If you're shopping for health insurance for 2026, you need to know this: we're facing the most significant marketplace disruption in years. Premiums are jumping by an average of 18-20% nationwide, and that's before we talk about the subsidy cliff that could double what you pay out of pocket. The enhanced ACA subsidies that have kept millions of Americans insured are set to expire on December 31, 2025, and as of now, there's no deal in Congress to extend them.
Here's what you're up against and what you need to do about it.
Why Premiums Are Skyrocketing in 2026
Insurance companies filed rate requests showing a median increase of 18%—the biggest jump we've seen since 2018. Some states are getting hit much harder. Arkansas tops the list with proposed increases averaging over 50%, while Delaware, Mississippi, New Mexico, and Indiana are also facing hikes above 30%.
Three main factors are driving these increases. First, healthcare costs are rising across the board—hospital expenses are climbing due to workforce shortages and inflation, and the growing use of expensive GLP-1 medications like Ozempic and Wegovy is adding to insurers' costs. Second, insurers are baking in an extra 4% increase specifically because they expect the enhanced subsidies to expire. Third, broader economic pressures including potential tariffs are creating additional cost uncertainty.
The variation by state matters. If you live in a state that didn't expand Medicaid and you're earning just above the subsidy threshold, you're about to face some of the steepest increases in the country.
The Subsidy Cliff: What December 31 Means for Your Wallet
Here's the situation: about 22 million people—92% of marketplace enrollees—currently receive premium tax credits. Right now, enhanced subsidies cap your premium payments at 8.5% of your household income, no matter how much you earn. That goes away on December 31, 2025.
If the enhanced subsidies expire, the average marketplace enrollee will see their annual premium payments jump from $888 to $1,904—more than doubling what they pay out of pocket. That's a 114% increase on average, and for some people, it'll be even worse. Middle-income families who were previously capped at 8.5% of income could suddenly face bills that represent 15% or more of what they earn.
Who gets hit hardest? Early retirees in their 50s and early 60s who aren't yet eligible for Medicare. Small business owners and self-employed workers. Middle-income households earning above 400% of the federal poverty level who previously had no subsidy cap. Black and Latino consumers who make up a significant portion of marketplace enrollment. The analysis shows that residents of states Trump won in 2024 will also be disproportionately affected.
Millions Could Lose Coverage Entirely
The Urban Institute estimates that 4.8 million people will become uninsured in 2026 when subsidies expire, with another 2.5 million shifting to other coverage options. The Congressional Budget Office puts the number at about 4 million newly uninsured. Either way, we're looking at the individual market potentially losing 11 to 14 million enrollees total—dropping enrollment to levels we haven't seen since the early years of the ACA.
This isn't just about individuals losing coverage. When millions of people drop their insurance, the whole marketplace becomes less stable. Healthier, younger people tend to be the first to leave when prices rise, which means the remaining pool of insured people is older and sicker. That creates a feedback loop where insurers raise rates even more the following year, causing more people to drop out.
The economic ripple effects are significant too. The Commonwealth Fund estimates that without an extension of enhanced subsidies, total state GDPs would fall by $34.1 billion and total economic output would decrease by $57 billion. Job losses could reach 340,000 positions.
What You Should Do Right Now
The open enrollment period runs from November 1, 2025, through January 15, 2026, in most states. If you want coverage that starts January 1, you need to enroll by December 15, 2025. That deadline has passed, but you can still enroll through January 15 for coverage starting February 1.
Don't assume your current plan is still your best option. Even if you're happy with your coverage, the landscape has shifted dramatically. Shop around on your state's marketplace or HealthCare.gov. Compare not just premiums but deductibles, out-of-pocket maximums, and provider networks. A plan that costs $50 less per month but has a $2,000 higher deductible might not actually save you money.
If you're facing a premium increase you genuinely can't afford, explore all your options. Check whether you qualify for Medicaid in your state—eligibility varies widely, and you might qualify even if you didn't before. If you're employed, ask your employer about group coverage, even if you previously declined it. Look into whether you're eligible for a catastrophic plan if you're under 30 or qualify for a hardship exemption. Going uninsured should be your absolute last resort, not your first response to sticker shock.
Finally, stay informed about what Congress does. While talks to extend the enhanced subsidies have stalled as of December 2025, that could change. If Congress acts to extend the subsidies retroactively, marketplace enrollees could see adjustments to their premiums and tax credits. But don't wait for Congress to act—get covered during open enrollment and adjust later if the situation changes.
