If you buy health insurance through the ACA marketplace, you need to pay attention to what's happening in Washington right now. The enhanced subsidies that have made your coverage affordable since 2021 are scheduled to disappear on December 31, 2025. And if Congress doesn't act, your premium could more than double in 2026.
Here's what's actually happening, who's affected, and what you need to know before open enrollment for 2026 coverage.
What Are Enhanced Health Insurance Subsidies?
The Affordable Care Act has always offered premium tax credits to help people afford marketplace health insurance. But in 2021, the American Rescue Plan temporarily expanded these subsidies in two major ways. First, it removed the income cap—previously, if you earned more than 400% of the federal poverty level, you got nothing. Second, it increased the subsidy amounts for everyone, ensuring nobody pays more than 8.5% of their income for the benchmark silver plan.
Think of it this way: Before 2021, if you were a 60-year-old in Miami earning $62,000 a year, you'd be just over the 400% poverty line. Your marketplace premium might be $1,200 a month, and you'd get zero help paying it. With the enhanced subsidies, you'd qualify for assistance that caps your premium at about $440 a month. That's the difference between affordable coverage and going uninsured.
These enhanced subsidies were extended through 2025 by the Inflation Reduction Act. But unless Congress acts again, they expire on December 31, 2025. And we're talking about real money for real people—over 20 million Americans currently receive these subsidies.
What Happens If the Subsidies Expire in 2026
The numbers are stark. The Congressional Budget Office estimates that 3.8 million people will lose health insurance coverage if these subsidies aren't extended. The Urban Institute puts that number even higher at 4.8 million. But even if you keep your coverage, you're going to pay a lot more for it.
The Kaiser Family Foundation analyzed the impact and found that the average subsidized household currently pays $888 per year in premiums. In 2026, without enhanced subsidies, that same household would pay $1,904—a 114% increase. And that's just the average. Depending on your age, income, and where you live, your increase could be much steeper.
The return of the 400% federal poverty level cliff is particularly brutal. For 2026 coverage, that cliff sits at $60,240 for an individual, $81,760 for a couple, and $124,800 for a family of four. Earn one dollar more than these thresholds, and your entire subsidy disappears. You go from paying 8.5% of your income to paying full price, which in high-cost areas could mean $1,000 or more per month.
Why Florida and Texas Are Hit Hardest
Not every state feels this pain equally. Southern states, particularly Florida and Texas, are facing premium increases exceeding 30% for 2026—well above the national average of 20%. There's a reason for this geographic disparity, and it has everything to do with Medicaid expansion.
States that expanded Medicaid offer coverage to low-income residents earning up to 138% of the poverty level. Florida and Texas haven't expanded Medicaid, which means people who would qualify for Medicaid in other states have to buy marketplace plans instead. These states have huge marketplace populations that depend heavily on subsidies. When those subsidies shrink or disappear, the impact is devastating.
Eight of the ten states with the highest share of subsidized marketplace enrollees are in the South. These states also tend not to run their own marketplaces or operate reinsurance programs that help keep premiums down. The result is a perfect storm: higher baseline premiums, larger subsidized populations, and steeper increases when subsidies expire.
Who's Most Affected and Why
Older adults in their 50s and early 60s face the biggest sticker shock. Health insurance premiums increase with age, so a 60-year-old pays significantly more than a 30-year-old for the same plan. When subsidies shrink, older adults feel it most acutely. Many people in this age group aren't yet eligible for Medicare but are too expensive to insure at full price.
Middle-income households earning just above 400% of poverty are also in a tough spot. These are families earning what many would consider middle-class incomes—maybe a teacher married to a small business owner, or a couple of freelancers. They don't qualify for Medicaid, they don't get employer coverage, and starting in 2026, they won't get marketplace subsidies either. They're stuck paying full freight.
Self-employed people and gig workers also depend heavily on marketplace subsidies. Unlike employees with workplace coverage, they bear the full cost of insurance themselves. The enhanced subsidies have made it possible for millions of entrepreneurs, consultants, and independent contractors to afford health coverage. Losing those subsidies could force difficult choices between health insurance and business expenses.
What You Should Do Right Now
First, don't panic, but do pay attention. Congress may still extend these subsidies. The cost of a two-year extension is estimated at $60 billion, and a ten-year extension would cost $350 billion. There's bipartisan recognition that letting subsidies expire would be disruptive, but as of late December 2025, no action has been taken.
Use the subsidy calculator on Healthcare.gov or KFF.org to estimate what your 2026 premium would be with and without enhanced subsidies. Enter your current income, household size, age, and location. This will give you a concrete number to plan around, rather than worrying in the abstract.
If your income is close to a threshold—especially the 400% poverty level—consider whether you have any flexibility. This isn't about gaming the system; it's about understanding how income-based subsidies work. Contributing more to a traditional IRA or 401(k) reduces your taxable income. So does making Health Savings Account contributions if you're on a high-deductible plan. Even timing can matter—if you're self-employed, you might have some control over when you recognize income.
Shop carefully during open enrollment. Compare all available plans, not just the one you're currently on. Insurers adjust their offerings every year, and the plan that was the best deal in 2025 might not be in 2026. Look at total cost—premium plus deductible plus copays for the care you actually expect to use.
Finally, stay informed. This situation is fluid. Congress could act during a lame-duck session, early in the new year, or even retroactively. Sign up for email alerts from Healthcare.gov, and check back regularly as we get closer to January 1, 2026. Your health coverage is too important to leave to chance.
