What short-term and long-term options exist for consumers who lose ACA premium tax credits in 2026?
Executive summary
Millions of enrollees face sharply higher 2026 premiums if the enhanced ACA premium tax credits expire on Jan. 1, 2026; analyses project average premium payments could more than double and as many as 3.8–4.8 million more adults could become uninsured without Congressional action [1] [2]. Short-term fixes being discussed include hardship exemptions, exchange FSAs, or a temporary legislative extension; long-term options range from permanently extending enhanced credits to redesigning subsidy formulas or tightening eligibility—each path carries clear trade-offs for costs, coverage, and political feasibility [3] [4] [5].
1. Immediate pain: what happens to consumers in 2026 if enhancements lapse
If Congress does nothing, the temporary “enhanced” premium tax credits that lowered household contributions and expanded eligibility through 2025 will lapse on January 1, 2026, raising required premium contributions back toward earlier ACA levels and driving large premium increases for marketplace enrollees [6] [5]. KFF and other analysts estimate average marketplace premium payments would rise dramatically — in many cases more than doubling for individuals — and insurers have built an estimated median proposed rate increase of about 18% for 2026 into filings, compounding the shock for consumers [7] [8].
2. Short-term choices consumers can pursue right away
Consumers losing enhanced credits in 2026 can shop their Marketplace during open enrollment to switch to lower-premium plans or different metal levels, as advocates and insurers instruct; outreach and plan comparisons will be essential because estimated subsidies may change as late as October if Congress acts [9] [10]. HHS has signaled a 2026 “hardship exemption” for people who become newly ineligible for advance payments or cost-sharing reductions, which would expand access to catastrophic or alternative coverage pathways for some enrollees in the short run [3]. Private proposals being discussed—like pre-funded “exchange FSAs” that would let enrollees use credits for broader care needs—are framed as short-notice workarounds that proponents say could be implemented for plan year 2026, but those remain proposals, not widespread policy yet [4].
3. The political stopgaps lawmakers are debating
Congressional options in the near term include a short-term extension of the enhanced credits to buy time for negotiation, or targeted fixes (for example, preserving protections for lower-income enrollees while trimming benefits for higher-income households). Senate Republicans have reportedly discussed a short-term extension while other proposals seek new guardrails or income limits—each approach reflects competing political aims: preserving affordability (Democratic aim) versus limiting federal spending or reshaping eligibility (Republican aim) [11] [4].
4. Longer-term policy paths and their consequences
Beyond temporary extensions, analysts outline several durable alternatives: permanently extending the enhanced subsidy formula, reverting to pre-enhancement rules, redesigning subsidy indexing, or creating new mechanisms (such as Exchange FSAs) that change how assistance is delivered. Permanent extension would likely lower gross premiums by improving risk pools and reduce the number uninsured, but it would increase federal spending; expiration or rollback reduces federal outlays but risks large coverage losses and higher uncompensated care costs [5] [2].
5. Who stands to lose most — and why projections differ
Low- and middle-income households and older enrollees face the largest dollar increases because enhanced credits capped required contributions and expanded eligibility above 400% FPL; KFF examples show substantial increases for people at a range of incomes, and models estimate millions could drop coverage if affordability collapses [7] [12]. Different institutional projections (CBO, Urban Institute) vary in magnitude—CBO estimated about 3.8 million more uninsured on average over 2026–2034, while Urban Institute’s more recent estimate reached 4.8 million for 2026—reflecting differences in baseline enrollment and behavioral assumptions [2].
6. Practical advice for consumers navigating 2026
Prepare documentation and shop early: insurers and marketplaces advise gathering income proof (pay stubs, prior-year returns) and comparing plans during open enrollment since projected subsidies and premium estimates could change if lawmakers act late in the year [10] [9]. Use tools like KFF’s subsidy calculator to estimate 2026 out-of-pocket premiums under different scenarios so you can prioritize lower-premium plans, evaluate whether a hardship exemption applies, or consider alternative coverage if marketplace costs prove unaffordable [1] [3].
Limitations and open questions: reporting shows concrete short-term proposals (hardship exemption, exchange FSAs) and clear cost projections, but available sources do not provide final, enacted 2026 policies at this time—many options remain under negotiation and outcomes depend on Congressional action or administrative implementation [3] [4].