How will subsidy changes in 2026 impact low-income families, seniors, and people with preexisting conditions?
Executive summary
If Congress does nothing, enhanced ACA premium tax credits that have cut average marketplace premiums more than half will sunset at the end of 2025, driving average after-subsidy premium payments up 114% (from $888 in 2025 to $1,904 in 2026) and putting millions at risk of losing coverage—analysts estimate between roughly 2.2 million and up to nearly 5 million could become uninsured depending on the model [1] [2] [3]. Separately, 2026 changes to Medicare’s Low-Income Subsidy (Extra Help) change benchmark premiums and copays in ways that will help some Medicare beneficiaries but also require redeterminations and plan shopping [4] [5] [6].
1. The cliff: who faces the biggest immediate hit
Low- and middle-income marketplace enrollees will see the sharpest and most immediate financial pain if enhanced premium tax credits expire: KFF estimates average subsidized enrollee premiums would more than double in 2026—a 114% increase from $888 to $1,904 annually if enhancements lapse [1]. Multiple analyses warn older enrollees, households above 400% FPL in 2025, and people in high-premium states face particularly large increases and could lose subsidies entirely if income exceeds the reinstated 400% cap [7] [8] [9].
2. Coverage losses and job‑market ripple effects
Think beyond monthly bills: modeling finds letting enhanced subsidies lapse could push millions uninsured and ripple into the economy. Commonwealth Fund updates estimate nearly 5 million people could become uninsured in 2026 under some scenarios and project job losses tied to coverage and spending shifts; CBO-based analyses and other groups project millions losing coverage as well [2] [3]. These are not identical estimates—different methods and assumptions explain the range—but all point to sizable coverage loss risks [2] [3].
3. Seniors and Medicare beneficiaries: some targeted relief, some new admin burdens
Medicare’s Extra Help/LIS program will have specific 2026 adjustments: CMS and plan analyses show changes to benchmark Part D premiums across regions (33 regions lowering benchmarks, one rising) and updated copay caps—e.g., $4.90 per fill for some beneficiaries under 100% FPL—helping out-of-pocket drug costs for many low‑income seniors [4] [5] [10]. At the same time, routine redeterminations and eligibility processes will require beneficiaries and plans to navigate paperwork and possibly re‑enroll to keep benefits effective in 2026 [6].
4. People with preexisting conditions: coverage protections remain but costs and access may worsen
Marketplace rules still require plans to cover preexisting conditions, so the legal protections against denial of coverage remain in 2026 [11] [12]. But analysts warn that if healthier people leave the market because of higher premiums, remaining enrollee pools could be sicker and premiums could rise further, increasing costs for people who need care—meaning preexisting-condition protections exist in law but affordability and plan choice could erode [13] [14].
5. Practical choices families will face in 2026
If subsidies shrink or vanish, many low-income families and people with chronic conditions will confront stark trade-offs: stay in plans with higher premiums, switch to narrower or high‑deductible plans, seek Medicaid if eligible, or become uninsured. Advisors and insurers already urge timely enrollment decisions because open enrollment deadlines and system programming mean consumers will see 2026 prices immediately when they shop [15] [16] [17].
6. Policy debate and uncertainty shape outcomes
The ultimate impacts depend on politics: policymakers have proposed multiple fixes—temporary extensions, targeted phase‑outs, or alternatives—and the White House and Congress have been negotiating different approaches that could alter eligibility and benefit design [18] [19] [20]. Analysts note permanent extension raises long‑term federal costs while offsetting coverage losses; failure to act leaves large short‑term household and market shocks [9] [1].
7. What reporting does and does not say (limits and open questions)
Available sources quantify premium and coverage scenarios and detail Medicare LIS adjustments, but they do not provide precise, universally agreed single estimates of coverage loss—the numbers vary by model and assumptions [2] [1] [3]. Sources also do not spell out every state‑level administrative contingency (not found in current reporting); consumers should watch state marketplaces for their plan‑specific notices and the December 15/January 15 enrollment deadlines highlighted by analysts [21] [15].
Bottom line: unless Congress or the administration alters the subsidy framework, low‑income families and many with preexisting conditions confront sharply higher premiums and a meaningful risk of losing coverage in 2026, while most low‑income Medicare beneficiaries will see mixed but tangible changes to drug subsidy benchmarks and copays that help some but require paperwork and plan review [1] [7] [4] [5].