Millions of Americans who buy their own health coverage on the Affordable Care Act marketplace are bracing for a second straight year of steep premium increases after Congress let enhanced federal subsidies lapse at the end of 2025. The nonpartisan Congressional Budget Office projects that gross benchmark premiums will climb roughly 7.7% in 2027 if the credits stay expired, compounding a 4.3% increase already built into 2026 plans. The pain lands hardest on people in their late 50s and early 60s who buy coverage on their own before qualifying for Medicare, and on middle-income households that lost financial help entirely once the enhanced credits disappeared.
Why the Extra Help Disappeared
The enhanced premium tax credits were created in 2021 during the pandemic and extended through 2025 by the Inflation Reduction Act. They lowered the share of income marketplace enrollees had to pay toward a benchmark plan and, for the first time, opened subsidy eligibility to households earning more than 400% of the federal poverty level. Congress did not extend the enhanced credits before they expired on Dec. 31, 2025, reverting subsidy rules to the smaller, pre-2021 formula.
KFF estimates the reversal alone will roughly double what subsidized enrollees pay out of pocket in 2026, from an average of $888 in 2025 to $1,904 this year — a 114% jump once rising base premiums are factored in. Enrollees above 400% of poverty lose their subsidy altogether, a group KFF describes as facing a “double whammy” of paying full price for a plan that also costs more than it did a year earlier.
Insurers, meanwhile, are not standing still. Marketplace carriers proposed a median rate increase for 2026 that health researchers called the largest since 2018, blaming both rising medical costs and the uncertainty created by Congress’s inaction on the credits.
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What the CBO Projects for 2027
The Congressional Budget Office, in an analysis widely cited by health-policy researchers on both sides of the debate, estimates that if the enhanced credits remain expired, gross benchmark premiums nationwide will climb 7.7% in 2027, on top of the 4.3% increase already underway this year.
The agency also projects the ranks of the uninsured will grow by 2.2 million people in 2026 and by 3.7 million more in 2027, compared with a scenario in which the credits had been extended, as some enrollees conclude the higher net cost is no longer worth paying and drop coverage.
Premium increases typically take time to fully reach consumers because insurers phase in rate changes gradually and many enrollees are automatically re-enrolled in an existing plan rather than shopping for a cheaper one, which is part of why the CBO models a larger jump in the second year than the first.
Who Faces the Biggest Increases
Age matters more than almost any other factor in the marketplace. Federal rules let insurers charge older enrollees up to three times what they charge a 21-year-old for an identical plan, so losing a subsidy compounds a premium that was already higher to begin with. Using KFF’s premium calculator, a 60-year-old couple earning $85,000 a year — just above the old 400% poverty cutoff — would see their annual premium payment rise by more than $22,600 in 2026 alone once the enhanced credit disappears.
Households sitting right at 400% of the federal poverty level face what researchers call a subsidy cliff: anyone even slightly above that income line now pays the full unsubsidized premium, because the enhanced credit’s expanded eligibility above that threshold expired along with everything else.
Younger and lower-income enrollees are not exempt from the shift either. A worker earning around 128% of poverty in a state that has not expanded Medicaid could see a benchmark premium payment go from zero to several hundred dollars a year, according to KFF’s modeling, because even the base subsidy formula changed when the enhanced credits lapsed.
What Actually Happened When 2026 Enrollment Opened
Early data from the 2026 plan year, the first to run without the enhanced credits, show how the projected pain is already landing. Marketplace sign-ups fell by more than a million people to 23.1 million during the 2026 open-enrollment period, the sharpest single-year drop since the ACA marketplaces launched in 2014, according to KFF’s analysis of CMS and state-exchange enrollment data. Consumers earning just above the 400% poverty subsidy cliff made up only 3% of 2025 sign-ups but accounted for 27% of the coverage lost between the two years, with sign-ups in that narrow income band falling 44%, or more than 321,000 people.
The actual increase in what enrollees pay came in lower than KFF’s original 114% projection: premium payments net of tax credits rose 58% on average, from $113 to $178 a month, largely because hundreds of thousands of people bought down to cheaper, higher-deductible bronze plans instead of absorbing the full increase, and because many of those facing the steepest increases dropped coverage entirely. The tradeoff shows up in deductibles, which are a separate out-of-pocket cost from the monthly premium: the marketplace-wide average jumped 37%, or just over $1,000 per person, to a record $3,786 in 2026, as the share of enrollees choosing bronze plans climbed from 30% to 40% and silver-plan selection fell to a record-low 43%.
The decline was not uniform across states. Sign-ups fell 22% in North Carolina and 20% in Ohio, among the steepest drops nationally, while New Mexico saw an 18% increase after the state moved to temporarily backfill the lost federal subsidy with its own money — evidence that a state’s willingness to spend its own funds can now determine whether a marketplace shopper’s bill goes up or down heading into the 2027 plan year.
None of this is locked in. Congress could still act to extend or restore the enhanced credits before the 2027 plan year begins, and lawmakers in both parties have raised the issue since the subsidies expired. But with no legislation enacted as of late August, insurers are already filing 2027 rates around the higher-cost scenario, and open enrollment for 2027 marketplace coverage begins Nov. 1 — the point at which the CBO’s 7.7% estimate stops being a projection and starts showing up in the prices consumers actually see.
This article was researched and drafted with the assistance of artificial intelligence.
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