Health Insurance Premiums Set to Rise: What the Expiration of Tax Credits Means for You
A 4% average premium increase is just the beginning. Early rate filings for 2026 health insurance plans signal a significant shift is coming, driven by the impending expiration of enhanced premium tax credits established during the pandemic. These credits, which have made Affordable Care Act (ACA) coverage more accessible, are slated to disappear at the end of 2025, and insurers are already factoring that change into their pricing projections.
Decoding the Rate Filing Data
The Kaiser Family Foundation (KFF) recently examined 23 early insurer filings from Vermont, Oregon, Washington, and Washington, D.C. These filings, submitted to state regulators each summer, offer a first glimpse into how insurance companies are preparing for a post-credit landscape. While these four states don’t represent the entire nation, they provide valuable early indicators. The KFF analysis, available through the Peterson-KFF Health System Tracker, highlights that the anticipated loss of these subsidies is directly translating into higher projected premiums.
Why Are Tax Credits So Important?
The enhanced premium tax credits, a cornerstone of the American Rescue Plan, significantly lowered monthly health insurance costs for millions of Americans. They expanded eligibility for subsidies beyond the original income limits set by the ACA, making coverage affordable for a wider range of individuals and families. Without these credits, many will face substantially higher premiums, potentially pricing them out of the market.
The Ripple Effect: Beyond a 4% Increase
The 4% average increase identified by KFF is likely a conservative estimate. Several factors could push premiums even higher in 2026. These include continued rising healthcare costs, the aging of the population, and potential changes in the risk pool as individuals lose coverage due to affordability issues. The impact won’t be uniform; some individuals will experience much larger increases than others, depending on their income and location.
Understanding the Impact on Different Income Groups
Those earning just above the current subsidy eligibility threshold will be particularly vulnerable. They’ve been enjoying significant savings and will see those savings evaporate. Individuals and families who don’t qualify for any subsidies will also feel the pinch, facing the full brunt of premium increases. This could lead to a surge in enrollment in short-term, limited-duration plans, which offer less comprehensive coverage and aren’t subject to the same consumer protections as ACA plans.
What’s on the Horizon? Potential Scenarios for 2026
The future of health insurance premiums hinges on several key developments. Congress could choose to extend the enhanced tax credits, averting the projected increases. However, given the current political climate, that outcome is far from certain. Alternatively, policymakers could explore other options to mitigate the impact, such as increasing cost-sharing reductions or expanding Medicaid eligibility. Another possibility is a shift towards state-level solutions, with states implementing their own premium assistance programs.
The Role of State Regulators
State insurance regulators will play a crucial role in reviewing and approving rate filings. They have the authority to reject or modify proposed rates if they deem them unreasonable. However, regulators are often constrained by legal and political considerations. Increased transparency in the rate-setting process and greater public engagement could help ensure that rates are fair and justified.
Navigating the health insurance landscape is becoming increasingly complex. Understanding the factors driving premium changes and exploring all available options is essential for ensuring access to affordable, quality healthcare. What are your predictions for health insurance costs in 2026? Share your thoughts in the comments below!
