Health Insurance Premiums Set to Surge 15% in 2026 Due to Expiring Tax Credits

Health insurers are preparing to impose the largest premium increases since 2018, influencing the cost of health insurance obtained through marketplaces such as Healthcare.gov and the state-based ACA exchanges. These anticipated increases are primarily driven by the impending expiration of enhanced premium tax credits and heightened policy uncertainties surrounding the Affordable Care Act (ACA).

As insurers submit their proposed rate increases to state regulators, the median premium increase across over 100 ACA Marketplace insurers is projected to reach 15% for the 2026 plan year. The rate hikes reflect a combination of rising healthcare costs and strategic adjustments in anticipation of a sicker risk pool. Enhanced premium tax credits, set to expire at the end of 2025, have been crucial in improving affordability of coverage for ACA enrollees since the COVID-19 pandemic. Insurance providers assert that the end of these subsidies could lead to a significant rise in out-of-pocket premium payments, estimated to surge by an average of over 75%. Such an increase might prompt healthier individuals to forgo coverage, thereby amplifying the cost pressure on remaining policyholders.

The impact of policy changes extends beyond subsidies. Insurers also cite potential cost escalations due to tariffs on pharmaceuticals and medical supplies, with an estimated average impact of 3% on their proposed premium rate increases. The uncertainty surrounding these tariffs further accentuates the financial challenges insurers are navigating as they make pricing decisions for the upcoming year.

In prior years, enhanced premium tax credits facilitated lower monthly payments for ACA enrollees by expanding eligibility and decreasing the portion of income paid toward premiums. Without legislative action to extend these subsidies, many insurers project an additional 4% increase in premium rates to offset higher anticipated losses due to a reduction in covered populations. This expected shift in the demographic profile of the insured could lead to a sicker overall risk pool, exerting upward pressure on premiums.

Regional differences in rate proposals are evident, as some insurers in states like Maryland report filing rate increases from as low as 8.1% to as high as 66% in New York, underscoring variability in market conditions and insurer strategies. The initial rate filings, which remain subject to state regulatory review and potential adjustments, will become more definitive as the open enrollment period approaches later this year.

The broader financial implications for consumers are significant, particularly as many face both premium increases and reduced financial assistance from federal tax credits. With pressures mounting on system affordability, affected individuals may be compelled to consider alternative coverage options such as high-deductible plans, which offer lower monthly premiums but require higher out-of-pocket contributions before insurance coverage commences.

A critical decision point remains with Congress, which can choose to extend enhanced tax credits and thereby influence the stability of the health insurance landscape. Discussions continue on potential legislative measures that could provide relief, though options vary widely and carry distinct fiscal impacts.

Overall, the upcoming 2026 plan year represents a challenging period for both insurers and consumers, marked by an intersection of rising healthcare costs, shifting policy landscapes, and significant financial considerations tied to premium affordability and subsidy availability. Insights and decisions in the coming months will shape the trajectory of the ACA marketplaces and the accessibility of health coverage for millions of Americans.