The enhanced premium subsidies introduced as part of the 2021 COVID-19 relief package have expired, leaving millions of Americans facing higher costs for health insurance in 2026. Here’s a breakdown of what’s happening and what you need to know:
1. What subsidies have expired?
- The enhanced premium subsidies enacted in 2021 as part of the American Rescue Plan have ended.
- These subsidies made coverage more affordable by:
- Reducing monthly premiums to 0 for lower-income Americans.
- Providing assistance to middle-class individuals for the first time.
- Allowing four out of five consumers to find 2025 plans for $10 or less per month.
2. What subsidies are still available?
- The original subsidies from the 2010 Affordable Care Act (ACA) remain in place. They limit monthly payments for the benchmark plan to no more than about 10% of enrollees’ household income for those earning less than 400% of the federal poverty level (around 128,600 for a family of four).
- Some states offer additional subsidies to eligible residents, which may help offset premium increases. For example:
- California: Providing $190 million to replace enhanced subsidies for many low-income enrollees.
- Massachusetts: Offering longstanding state subsidies for residents with incomes below 400% of the federal poverty level.
3. What should consumers do to prepare for 2026 coverage?
- Shop around: Update your income estimate and explore available plans on your state’s exchange or healthcare.gov.
- Consider alternatives: If premiums are unaffordable, explore less expensive options, such as plans with higher deductibles, narrower networks, or more restrictive HMOs. Be aware of short-term plans, but ensure they meet your medical needs.
- Get help: Contact an enrollment navigator, insurance broker, or agent to discuss your medical needs and budget. Be cautious of scams targeting concerned consumers.
- Act quickly: The open enrollment period for most states ends on January 15, 2026.
4. How is the subsidy lapse affecting enrollment?
- New enrollments are down, and terminations are up in many states.
- More people are switching to bronze plans due to their lower premiums, despite higher deductibles and out-of-pocket costs.
- Some consumers are forgoing coverage due to higher premiums, while others are struggling to make initial payments and may drop their policies.
- Exchange leaders expect a clearer picture of 2026 enrollment and the subsidy lapse’s impact by April 2026.
5. What happens if Congress extends the subsidies in 2026?
- State-based exchanges can update their systems if Congress acts in January, but it may take time.
- A straightforward extension of enhanced subsidies would be the quickest to implement. Changes to the subsidies, such as setting income limits or requiring minimum premium payments, could take longer.
- Exchanges will notify consumers about the enhanced subsidy renewal and allow them to sign up or switch plans.
6. Key takeaways
- Enhanced premium subsidies have expired, leading to higher costs for many Americans in 2026.
- Original subsidies and some state-funded subsidies remain available.
- Shop around, consider alternatives, and get help to find affordable coverage.
- Be cautious of scams targeting concerned consumers.
- Congress may extend enhanced subsidies in 2026, but implementation could take time.