How will 2026 subsidy changes affect monthly premiums and out-of-pocket costs for low-income families?
Executive summary
If Congress does not extend the enhanced premium tax credits, the 2026 rules will reinstate the 100–400% of federal poverty level (FPL) eligibility band and use sliding required-contribution percentages that cap benchmark-plan premiums at roughly 2% of income at 100% FPL up to about 9.96% at 300–400% FPL — a change that researchers and analysts say could double average post-subsidy premiums for many households and push some families into losing all premium aid [1] [2] [3]. Separately, Medicare’s Low-Income Subsidy (“Extra Help”) will change copays, resource limits and enrollment rules for 2026 in ways that help some beneficiaries but may require reapplications or paperwork for others [4] [5] [6].
1. What’s actually changing in ACA premium subsidies for 2026 — the rulebook returns
Under current law, the temporary “enhanced” premium tax credits that removed the 400% FPL cap through 2025 are scheduled to expire, which would restore the pre-2021 framework: subsidies are available only for households with incomes between roughly 100% and 400% of the federal poverty level and the consumer’s required premium share rises with income (examples: ~2% of income at 100% FPL up to ~9.96% at 300–400% FPL) [2] [1]. Analysts warn this restoration means many middle-income households who were receiving assistance in 2025 would lose it in 2026 unless Congress acts [2] [7].
2. Immediate effects on monthly premiums for low-income families
For households within the 100–400% FPL band, subsidies will be recalculated under the sliding caps, which limits the share of income that must be paid for the benchmark (silver) plan — e.g., 2% at 100% FPL rising to 9.96% near 400% FPL — so some low- and lower-middle-income families will still see premiums constrained to a manageable share of income under this formula [1]. But multiple sources project average post-subsidy premiums could rise markedly in 2026 relative to 2025 if enhanced credits lapse, meaning even families who remain eligible may face higher monthly payments depending on age, plan choice and geography [1] [3].
3. Who loses the most — the cutoff at 400% FPL is decisive
Families just above the 400% FPL threshold would lose all premium tax credits under the restored rules; reporting shows that could turn sizable monthly subsidies into zero overnight for households whose incomes cross that line, producing thousands of dollars in added annual cost for some middle-income families (for example, illustrative couple examples used by local reporting) [7] [3]. Meanwhile, those below 100% FPL in expansion states mostly qualify for Medicaid and are generally unaffected by marketplace subsidy mechanics [1].
4. Out‑of‑pocket costs beyond premiums — cost sharing and plan choice matter
Premium tax credits are tied to the benchmark silver plan; reductions in credits can push families into cheaper bronze plans or make them forgo coverage, which increases exposure to deductibles, copays and out‑of‑pocket spending. The Bipartisan Policy Center and other analyses show average premium changes obscure large variation by age and region — meaning real-world out-of-pocket exposure could jump sharply for particular families even if headline subsidy formulas remain [3] [1].
5. Medicare beneficiaries and the Low‑Income Subsidy: mixed relief, new hoops
For Medicare Part D enrollees, CMS updated resource limits, copay ceilings and subsidy parameters for 2026 that reduce some prescription costs (for example, low-income beneficiaries paying no more than $4.90 per fill under certain thresholds) and raised resource limits for Extra Help, which helps some low-income seniors with premiums and drug cost-sharing [4] [6]. But outreach and enrollment procedures are changing: some people who were auto-enrolled in 2025 may lose automatic status and must reapply or respond to notices to retain benefits [5].
6. How big could the dollar impacts be — illustrations from reporting
Policy briefs and local reporting give concrete examples: analyses show families at modest incomes who paid nothing in 2025 could see premiums rise to a few percent of income in 2026 (a family of four at 140% FPL cited an increase to $1,607/year), while other illustrative households could see tens of thousands in added premiums if their previous cap (8.5% of income) vanishes and no subsidy applies [3] [7]. These are illustrative scenarios; exact impact depends on household size, age, location and plan selection [1].
7. What families should watch and do now
Monitor congressional action: Congress could extend or modify enhanced credits, which would change everything described above [2]. If you rely on marketplace subsidies, use calculators and update your Marketplace income estimate if circumstances change; review enrollment windows because some rules around year‑round enrollment and documentation are tightening [2] [8] [9]. Medicare enrollees should open any CMS or SSA mail and reapply promptly if required to avoid losing Extra Help [5] [6].
Limitations: available sources do not provide a universal per-family dollar figure because results vary by age, plan, state and household. Legislative action between now and 2026 could alter or avert these effects; provided reporting describes likely outcomes under current law [2] [1] [3].