How would expiration of 2025-era ACA subsidies affect uninsured and low-income households in 2026?
Executive summary
If Congress allows the enhanced ACA premium tax credits that expire at the end of 2025 to lapse, federal analyses and major research groups project large premium increases and millions of coverage losses in 2026: average marketplace premium payments could more than double (a 114% increase, about $1,016–$1,016–$1,904 per year in different estimates) and federal models put coverage losses in the range of roughly 2–5 million people becoming uninsured in 2026 (CBO ~2.2–3.8M; Urban Institute/others up to ~4.8–5M) [1] [2] [3] [4] [5].
1. A sudden return to pre‑2021 subsidy rules will raise premiums sharply
The temporary “enhanced” premium tax credits enacted in 2021 and extended through 2025 are scheduled to revert to the original ACA rules on January 1, 2026; that change increases required household premium contributions at nearly every income level and therefore reduces subsidy amounts [6] [7]. KFF’s modeling shows average out‑of‑pocket premium payments for subsidized enrollees would rise by roughly 114% (about $1,016 more annually on average), and the typical subsidized household that paid $888 in 2024–25 could pay about $1,904 in 2026 if enhancements lapse [1] [8].
2. Insurers and the market expect higher list premiums too, magnifying the shock
Analysts cite insurer rate filings and CBO modeling that predict higher “gross benchmark” premiums after healthier enrollees leave the market; CBO estimated gross benchmark premiums would increase by about 4.3% in 2026 and larger amounts thereafter without an extension, while state and insurer projections show higher rate requests already being filed for 2026 [9] [6] [8]. The interaction of rising list prices and smaller subsidies would compound the increase in what households actually pay [9] [8].
3. Coverage losses will be substantial but estimates vary by method
Multiple credible analyses converge that millions would lose marketplace coverage or become uninsured in 2026 if enhancements expire, but the magnitude differs: CBO and analyst summaries have cited roughly 2–3.8 million people losing coverage or becoming uninsured [3] [2], while Urban Institute and other recent work estimate larger impacts—up to about 4.8–5 million newly uninsured and as many as 7.3 million losing marketplace coverage depending on behavioral responses and the higher 2025 enrollment baseline [4] [5]. These differences reflect modeling choices about who drops coverage, substitution into other sources (employer coverage, Medicaid), and updated 2025 enrollment levels [3] [4].
4. Low‑income households and the “subsidy cliff” face the sharpest harm
The enhanced credits eliminated the cliff for people over 400% of the federal poverty level and capped premium shares at relatively low percentages of income; reverting to ACA rules restores the cliff and higher applicable percentages, which will particularly hurt middle‑income and near‑poor households and leave some older buyers facing very large percent increases [7] [10]. Analysts warn that many households above the cliff could see monthly costs jump dramatically and that enrollees under 100% FPL may not receive credits under 2026 rules in some contexts [1] [3].
5. Broader economic and system effects are likely but uncertain
Researchers project knock‑on effects beyond household budgets: job and economic estimates suggest large employment impacts and fiscal shifts if coverage drops and uncompensated care rises—one study projected hundreds of thousands of jobs affected and large federal budget implications tied to coverage changes—yet magnitudes depend on behavioral responses and any near‑term policy fixes [4] [3]. Available sources do not mention specific state‑by‑state mitigation efforts beyond insurers’ rate planning and federal rule changes already factored into models (not found in current reporting).
6. Conflicting numbers reflect timing, assumptions and recent enrollment surges
The spread in headline estimates—CBO’s roughly 2–3.8M versus Urban Institute’s up to 4.8–5M uninsured or larger numbers of people losing marketplace plans—stems from different base years, whether analyses use 2024 or record 2025 enrollment, and assumptions about who discontinues coverage versus shifts to other sources [3] [4] [5]. Reporters and policymakers should treat single estimates as plausible scenarios, not certainties, and note that updated 2025 enrollment materially raised some projections [5] [4].
7. What the evidence says about immediate choices for affected households
Sources stress that, absent a legislative fix, consumers face plan shopping and benefit trade‑offs: switching to lower‑cost plans, assessing eligibility for Medicaid (where applicable) or employer coverage, and using calculators like KFF’s to estimate 2026 costs [11] [1] [7]. Analysts also note that some households will be simply priced out and drop coverage—creating both public‑health and fiscal consequences emphasized in CBO and independent studies [9] [3] [4].
Limitations and context: these conclusions are drawn from government estimates and major research organizations cited above; differing modeling assumptions produce different numerical outcomes, and available sources do not report on any Congress action after the cited analyses [3] [4] [5].