Health coverage in the individual market changed materially this year, and the change is arithmetic rather than ideology: the enhanced premium tax credits created in 2021 and extended through 2025 expired at the end of last year, and were not extended.
Whatever you think of the policy, the effects on household budgets are measurable. Here is what happened and what your options are.
What changed and by how much
The enhanced credits had lowered the share of income that Marketplace enrollees paid toward a benchmark plan. With their expiration, the older subsidy schedule returned.
The measured results for 2026:
- The average monthly premium payment net of tax credits rose 58%, from $113 to $178.
- Analysts had projected a 114% increase for subsidized enrollees keeping the same plan; the smaller realized figure reflects that many enrollees bought down to bronze plans with lower premiums and higher deductibles, and that some enrollees left the market entirely.
- Average deductibles grew by about $1,000 per person, as enrollees shifted into higher-deductible plans.
- The share of enrollees receiving premium tax credits fell from 92% to 87% — the first decline since 2020.
The subsidy cliff is back
This is the change that hits hardest and surprises the most people.
Under the enhanced credits, no household paid more than a set percentage of income for a benchmark plan regardless of income level. That cap is gone. Subsidy eligibility now ends abruptly above 400% of the federal poverty level.
The result is a genuine cliff rather than a slope. A household one dollar over the threshold loses the entire subsidy. For older enrollees in their 50s and 60s — who face the highest age-rated premiums — full-price coverage can consume a fifth or more of household income, and in some markets considerably more.
Enrollees with incomes above the cliff made up about 7% of 2025 enrollment but accounted for nearly half of the drop in plan selections for 2026.
The practical implication: if your income lands near 400% FPL, your exact modified adjusted gross income matters enormously. Legitimate ways to reduce MAGI — traditional IRA or 401(k) contributions, HSA contributions, deductible self-employment expenses — can be worth thousands of dollars in restored subsidy. Run this calculation before year-end, not at tax time.
How to lower your costs
1. Check whether you qualify for cost-sharing reductions
Enrollees under 250% FPL who choose a silver plan get cost-sharing reductions that lower deductibles and out-of-pocket maximums substantially. These are only available on silver. Buying bronze to save premium can forfeit thousands in reduced cost-sharing — one of the most common and expensive mistakes on the Marketplace.
2. Compare total expected cost, not premium
The right comparison is: annual premium + expected out-of-pocket costs, capped by the plan’s out-of-pocket maximum. A bronze plan with a $500 lower annual premium and a $4,000 higher deductible is worse for anyone who uses meaningful care.
3. Check the network before enrolling
Verify your doctors and hospitals are in-network on the specific plan, and check the drug formulary for your prescriptions. Networks narrowed in many markets. An out-of-network specialist can undo any premium savings in a single visit.
4. Consider an HSA-eligible plan if you’re healthy and can fund it
High-deductible plans paired with a Health Savings Account offer a triple tax advantage — deductible contributions, tax-free growth, tax-free qualified withdrawals — and the balance rolls over indefinitely. This works well for healthy people with cash to contribute and badly for people who will skip needed care to avoid the deductible.
5. Check Medicaid and CHIP eligibility
Eligibility thresholds vary by state. Children often qualify for CHIP at household incomes well above adult Medicaid thresholds.
6. Look at every alternative channel
Employer coverage (including a spouse’s), COBRA (expensive but preserves your network), a professional or trade association plan, or a spouse’s plan during their open enrollment. Compare rather than assuming the Marketplace is your only option.
7. Report income changes during the year
Premium tax credits are reconciled at tax time. Underestimating income means repaying credits; overestimating means you paid more than necessary all year. Update the Marketplace when your income changes.
A caution on non-ACA plans
Short-term limited-duration plans, health care sharing ministries and fixed-indemnity products advertise low monthly costs. They achieve those costs by not being comprehensive insurance: they can exclude pre-existing conditions, cap benefits, decline renewal after a claim, and omit essential health benefits.
They can be a legitimate stopgap for a healthy person bridging a short coverage gap. They are a serious financial risk as a substitute for comprehensive coverage. Read exactly what is excluded before enrolling, and understand that sharing ministries are not insurance and carry no guarantee of payment.
Frequently asked questions
When is open enrollment? Marketplace open enrollment typically begins 1 November. Outside that window you need a qualifying life event — job loss, marriage, birth, moving, loss of other coverage — for a special enrollment period.
What if my income drops mid-year? Report it to the Marketplace immediately. You may qualify for a larger subsidy, or for Medicaid, right away.
Can I be denied for a pre-existing condition? Not on ACA-compliant plans. Short-term and non-ACA products can exclude them.
Will the enhanced credits come back? That is a live legislative question with no settled answer. Plan on the rules as they currently stand and follow developments.
What’s the penalty for going uninsured? There is no federal penalty, though a few states impose their own. The real cost of going uninsured is exposure to unlimited medical bills.
Before open enrollment
Estimate next year’s income carefully, check where it falls relative to 400% FPL, and if you’re close, look at what legitimate pre-tax contributions could do. Then compare plans on total expected cost with your own doctors and prescriptions plugged in.
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