On the first Monday of January, millions of Americans opened their health insurance bills and found a number they didn’t recognize. Across the 22 million households enrolled in Affordable Care Act marketplace plans, monthly premiums had jumped, in many cases nearly doubling, after Congress allowed the enhanced premium tax credits to expire at the end of 2025. The subsidies had been in place for nearly five years. Now they’re gone, and the financial hit is landing squarely on people who buy their own coverage.
The average household is projected to absorb an estimated $1,016 more per year in premium costs, according to pre-expiration modeling by KFF (formerly the Kaiser Family Foundation). Because CMS has not yet released post-expiration enrollment or premium data, that figure remains a projection rather than a confirmed average. Still, the structural subsidy changes that would produce increases of that magnitude are now in effect for self-employed workers, gig economy participants, early retirees, and anyone else who depends on the individual market for health coverage.
To put the projected $1,016 annual increase in context, the Bureau of Labor Statistics reported that the average U.S. household spent roughly $1,058 more on food at home in 2025 compared with 2020, and median asking rents rose by more than $2,400 annually over the same period, according to Census Bureau data. A four-figure jump in health insurance premiums lands on top of those already-stretched budget lines, not in isolation.
How the subsidies worked and why they ended
The enhanced credits were created by the American Rescue Plan Act of 2021, signed during the COVID-19 recovery. The law made two significant changes to the ACA’s subsidy structure: it eliminated the income cap that had previously cut off premium tax credit eligibility at 400% of the federal poverty level (roughly $62,400 for an individual in 2025), and it reduced the maximum share of income any enrollee had to pay toward a benchmark silver plan to 8.5%. People earning below 150% of the poverty level owed nothing toward their premiums.
The Inflation Reduction Act of 2022 extended those provisions through December 31, 2025. Both laws contained explicit sunset dates, meaning the expanded eligibility and lower contribution percentages were always scheduled to lapse unless Congress passed new legislation.
No new legislation came. IRS guidance on the premium tax credit confirms that for tax years 2021 through 2025, eligibility was temporarily broadened. For 2026, the rules have reverted to their pre-2021 structure. Households earning above 400% of the federal poverty level no longer qualify for any marketplace subsidy. Those below the cap face steeper required contributions as a percentage of income.
Who is absorbing the biggest increases
The projected cost increase is not hitting everyone equally. KFF’s analysis identified two groups facing the sharpest premium spikes: middle-income enrollees earning between 250% and 400% of the poverty level, who now owe a significantly larger share of their income toward premiums, and those above 400% FPL, who lost subsidy eligibility entirely and must pay the full unsubsidized price.
The numbers get stark quickly. For a 60-year-old earning $60,000 a year, the annual premium increase could exceed $3,500 in high-cost states, according to KFF’s estimates. Younger, lower-income enrollees face smaller dollar increases, but even a few hundred dollars a year can be unaffordable for someone earning $35,000 with no employer coverage.
“The expiration of enhanced subsidies represents the single largest overnight increase in consumer health care costs since the ACA marketplaces launched,” said Larry Levitt, executive vice president for health policy at KFF, in a KFF analysis of the subsidy lapse. Cynthia Cox, KFF’s vice president and director of the ACA program, noted in the same analysis that enrollees above 400% of the poverty level “will go from paying a capped percentage of their income to paying the full sticker price, which in many cases is thousands of dollars more per year.”
A Congressional Research Service brief explains the underlying mechanics: without an extension, the federal formula reverts to requiring many households to devote a higher percentage of income to benchmark premiums before any subsidy applies. The CRS report does not project state-by-state enrollment losses but confirms the structural shift is substantial.
For enrollees who still qualify under the narrower, pre-2021 rules, the picture is less alarming. A CMS fact sheet for Plan Year 2026 projects that tax credits will still cover an average of 91% of the lowest-cost silver plan premium for eligible buyers, with the average after-credit cost sitting at about $50 per month. But that figure applies only to people who qualify under the old income rules, not to the millions who gained or maintained coverage solely because of the expansion.
The data gap: what we still cannot measure
As of June 2026, several critical data points remain unpublished. CMS has not yet released post-January 1 enrollment files broken down by income band, so the precise number of households that have dropped marketplace coverage, switched to cheaper plans, or moved to employer-sponsored insurance is still unknown. The Congressional Budget Office projected in its March 2025 baseline that an estimated 3 to 4 million people could lose coverage following the expiration, but actual figures won’t be available until CMS publishes updated enrollment data later this year.
Consumer behavior adds another layer of uncertainty. Some enrollees may not fully grasp the impact until they reconcile advance premium tax credits on their 2026 tax returns, potentially triggering repayment obligations if their actual income exceeds what they estimated during enrollment. Others have already responded by downgrading to bronze-tier plans with higher deductibles or by dropping coverage for younger, healthier family members. None of these decisions are yet visible in federal datasets.
State-level effects are similarly unclear. States with large shares of enrollees between 200% and 400% FPL, particularly those that did not expand Medicaid under the ACA, may see increased numbers of uninsured residents rather than Medicaid referrals. That pattern will only become measurable once state programs release their own 2026 enrollment snapshots.
Where Congress stands on a fix
Several bills to restore or permanently extend the enhanced credits have been introduced in both chambers, but none had advanced past committee as of late May 2026. The political math is difficult: extending the subsidies would cost an estimated $335 billion over a decade, based on CBO scoring of the Inflation Reduction Act’s subsidy provisions and subsequent extension proposals scored in 2024 and 2025. Deficit concerns have stalled negotiations in both parties.
Some lawmakers have proposed narrower alternatives, such as restoring credits only for enrollees below 300% FPL or phasing out the expansion over several years rather than ending it abruptly. None of these alternatives have secured enough support to reach a floor vote.
The next open enrollment period begins in November 2026. If no legislation passes before then, insurers will set 2027 premiums based on the current subsidy structure, potentially baking in lower enrollment assumptions that could push unsubsidized prices even higher. That feedback loop, where fewer enrollees lead to higher per-person costs, which drive away more enrollees, is the scenario health policy analysts have warned about since the ACA’s early years.
Steps affected enrollees can take before November open enrollment
If your marketplace premium jumped in January, there are concrete steps worth taking before the next enrollment cycle.
Recalculate your subsidy eligibility. Update your income estimate on HealthCare.gov or your state exchange. If your income has dropped or your household size has changed, you may still qualify for a credit under the reverted rules.
Compare plans aggressively. Switching from a silver to a bronze plan can lower monthly premiums substantially, though it means higher out-of-pocket costs when you actually use care. For relatively healthy enrollees, the trade-off may be worth it in the short term.
Check Medicaid eligibility. In the 40 states (plus D.C.) that expanded Medicaid, adults earning up to 138% of the federal poverty level qualify. If your income has changed since you last enrolled, you may now fall within that range.
Revisit employer-sponsored options. If you have access to coverage through an employer, a spouse, or a domestic partner, compare the total cost, including premiums, deductibles, and out-of-pocket maximums, against your marketplace plan. The math may have shifted dramatically since the last time you checked.
The policy scaffolding that kept premiums low for nearly five years has been removed. For millions of households, the question is no longer whether costs are going up, but how they will absorb the increase while Washington decides whether to act.
