial assistance for those with incomes below four times the poverty level, and the complete loss of assistance for those above that threshold, creating a “double whammy” of higher premiums and lost tax credits.
Even with the expiration of enhanced tax credits, many lower-income enrollees will still qualify for a bronze plan with little to no premium payment after applying the remaining tax credit. Though, this coudl necessitate a shift from a silver plan with a low deductible – some as low as under $100 – to a bronze plan with a deductible exceeding $7,000.
Several factors are contributing to the overall increase in insurer charges, including rising hospital costs, the growing expense of GLP-1 drugs like Ozempic, and potential tariff impacts.These factors are also driving up premiums for employer-sponsored coverage. However, ACA Marketplace premiums are facing an additional pressure: insurers anticipate that healthier individuals will drop coverage if the enhanced tax credits expire, leading them to request premium increases of approximately 4 percentage points on average in their 2026 filings to state regulators.
The cost of the ACA’s tax credit is directly linked to the price of the second-lowest cost silver plan, meaning that as benchmark premiums rise, so too does the federal cost of providing these credits.
