ACA Enhanced Subsidies Expired: What the 2026 Premium Surge Means for You

What Happened: The Enhanced ACA Subsidies Have Expired

On December 31, 2025, the enhanced premium tax credits that had been keeping ACA marketplace health insurance affordable for millions of Americans officially expired. These enhanced credits were first introduced through the American Rescue Plan Act (ARPA) of 2021 and later extended through 2025 by the Inflation Reduction Act (IRA) of 2022. Congress did not pass legislation to extend them further, and as of January 1, 2026, the ACA's premium tax credit structure has reverted to its original, less generous formula.

The consequences are immediate and severe. The Congressional Budget Office and the Kaiser Family Foundation both projected that approximately 4.8 million Americans would lose health coverage entirely once the enhanced subsidies expired, and millions more would face dramatically higher monthly premiums. Those projections are now reality. If your health insurance bill doubled or tripled in January, you are not alone — and this guide will explain exactly what changed, who is affected, and what you can do about it.

A Brief History of the Enhanced Subsidies

To understand the current crisis, it helps to know what the enhanced subsidies did and why they existed. When the ACA was originally signed into law in 2010, premium tax credits were available to households earning between 100% and 400% of the federal poverty level (FPL). Anyone earning above 400% FPL — roughly $58,320 for a single individual in 2021 — received no help at all, a cutoff known as the subsidy cliff.

The American Rescue Plan Act of 2021 made two transformative changes to the ACA's subsidy structure:

1. Eliminated the subsidy cliff. Instead of cutting off eligibility at 400% FPL, the enhanced formula ensured that no one would pay more than 8.5% of their household income for the benchmark Silver plan, regardless of income level. This meant a household earning $80,000 or even $120,000 could still receive a subsidy if their local benchmark plan cost more than 8.5% of income.
2. Increased subsidy amounts across the board. Even for consumers who already qualified for subsidies under the original formula, the enhanced credits lowered the expected premium contribution at every income level. People earning between 100% and 150% FPL paid nothing — zero dollars — for benchmark Silver coverage. Those between 150% and 400% FPL paid significantly less than under the pre-ARPA formula.

The result was historic. Marketplace enrollment surged from about 12 million in 2020 to over 21 million during the 2024 open enrollment period and exceeded 23 million for the 2025 plan year. The uninsured rate in the United States dropped to the lowest level ever recorded. Now, with the enhanced subsidies gone, that progress is at risk of being reversed.

What Changed on January 1, 2026

With the expiration of the enhanced credits, the ACA's premium tax credit formula has reverted to its pre-2021 structure. Here are the key changes that took effect on January 1, 2026:

The Subsidy Cliff Is Back

Premium tax credits are once again limited to households earning between 100% and 400% FPL. For 2026, that means a single individual earning more than approximately $62,400 or a family of four earning more than approximately $128,400 receives no subsidy whatsoever. Under the enhanced credits, these households could have received substantial help. Now they must pay the full unsubsidized premium or find coverage elsewhere.

Higher Required Premium Contributions

Even for households that still qualify for subsidies below the 400% FPL threshold, the required premium contribution as a percentage of income has increased. Under the enhanced formula, a household at 150% FPL paid 0% of income toward the benchmark Silver plan. Under the reverted formula, that same household is expected to pay approximately 2% to 4% of income. At 300% FPL, the expected contribution jumps from about 6% under the enhanced formula to approximately 9.5% under the original formula. These percentage-point differences translate into hundreds of dollars per month in additional costs.

Zero-Premium Plans Have Vanished for Many Enrollees

Under the enhanced subsidies, the lowest-income enrollees (100% to 150% FPL) could get Silver-tier coverage for zero dollars per month. Many could also access zero-premium Bronze plans. These zero-dollar options have largely disappeared under the reverted formula. Enrollees in this income range now face monthly premiums ranging from $30 to over $100 depending on age and location, a cost that may be unaffordable for people living near the poverty line.

Who Is Affected the Most

While virtually every marketplace enrollee is feeling the impact of higher premiums, certain groups have been hit especially hard:

• Adults over 50 and early retirees. The ACA allows insurers to charge older adults up to three times more than younger enrollees. With reduced subsidies, a 60-year-old earning $45,000 may now face premiums exceeding $700 per month for Silver coverage — up from around $200 with the enhanced credits.
• Middle-income households above 400% FPL. A family of four earning $130,000 — solidly middle class in most metro areas — previously received enhanced credits. As of 2026, they fall above the subsidy cliff and pay the full, unsubsidized premium, which can easily exceed $2,000 per month for a family plan.
• Self-employed workers and freelancers. Without an employer to share premium costs, independent workers rely entirely on marketplace coverage. Many gig workers, contractors, and small business owners with moderate incomes are now priced out of comprehensive coverage.
• Residents of rural areas with limited insurer competition. In counties with only one or two insurers, base premiums tend to be higher. The enhanced subsidies shielded enrollees from these inflated prices. Without them, rural consumers are paying some of the highest premiums in the country.
• Young adults aged 26 to 34. Many young adults who aged off a parent's plan and enrolled in zero- or low-premium marketplace plans now face premiums they cannot afford. This demographic has historically had the highest uninsured rate, and the subsidy expiration risks pushing it higher.

The New Income Limits and Premium Contribution Percentages

Understanding the reverted premium tax credit formula is essential for estimating your 2026 costs. Under the original ACA structure, the amount you are expected to contribute toward the benchmark Silver plan is based on a sliding scale tied to your income as a percentage of FPL:

• 100% to 133% FPL: Expected to pay approximately 2.07% of household income
• 133% to 150% FPL: Expected to pay approximately 3.10% to 4.14% of household income
• 150% to 200% FPL: Expected to pay approximately 4.14% to 6.52% of household income
• 200% to 250% FPL: Expected to pay approximately 6.52% to 8.33% of household income
• 250% to 300% FPL: Expected to pay approximately 8.33% to 9.83% of household income
• 300% to 400% FPL: Expected to pay approximately 9.83% of household income (capped)
• Above 400% FPL: No subsidy available — you pay the full premium

Compare this to the enhanced formula, where the maximum contribution was capped at 8.5% of income with no upper income cutoff, and the lowest income brackets paid 0%. The difference is stark — and for many households, it means the choice between paying rent and paying for health insurance.

Real-World Impact: How Premiums Changed for Typical Households

The following examples illustrate how the subsidy expiration affects real people. All figures are approximate and based on 2026 federal poverty levels and benchmark Silver plan pricing in a mid-cost region:

• A 40-year-old single adult earning $35,000 (225% FPL): Under the enhanced credits, this person paid roughly $140 per month for Silver coverage. Under the reverted formula, the expected contribution rises to about $240 per month — a 71% increase.
• A 60-year-old single adult earning $55,000 (353% FPL): Previously paid about $390 per month. Now pays approximately $650 per month — a 67% increase — because the reverted formula requires a higher percentage of income and the base premium is higher due to age rating.
• A married couple, both age 45, with two children, earning $110,000 (343% FPL for a family of four): Previously paid about $780 per month for a family Silver plan. Now pays approximately $1,200 per month — a 54% increase.
• A 50-year-old single adult earning $65,000 (417% FPL): Under the enhanced credits, this person received a subsidy and paid about $460 per month. Under the reverted formula, they are above the 400% FPL cliff and receive zero subsidy, paying the full premium of approximately $850 per month — an 85% increase.

The 4.8 Million Who Could Lose Coverage

Before the subsidies expired, both the Congressional Budget Office and the Kaiser Family Foundation projected that about 4.8 million people would drop their marketplace coverage if the enhanced credits were not renewed. The reasons are straightforward: when premiums double or triple, many people simply cannot afford to maintain their plans.

Of those projected to lose coverage, approximately 3.8 million are expected to become uninsured entirely. The remaining 1 million may transition to Medicaid, employer-sponsored plans, or other coverage. Being uninsured carries significant risks — not just the financial burden of paying out of pocket for medical care, but also delayed preventive screenings, untreated chronic conditions, and medical debt that can lead to bankruptcy.

Early data from January and February 2026 suggest these projections may be accurate. Several state-based exchanges have reported enrollment declines of 15% to 25% compared to the same period in 2025. The federal marketplace has not yet released official figures, but insurance industry sources indicate a sharp drop in effectuated enrollment — the number of people who actually pay their first premium and activate coverage.

What You Should Do Right Now

If your premiums jumped in January 2026, do not panic — but do take action immediately. There are several concrete steps you can take to mitigate the financial damage.

1. Update Your Income and Household Information

Log into your HealthCare.gov account or your state exchange and verify that your income estimate is accurate. If your income has decreased since you first enrolled, you may qualify for a larger subsidy — or for Medicaid. Even a small change in projected income can make a meaningful difference in your premium tax credit under the reverted formula, especially near the FPL thresholds.

2. Shop for a Different Plan

You are not locked into the plan you enrolled in during open enrollment. If you experience a qualifying life event — including a significant change in income that affects your subsidy — you may be eligible for a Special Enrollment Period. During a Special Enrollment Period, you can switch to a different plan or metal tier. Consider moving to a Bronze plan, which has lower premiums but higher out-of-pocket costs. If you are generally healthy and primarily need catastrophic protection, a high-deductible Bronze plan paired with a Health Savings Account (HSA) can significantly reduce your monthly expenses.

3. Check Whether You Qualify for Medicaid

If your income is at or below 138% FPL (about $20,783 for a single individual in 2026), you likely qualify for Medicaid in the 40 states plus Washington, D.C. that have expanded the program. Medicaid has no monthly premium in most states and covers a comprehensive range of services. You can apply for Medicaid at any time — there is no open enrollment window. Visit your state Medicaid agency's website or apply through HealthCare.gov, which will automatically route you to Medicaid if you qualify.

4. Explore Alternatives to Marketplace Coverage

If marketplace plans are now unaffordable, there are other options to consider — though each comes with trade-offs:

• Short-term health insurance: These plans offer lower premiums but are not ACA-compliant. They can deny coverage for pre-existing conditions, impose annual or lifetime benefit caps, and exclude essential health benefits. They are best used as a temporary bridge, not a long-term solution.
• Health sharing ministries: Members share medical expenses through a faith-based cooperative model. Monthly costs are often lower than insurance premiums, but these are not insurance and do not guarantee payment of claims. Pre-existing conditions are typically excluded or subject to waiting periods.
• Fixed indemnity plans: These plans pay a fixed dollar amount for specific medical services (such as $100 per doctor visit or $1,500 per hospital day). They can supplement other coverage or serve as a basic safety net, but they are not comprehensive health insurance and will not cover large medical bills.
• Spouse's employer plan: If your spouse has access to employer-sponsored coverage that includes family enrollment, compare the total cost of joining that plan versus staying on the marketplace. Employer plans often have significant employer contributions that make them more affordable.

5. Use Tax-Advantaged Accounts Strategically

If you enroll in an HSA-eligible high-deductible health plan, you can contribute to a Health Savings Account and deduct those contributions from your taxable income. For 2026, the HSA contribution limit is $4,300 for individuals and $8,550 for families. HSA funds can be used tax-free for qualified medical expenses including deductibles, copays, prescriptions, and many other out-of-pocket costs. This strategy does not reduce your premium, but it can meaningfully lower your total healthcare spending.

Understanding How Your Premium Is Calculated

To make informed decisions about your coverage, it helps to understand how health insurance premiums are calculated. Under the ACA, insurers can only vary premiums based on four factors: your age, where you live, whether you use tobacco, and the plan category (metal tier) you choose. They cannot charge more based on health status, gender, or pre-existing conditions.

Your premium tax credit is calculated by taking the cost of the second-lowest-cost Silver plan (the benchmark plan) in your area and subtracting your expected contribution based on income. The subsidy equals the difference. If the benchmark plan costs $600 per month and your expected contribution is $300, your subsidy is $300. You can apply that subsidy to any metal tier plan, but the credit amount stays the same. Choosing a Bronze plan could leave you with a very low or even zero premium, while choosing a Gold or Platinum plan would require a higher out-of-pocket premium.

State-Level Options and Protections

While the expiration of the enhanced subsidies is a federal issue, several states have taken independent action to protect their residents:

• California has expanded its state-funded subsidy program to cover enrollees earning between 400% and 600% FPL. The state also offers subsidies for undocumented immigrants who are ineligible for federal credits.
• Massachusetts operates ConnectorCare, a state-subsidized program that provides additional premium assistance and lower cost-sharing for residents earning up to 500% FPL.
• Colorado launched a public option program that caps premiums at a percentage of income for residents who purchase coverage through the state exchange.
• Washington State offers Cascade Care, which provides state-funded subsidies for residents earning up to 250% FPL who purchase standardized plans through the state exchange.
• New Jersey and Vermont have both implemented state individual mandates that require residents to maintain coverage. While this does not lower premiums directly, it helps stabilize the insurance market and can prevent the premium spirals that occur when healthy individuals drop coverage.

If you live in a state with its own exchange, check your state marketplace website for information about state-level financial assistance programs. These programs can provide meaningful relief even though the federal enhanced credits have expired.

Medicaid as an Alternative

For consumers whose income is low enough to qualify, Medicaid remains the most affordable path to comprehensive health coverage. Here is what you need to know:

• In expansion states, adults with household incomes up to 138% FPL (about $20,783 for a single person in 2026) qualify for Medicaid.
• Medicaid enrollment is open year-round — you do not need to wait for an open enrollment period.
• Most Medicaid programs have no monthly premium and minimal cost-sharing, making it far more affordable than marketplace coverage.
• Children and pregnant women often qualify at higher income thresholds through CHIP and pregnancy-related Medicaid coverage.
• In the 10 states that have not expanded Medicaid, adults without dependent children may fall into the coverage gap — earning too much for traditional Medicaid but too little for marketplace subsidies. Community health centers and free clinics may be the primary option in these states.

If your income fluctuates throughout the year — as it does for many self-employed, seasonal, and gig workers — be aware that you may move between Medicaid and marketplace eligibility. Report income changes promptly so your coverage and financial assistance stay accurate.

How to Avoid Going Uninsured

Going without health insurance is risky at any age. A single emergency room visit can cost $5,000 to $20,000 or more, and a serious illness or injury can result in bills exceeding $100,000. Even if your marketplace premium has doubled, dropping coverage entirely should be a last resort. Here are strategies to maintain some level of protection:

1. Downgrade to a Bronze or Catastrophic plan. Bronze plans have the lowest premiums of any ACA metal tier. Catastrophic plans are available to adults under 30 or those who qualify for a hardship exemption and offer even lower premiums — though they cover very little until you meet a high deductible.
2. Ask about income-based payment plans. If you receive a large medical bill, most hospitals and providers will negotiate payment plans or offer financial assistance programs. Many nonprofit hospitals are required by law to provide charity care to patients who meet income criteria.
3. Use community health centers. Federally qualified health centers serve patients regardless of insurance status and charge on a sliding fee scale based on income. There are more than 1,400 community health center organizations in the United States operating at over 15,000 sites.
4. Do not skip preventive care. All ACA-compliant plans must cover preventive services at no cost to you, even before meeting your deductible. Annual physicals, vaccinations, cancer screenings, and other preventive services remain free under any marketplace plan.
5. Get free enrollment help. Licensed marketplace navigators, certified application counselors, and insurance brokers can help you find the most affordable plan for your situation at no cost. Call the marketplace helpline at 1-800-318-2596 or visit HealthCare.gov to find local assistance.

What Comes Next: The Legislative and Policy Outlook

As of February 2026, the political path to restoring the enhanced subsidies remains uncertain. Multiple bills have been introduced in Congress, but partisan disagreements about the cost — estimated at $250 billion over ten years — and the broader structure of the ACA have stalled progress. Health policy experts, insurers, hospitals, and consumer advocates have all called for the subsidies to be restored or made permanent, warning that the uninsured rate will rise significantly without them.

In the meantime, it is important to plan based on current law rather than waiting for a potential legislative fix. Even if Congress does act, it could take months for new legislation to pass and even longer for its effects to reach consumers. In the interim, the strategies outlined in this guide — updating your income, shopping for lower-cost plans, exploring Medicaid, and using tax-advantaged accounts — represent your best options for managing higher costs.

Key Takeaways

• Enhanced ACA premium tax credits expired on December 31, 2025. The subsidy formula has reverted to the original, less generous ACA structure.
• The subsidy cliff at 400% FPL is back. Households earning above this threshold receive no premium tax credit.
• Approximately 4.8 million people are projected to lose marketplace coverage, with 3.8 million expected to become uninsured.
• Older adults, middle-income households, self-employed workers, and rural residents are the hardest-hit groups.
• Take action now: update your income on the marketplace, shop for a lower-cost plan, check Medicaid eligibility, and explore alternatives like HSA-eligible plans and state-level subsidies.
• Several states including California, Massachusetts, Colorado, and Washington offer their own subsidy programs that can partially offset the loss of federal enhanced credits.
• Do not drop coverage without exploring every option. Free help is available through marketplace navigators, certified application counselors, and licensed brokers.