ACA Subsidies May Expire: What Consumers Should Do Now

ACA Premium Tax Credits Are Likely Ending — What Higher Health Insurance Costs Mean for Consumers

With Congress failing to extend ACA premium tax credits, millions of Americans may face significantly higher health insurance costs in the coming year. The change could hit early retirees, gig workers, and middle-income households especially hard.

The Senate recently rejected legislation that would have extended the enhanced ACA premium tax credits beyond year-end. As a result, the expanded subsidies created during the COVID-19 pandemic are now expected to expire on Jan. 1, potentially leading to sharp premium increases during open enrollment.

“People should assume the enhanced ACA premium tax credits will expire and plan accordingly,” said Jae Oh, CFP®, author of Maximize Your Medicare. “Waiting and hoping for a last-minute fix is not a strategy.”

Why Health Insurance Costs Are Rising

The enhanced ACA premium tax credits eliminated the so-called subsidy cliff and expanded eligibility for financial assistance. If those enhancements expire, subsidies will once again drop sharply as income increases.

According to KFF, about 22 million of the 24 million ACA marketplace enrollees currently receive a premium tax credit, underscoring how widespread the impact could be.

Premiums themselves are also climbing. KFF estimates that ACA marketplace premiums are increasing an average of 26% for 2026. In state-run marketplaces, benchmark silver premiums are rising roughly 17%, while states using HealthCare.gov may see increases averaging 30%.

For married early retirees who are not yet eligible for Medicare, the loss of enhanced ACA premium tax credits combined with rising premiums can be especially painful.

“For some households, costs can rise into the five figures annually if they do nothing,” Oh said. “And that increase can repeat every year until Medicare eligibility.”

Income Planning Is Critical

Oh emphasized that consumers should start by estimating next year’s taxable income, including wages, self-employment income, investment earnings, and retirement withdrawals.

“Income planning matters not just for taxes, but for health insurance premiums,” he said. “Lower income can mean lower premiums.”

Because ACA premium tax credits are income-based, strategic income planning can play a major role in managing healthcare costs. In many cases, adjusting the timing or source of income may help preserve subsidies.

Choosing ACA Plans Wisely

Oh cautioned consumers not to focus on premiums alone when selecting a plan.

“If you’re in excellent health, a lower-tier plan may make sense to save money,” he said, noting that ACA rules allow enrollees to switch plans annually if their health or finances change.

That flexibility makes lower-premium plans appealing, but it also means accepting higher deductibles and out-of-pocket costs—an important trade-off to understand.

Provider Networks Still Matter

Even with ACA premium tax credits, network limitations can create unexpected costs. Plans offered by the same insurer may have very different provider networks.

“There’s no shortcut,” Oh said. “You have to check whether your doctors, specialists, and hospitals are in network.”

Out-of-network care under ACA plans can be extremely expensive, making careful verification essential.

Beware of Non-ACA Alternatives

As premiums rise, some consumers may consider alternatives such as short-term insurance or faith-based health-sharing plans. Oh warned that these options lack many of the consumer protections required under ACA rules.

“ACA plans have minimum standards,” he said. “Those guardrails don’t exist with many alternatives.”

Don’t Go Uninsured

Dropping coverage entirely may seem tempting, but Oh strongly advised against it.

“The risk of financial ruin can show up immediately,” he said.

Every ACA-compliant plan includes an out-of-pocket maximum, providing critical protection against catastrophic medical expenses—something non-ACA options often lack.

Enrollment Timing Still Matters

To have coverage effective Jan. 1, most consumers must enroll by Dec. 15. While plan changes are generally allowed through Jan. 15 for coverage beginning Feb. 1, Oh warned against intentionally going uninsured in January.

“That’s not a risk worth taking,” he said.

Bottom Line

With enhanced ACA premium tax credits likely ending, open enrollment decisions carry higher stakes than in recent years. Consumers who focus on income planning, network verification, and realistic assessments of risk will be better positioned to manage rising healthcare costs.

“This is about planning, not panic,” Oh said.