Introduction to ACA Premium Increases

Millions of people who get health insurance through the Affordable Care Act (ACA) could soon face a significant increase in their monthly premiums as subsidies expire and insurers propose a major premium hike for 2026.

Background on ACA Subsidies

The enhanced subsidies, which came out of the 2021 American Rescue Plan, broadened the number of people eligible, including many in the middle class. The Inflation Reduction Act, passed in 2022, extended the subsidies through 2025. However, the domestic policy bill signed into law earlier this month did not extend them further. Subsidies for people with very low incomes that were put in place when the ACA was enacted will still be available.

Impact of Expiring Subsidies

Nearly 4 million people were projected to lose their coverage next year if the subsidies weren’t extended, according to a 2024 analysis from the Congressional Budget Office. A loss of coverage would also have implications for the cost of insurance. With fewer people enrolled, insurers would have to spread the costs among a smaller group of people, pushing premiums higher, said Edwin Park, a research professor at the Georgetown University McCourt School of Public Policy.

Proposed Premium Increases

Insurers that offer plans through the ACA are planning an average premium increase of 15% for 2026 — the largest increase in seven years, according to an analysis published from KFF, a health policy research group. The analysis is based on filings from more than 100 insurers in 19 states and Washington, D.C. Most ACA insurers are proposing premium increases of 10% to 20% for 2026. More than a quarter are proposing premium increases of 20% or more.

Higher Out-of-Pocket Costs

ACA enrollment reached a record high last year, totaling more than 24 million people, according to the Centers for Medicare & Medicaid Services. Much of that growth was from the extended subsidies, the agency said. The average monthly premium was $113, compared with $162 in 2020. What people actually end up paying out of pocket for their monthly premiums could increase, on average, by more than 75%, Larry Levitt, the executive vice president for health policy at KFF, said on a call with reporters last week.

Factors Affecting Premium Proposals

The subsidies on track to expire, however, aren’t the only factor insurers are taking into account in their premium proposals, KFF’s analysis found. They’re also concerned about the potential impact of tariffs on some drugs, medical equipment, and supplies. Insurers also cited the anticipated growth in the cost of health care services, according to KFF. They also mentioned the cost of GLP-1 drugs, a class of medications that include the blockbuster drugs Ozempic and Wegovy.

Conclusion

The expiration of enhanced subsidies and proposed premium increases could lead to higher out-of-pocket costs for millions of people enrolled in ACA plans. The finalized plans, including how much more people will be expected to pay each month, are usually published around August. With the potential for significant premium increases and the loss of coverage for millions, the future of the ACA remains uncertain.

FAQs

• Q: What is the average proposed premium increase for 2026?
  A: The average proposed premium increase is 15%, according to KFF.
• Q: How many people could lose their coverage if subsidies aren’t extended?
  A: Nearly 4 million people could lose their coverage, according to the Congressional Budget Office.
• Q: What factors are insurers considering when proposing premium increases?
  A: Insurers are considering the expiration of enhanced subsidies, potential tariffs on drugs and medical equipment, and the growth in health care service costs.
• Q: When will the finalized premium plans be published?
  A: The finalized plans are usually published around August.
• Q: How many people are currently enrolled in ACA plans?
  A: ACA enrollment reached a record high last year, totaling more than 24 million people.