ACA Premiums Are Set To Spike For Some In 2026—How To Lock In Savings Now

Forbes

3 days ago

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Millions of Americans could lose a tax credit that saves them thousands of dollars on ACA Marketplace health insurance by the end of the year.
The tax credit, initially expanded under the American Rescue Plan during the pandemic and later extended through 2025 by the Inflation Reduction Act, saw expanded eligibility beyond the income cap of 400% of the federal poverty level starting in 2021. These subsidies capped out-of-pocket premiums to no more than 8.5% of income for those who qualified.
Unless Congress acts, the expanded eligibility will expire at the end of the year, creating what experts are calling a 'subsidy cliff' for enrollees with incomes above the 400% income threshold.
The 2024 Open Enrollment report from the Centers for Medicare and Medicaid Services found enrollees at 400% of the federal poverty level saved an annual average of $4,248 on their health premiums. Losing eligibility for this tax credit could leave many Americans facing unaffordable health insurance costs.
The Centers for Medicare and Medicaid Services reports the subsidy expansion of the tax credit led to increased enrollment in the ACA Marketplace, particularly in low-income communities and states that hadn't previously embraced the program.
According to Kaiser Family Foundation, since 2020, enrollment in the ACA Marketplace has more than doubled, with 88% of the total growth—11.4 million out of 12.9 million new enrollees—in enrollment came from states won by Trump in 2024. States like Texas, Mississippi, West Virginia and Georgia saw their enrollment numbers more than triple.
A household of two earning up to $84,600 (400% of the poverty level) currently qualifies for the tax credit. But if their income increases in 2026, they'll lose their eligibility that saves them $500 on monthly health insurance premiums—or $6,000 annually.
'It's one of the more lucrative credits that are out there for individual taxpayers,' says Tommy Lucas, a certified financial planner at Moisand Fitzgerald Tamayo.
Talks to extend the enhanced tax credit have stalled in Congress, with House Republicans 'balking' at the thought, according to a Politico report . That means households already teetering past 400% of the federal poverty line—or those that know they'll exceed it next year—need to start making a financial plan now to stay within the income threshold limits.
The battle, financial experts say, begins at the tax office. A few potential tax planning steps to take include: Tax loss harvesting : This investment method means investors sell investments that have lost value to help cancel out the taxes on their gains. Look at your portfolio to identify investments that are down and see if selling them could lower your tax bill.
This investment method means investors sell investments that have lost value to help cancel out the taxes on their gains. Look at your portfolio to identify investments that are down and see if selling them could lower your tax bill. Leverage health savings accounts : You can claim tax deductions through contributions made to a health-savings account (HSA). With the new tax law that passed under the One Big Beautiful Bill Act, all Bronze and catastrophic plans under the ACA are considered HSA-eligible, starting in 2026. 'For single-filers, you can contribute $4,300, for families, the maximum is $8,550. There's a $1,000 catch-up contribution for those 55 and older, so you can effectively reduce and back away from the cliff by that amount,' says Lucas.
You can claim tax deductions through contributions made to a health-savings account (HSA). With the new tax law that passed under the One Big Beautiful Bill Act, all Bronze and catastrophic plans under the ACA are considered HSA-eligible, starting in 2026. 'For single-filers, you can contribute $4,300, for families, the maximum is $8,550. There's a $1,000 catch-up contribution for those 55 and older, so you can effectively reduce and back away from the cliff by that amount,' says Lucas. Max out retirement contributions in tax-deductible accounts: One of the most effective ways to lower your taxable income is to contribute to a 401(k) or IRA, which offer upfront tax breaks. In 2025, individuals can contribute up to $23,500 to a 401(k) (plus an extra $7,500 if you're 50 or older), and up to $7,000 to a traditional IRA ($8,000 with the catch-up). 'This deferral of earnings will lower your taxable income exposure,' said Bill Shafransky, a senior wealth advisor at Moneco Advisors and a member of the Financial Planning Association.
Lucas recommended turning to tax experts and services that can help enrollees navigate the 'complicated' process to keep their income within means. While individuals can and should file using free or low-cost tax software , a little expertise could go a long way.
'This is going to potentially be thousands of dollars in cost, so always talk to a professional who knows the ins and outs of this,' says Lucas. 'Open enrollment is coming up pretty soon in November, so start planning now.'