A 45-year-old nonsmoker earning $55,000 a year in Georgia paid about $120 a month for a benchmark silver health plan in 2025, according to rate filings available through the HealthCare.gov plan comparison tool. This year, that same plan costs north of $350. The reason: enhanced premium tax credits that kept Affordable Care Act marketplace coverage affordable for roughly 20 million people expired at the end of 2025, and no replacement has followed.
The fallout is now measurable. Premiums have climbed an average of 26% nationally, based on analyses of state-level insurer rate filings tracked by the KFF and other health policy organizations. The Urban Institute projects that 4.8 million Americans will become uninsured as a direct result, a figure independently cited by the Associated Press and the Commonwealth Fund.
“We are looking at the single largest disruption to individual market coverage since the ACA’s major coverage provisions took effect,” said Michael Karpman, a senior research associate at the Urban Institute’s Health Policy Center, in a statement accompanying the institute’s coverage-loss projections.
The federal government has finalized new marketplace rules it says will bring costs down. But the gap between a regulatory fix targeting enrollment fraud and the sheer scale of the subsidy cliff raises a blunt question: who can still afford to stay covered?
How the subsidy cliff works
Enhanced premium tax credits were first created under the American Rescue Plan during the COVID-19 pandemic and later extended through the Inflation Reduction Act. They capped what enrollees owed for a benchmark silver plan at a fixed percentage of household income, regardless of age or geography. For lower-income households, that often meant $0 or near-$0 monthly premiums. For middle-income earners above 400% of the federal poverty level who previously got no marketplace help at all, the credits made individual coverage viable for the first time.
Those enhanced credits expired on December 31, 2025. As of May 2026, no replacement legislation has been enacted. The marketplace has reverted to the original ACA subsidy formula, which phases out entirely for households above 400% of the federal poverty level, roughly $62,400 for a single adult in 2026. A family of four earning $75,000 could see annual premium costs rise by $4,000 or more, depending on their state and the ages of family members.
The Urban Institute’s modeling shows the damage extends well beyond individual budgets. As healthier and younger enrollees drop coverage because of price increases, the remaining risk pool skews older and sicker. Insurers then raise rates further to cover higher average claims, which pushes out another wave of enrollees. Actuaries call this an adverse selection spiral. The institute projects that 7.3 million fewer people will hold subsidized marketplace coverage in 2026, a figure that includes both the 4.8 million who become uninsured and others who shift to employer plans, Medicaid, or thinner coverage options.
What the new federal rule actually does
In response to rising costs and enrollment irregularities, the Centers for Medicare and Medicaid Services finalized the Marketplace Integrity and Affordability rule earlier this year. The full text is published in the Federal Register under document number 2025-11606, and CMS says the rule is designed to lower individual health insurance premiums by cracking down on improper enrollments.
The problem it targets is real. Rapid enrollment growth in recent years brought a surge of reports that brokers were signing people up for plans without their knowledge or consent, sometimes using stolen identity information. Those unauthorized enrollments inflated insurer costs and, by extension, premiums for legitimate enrollees. The new rule introduces stricter identity verification at sign-up, limits on special enrollment period use, and tighter oversight of the brokers and agents who facilitate enrollments.
What the rule does not do is replace the lost subsidies. CMS frames the regulation as a cost-reduction tool, but the agency has not published projections showing how much premiums will actually fall in dollar or percentage terms as a result. The enhanced tax credits delivered tens of billions of dollars in annual premium support. Even an effective fraud crackdown operates on a fundamentally different scale. This rule is a legitimate intervention, but it is not a substitute for the financial assistance that just disappeared.
Where key data gaps remain
The 26% average premium increase is derived from analyses that aggregate state-level insurer rate filings, but no single official CMS actuarial table has confirmed that national figure yet. State insurance departments publish rate approvals on different timelines, and the weighted average depends on enrollment-mix assumptions that vary by analyst. The direction and general scale are consistent across multiple independent analyses, but the precise magnitude will sharpen once CMS releases its own post-enrollment premium summary for the 2026 plan year.
State-by-state variation matters enormously. States that expanded Medicaid may see smaller net coverage losses because some people dropping marketplace plans will qualify for Medicaid instead. States running their own exchanges with supplemental subsidies, like California and Massachusetts, may partially cushion the blow for their residents. But the Urban Institute’s published projections are national-level; granular state or demographic breakdowns have not been released publicly.
Rural communities face particular risk. In counties with one or two insurers, there is little competitive pressure to hold rates down, and provider networks are already thin. Health policy researchers widely expect rural areas to absorb steeper disruptions, though the scale of those effects has not yet been documented in primary research specific to the 2026 plan year.
Notably, none of this affects the roughly 155 million Americans who get health insurance through an employer. The subsidy expiration and the marketplace rule changes apply only to the individual market. But for gig workers, self-employed individuals, early retirees, and anyone else who depends on the ACA marketplace, the shift is dramatic.
What Congress has and hasn’t done
As of May 2026, no legislation extending or replacing the enhanced premium tax credits has been signed into law. Several bills were introduced in both chambers during 2025, but none advanced past committee. The political dynamics are familiar: extending the credits carries a significant budget cost. The Congressional Budget Office estimated roughly $335 billion over a decade for a full extension in its 2024 scoring of proposed legislation, and negotiations have stalled over how to offset that spending.
Without congressional action, the subsidy structure reverts to its pre-2021 form indefinitely. That means the 2026 premium shock is not a one-year event. Unless something changes legislatively, the same affordability gap will persist into 2027 and beyond, and the adverse selection pressures identified by the Urban Institute will continue to compound year over year.
What households shopping for coverage can actually do
For the millions of Americans affected, the practical reality is stark. Anyone who enrolled in a marketplace plan for 2026 during open enrollment last fall locked in premiums that already reflect the subsidy expiration. Those who qualified for a special enrollment period in early 2026 faced the same higher rates. People who dropped coverage because of cost now face the risk of medical debt or delayed care, with no clear timeline for relief.
Some options remain. Households whose income has dropped may qualify for Medicaid in the 40 states (plus Washington, D.C.) that have adopted the expansion. Short-term health plans, while offering less comprehensive coverage and fewer consumer protections, are available in most states at lower premiums. Health care sharing ministries and direct primary care arrangements exist as alternatives, though neither qualifies as minimum essential coverage under federal law. And anyone experiencing a qualifying life event, such as a job loss, marriage, or move, can still enroll in a marketplace plan mid-year, though the sticker price will reflect the new, higher baseline.
The enhanced tax credits were worth an average of roughly $700 per month to the households that received them, according to HHS data from the 2024 open enrollment period. No regulatory rule, however well-designed, can close a gap that large.
Why the 2027 budget cycle is the next pressure point for marketplace affordability
Congressional leaders will face renewed pressure to address marketplace affordability before the next open enrollment cycle begins in the fall. The 2027 budget process represents the most likely legislative vehicle for any extension or restructuring of premium tax credits. Until then, millions of Americans are navigating a health insurance market that just got significantly more expensive, with no guarantee that help is on the way.
