Marketplace Health Plan Costs Rise After Credit End

The cost of health insurance plans purchased through the Affordable Care Act (ACA) marketplaces has risen significantly for many Americans as of January 1, 2026, following the expiration of enhanced premium tax credits. These credits, initially expanded under the American Rescue Plan Act and the Inflation Reduction Act, helped to lower monthly premiums for a wider range of income levels. Without them, enrollees are facing a substantial increase in their contributions, with estimates suggesting an average rise of 114%, or roughly $1,016 per year, according to a recent analysis by the Kaiser Family Foundation (KFF).

How the Tax Credit Changes Affect Coverage

The enhanced premium tax credits were designed to make health insurance more affordable for individuals and families purchasing coverage through the Health Insurance Marketplace. These credits capped the amount enrollees would need to contribute towards their premiums, based on their income and the cost of the benchmark plan in their area. With the credits expired, those caps are no longer in effect, leading to higher out-of-pocket costs. The KFF calculator allows individuals to estimate their potential premium costs with and without the enhanced credits, based on their specific circumstances.

The impact of this change isn’t uniform. Although the average increase is 114%, the actual amount varies depending on income, age, family size and geographic location. Those with lower incomes, who benefited most from the expanded credits, are likely to observe the largest percentage increases. However, even those with higher incomes who previously received some assistance will experience a rise in premiums.

A Shift Towards Lower-Tier Plans

Facing higher premiums, many enrollees are considering alternative plans with lower monthly costs, even if it means accepting higher out-of-pocket expenses when they need care. A recent brief from the Health System Tracker highlights this trend, noting that 70% of respondents to a KFF poll indicated they would likely switch to a plan with a lower premium and higher deductible if their current premiums doubled. Bronze plans, which typically have the lowest monthly premiums but the highest deductibles and cost-sharing, are becoming increasingly attractive to those seeking to minimize their monthly payments.

This shift towards lower-tier plans presents a trade-off. While premiums may be lower, enrollees will likely face higher costs when accessing healthcare services, such as doctor visits, hospital stays, and prescription drugs. Understanding the differences between the various metal tiers – Bronze, Silver, Gold, and Platinum – is crucial for making informed decisions about health insurance coverage.

What the Data Reveals About Marketplace Enrollment

The Congressional Budget Office (CBO) previously projected that extending the enhanced tax credits would have increased the number of insured individuals by 3.8 million by 2035. Without the extension, the CBO anticipated that insurers would raise rates, expecting some healthier individuals to forgo coverage due to the increased costs. While the total enrollment numbers for 2026 won’t be available until later in the year, early data suggests that sign-ups remain strong, with most enrollees choosing to maintain some form of health insurance despite the rising premiums. This suggests a continued demand for coverage, even at a higher cost.

However, the long-term effects of the credit expiration on enrollment and the overall health of the individual market remain to be seen. It’s possible that as premiums continue to rise, more people will drop coverage, leading to a less diverse risk pool and potentially further premium increases.

Understanding Benchmark Plans and Premium Tax Credits

For premium tax credit purposes, a “benchmark plan” refers to the second-lowest cost Silver plan available in a given Marketplace. The premium tax credit is calculated based on the difference between the cost of the benchmark plan and the individual’s contribution, which is capped as a percentage of their income. The expiration of the enhanced credits means these contribution caps are now based on 2026 subsidy caps provided by the Internal Revenue Service (IRS), resulting in higher contributions for many enrollees.

It’s important to note that the premiums used in these calculations are based on data published by the Centers for Medicare and Medicaid Services (CMS), rate filings, and data collected from state-based exchanges. Actual premiums may vary depending on the specific plan chosen and the individual’s circumstances. Plans that include “non-essential benefits” such as dental or vision care may have higher premiums.

The Future of ACA Subsidies and Marketplace Stability

The expiration of the enhanced premium tax credits has sparked debate about the future of the ACA and the affordability of health insurance. While the current situation presents challenges for many enrollees, it also highlights the importance of ongoing efforts to stabilize the individual market and ensure access to affordable coverage.

Several potential solutions have been proposed, including extending the enhanced credits, increasing subsidies for cost-sharing reductions, and implementing policies to encourage greater competition among insurers. The ultimate path forward will likely depend on political considerations and the evolving dynamics of the healthcare landscape.

The KFF continues to monitor the impact of the tax credit expiration and provides updated information and analysis on its website. Individuals seeking to understand their options and find affordable coverage are encouraged to visit KFF’s website and explore the available resources.

What comes next: The Department of Health and Human Services (HHS) will continue to monitor enrollment trends and premium changes in the coming months. They will also be reviewing data on the impact of the tax credit expiration on different demographic groups and geographic areas. This information will be used to inform future policy decisions and potentially guide efforts to address affordability concerns.