As Americans rang in 2026, a financial time bomb detonated in the health insurance market. The enhanced premium tax credits that had made Affordable Care Act coverage affordable for millions expired at midnight on December 31—and the consequences are already reverberating through household budgets across the country.
According to analysis by the Kaiser Family Foundation (KFF), the more than 20 million subsidized ACA enrollees are seeing their premium costs rise by an average of 114% in 2026. In dollar terms, that translates to an increase from an average of $888 per year in 2025 to $1,904 in 2026—an additional $1,016 annually, or roughly $85 per month.
The Politics Behind the Expiration
The enhanced subsidies, first enacted in the American Rescue Plan of 2021 and extended through the Inflation Reduction Act, were never made permanent. They required congressional reauthorization—and despite a dramatic 43-day government shutdown in late 2025, Democratic efforts to force an extension ultimately failed.
President Trump floated a potential compromise before backing off after conservative backlash. Four centrist House Republicans broke with party leadership to join Democrats in forcing a vote on a three-year extension, but with the Senate having already rejected such measures, the effort stalled.
"What we're seeing is the largest sudden increase in health insurance costs for any group of Americans in modern history. For many of these people, health insurance will simply become unaffordable overnight."
— Health Policy Analyst
Who Is Affected?
The subsidy expiration affects a diverse cross-section of Americans who don't receive health insurance through an employer and don't qualify for Medicare or Medicaid. This includes:
- Self-employed workers and freelancers
- Small business owners
- Farmers and ranchers
- Early retirees (under 65)
- Gig economy workers
- Part-time employees without benefits
The geographic distribution of the impact is uneven. Florida, with more than 4.7 million ACA enrollees, will see the largest absolute number affected. Texas follows with 3.9 million, then California, Georgia, and North Carolina.
The Coverage Cliff
Health analysts predict the higher premiums will drive many enrollees—particularly younger, healthier Americans—to drop coverage entirely. An analysis by the Urban Institute and Commonwealth Fund projected that approximately 4.8 million Americans would lose coverage in 2026 due to the subsidy expiration.
This creates a dangerous dynamic. As healthier individuals exit the insurance pool, the remaining population skews older and sicker. This drives up costs for those who remain, potentially triggering a "death spiral" that has long been the nightmare scenario for the individual insurance market.
Premium Impact by State (Average Annual Increase):
- Texas: +127% average increase
- Florida: +118% average increase
- Georgia: +115% average increase
- North Carolina: +112% average increase
- California: +98% average increase
Medicare Offers Mixed News
While ACA enrollees face skyrocketing costs, Medicare beneficiaries are receiving a more nuanced picture. Part B premiums are jumping nearly 12% to $206.50 per month—a significant increase. However, new negotiated drug prices taking effect January 1 are providing relief for some of the program's most expensive medications.
The 10 drugs covered by Medicare's first-ever price negotiations include popular medications like Eliquis, Xarelto, Jardiance, and Januvia. Out-of-pocket costs for these drugs are expected to fall by more than 50% on average, according to AARP analysis.
What Options Remain?
For Americans now facing unaffordable ACA premiums, options are limited but exist:
- Shop for cheaper plans: Bronze plans with higher deductibles may be affordable without subsidies
- Health sharing ministries: Not insurance, but may cover some costs
- Short-term health plans: Limited coverage at lower costs
- Medicaid eligibility: Income changes may qualify some for state programs
- Employer coverage: Consider positions that offer health benefits
The Road Ahead
The subsidy expiration is not necessarily permanent. Congressional dynamics could shift, and pressure from affected constituents in swing districts may force reconsideration. But for the millions of Americans already receiving their first post-subsidy premium notices, the crisis is immediate and real.
The Affordable Care Act, for all its controversies, achieved its highest enrollment ever in 2025—precisely because the enhanced subsidies made coverage affordable for middle-income Americans who had long fallen through the cracks. Without those subsidies, the program's future as a viable coverage option for the middle class is very much in question.
For household budget planning in 2026, health insurance has just become one of the most volatile line items. And for millions of Americans, the new year has begun with an unwelcome financial shock.
