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Category: Obamacare (ACA)

The Looming “Subsidy Cliff” and the Soaring Cost of Obamacare Coverage in 2026

Andy |

If you get your health insurance through the Affordable Care Act (ACA) Marketplace, you might be facing sticker shock during this year’s Open Enrollment. While the underlying cost of health coverage is undeniably rising, a massive policy change—the expiration of crucial pandemic-era subsidies—is set to hit millions of Americans’ wallets with a significant increase in 2026.

Here is a summary of the expected increases and what is driving them:

1. The Shocking Rise in Premiums

Insurance companies are proposing major premium hikes for ACA plans. The base cost (gross premium) for coverage on the Marketplace is increasing by an estimated 26% on average for 2026 plans.

However, the real blow for many will come from the net premium—the amount enrollees pay after financial assistance.

2. The Expiration of Enhanced Subsidies (The “Subsidy Cliff”)

The main catalyst for the massive increase in out-of-pocket costs is the scheduled expiration of the enhanced Premium Tax Credits (PTCs) at the end of 2025.

  • Massive Cost Shift: If Congress does not renew these enhanced subsidies, the average subsidized enrollee’s monthly premium payment is estimated to more than double, increasing by about 114% on average.
  • Real-World Impact: An analysis suggests the annual out-of-pocket premium for the average subsidized household could jump from approximately $888 to over $1,900 for 2026 coverage.
  • The Loss of the “No Cliff” Rule: Before the temporary enhancements, individuals with incomes above 400% of the federal poverty line were ineligible for any subsidy (a “subsidy cliff”). The enhanced credits removed this cliff. If they expire, these higher-income enrollees will face the full, unsubsidized cost of their plan, potentially paying tens of thousands of dollars more a year.

3. The Problem of High Deductibles

While monthly premiums capture attention, high deductibles remain a core issue for many ACA enrollees. Even with subsidized premiums, many families still face very high out-of-pocket maximums. For some lower-income families, deductibles can be set as high as $14,700 for a family of four.

Furthermore, as insurers and employers look for ways to offset rising gross costs, there is concern that a new wave of rising deductibles will be implemented to keep premium costs down, shifting more financial risk onto the consumer.

4. Why Are Underlying Costs Rising?

The subsidy expiration only exacerbates a pre-existing trend of rising healthcare costs. Key drivers include:

  • Inflation & Labor Costs: General economic inflation and rising costs for healthcare workers and services.
  • Specialty Medications: The increasing use and high price of expensive specialty drugs, particularly weight-loss medications like GLP-1s, are cited by insurers as a significant factor in premium increases.
  • Anticipation of Risk: Insurers are factoring in a higher-risk pool, anticipating that healthier individuals—who will see the sharpest price increases—will drop their coverage, leaving the Marketplace with a higher concentration of older and sicker people.

What to Do Next: As the Open Enrollment period is underway, it is critical for consumers to check their new premium costs and shop for plans, as the best value plan may have changed significantly from the previous year. Lawmakers continue to debate solutions, including proposals to extend the subsidies or redirect the funding directly to patients to help offset high out-of-pocket costs.

As a health insurance broker in Surprise, AZ I can help. Plans off exchange and outside the ACA are available.

Contact Andy Orlikoff Today!
623-742-3878
[email protected]

🚨 Sticker Shock: Understanding the High Cost of ACA Plans and the Subsidy Cliff

Andy |

🚨 Sticker Shock: Understanding the High Cost of ACA Plans and the Subsidy Cliff

 

The annual Open Enrollment period for the Affordable Care Act (ACA) Marketplace is here, and for many Americans, this year is bringing an unpleasant surprise: sticker shock. While the ACA remains a vital source of coverage for millions, the underlying cost of health insurance is rising, and a major federal policy decision is poised to make things even more difficult for consumers in the near future.

The conversation this year revolves around two critical factors: rising premiums and the looming expiration of the enhanced federal subsidies.

 

The Current High Cost of Coverage

 

Health insurance premiums across the board are on the rise. Several factors contribute to this:

Even with these increases, the true bombshell for many enrollees isn’t just the price of the plan itself—it’s what happens when you remove the financial cushion of the expanded tax credits.

 

The Critical Role of Enhanced Subsidies (and the Looming Cliff)

 

The federal government provides Premium Tax Credits (PTCs) to make Marketplace coverage affordable. This assistance is critical for the vast majority of ACA enrollees.

In 2021, Congress temporarily passed enhanced premium tax credits as part of the American Rescue Plan Act, which were later extended through the end of 2025 by the Inflation Reduction Act. These enhancements achieved two major things:

  1. They eliminated the “Subsidy Cliff”: They removed the previous income cap (400% of the federal poverty level, or FPL) for subsidy eligibility. This meant that middle- and higher-income families who faced very high-cost premiums could still receive help, ensuring no one paid more than 8.5% of their household income for a benchmark Silver plan.
  2. They made subsidies more generous: They lowered the percentage of income that all eligible households had to pay toward their premiums.

 

What Happens Next? The 2026 Subsidy Cliff

 

Unless Congress acts soon, the enhanced subsidies are scheduled to expire on December 31, 2025. This expiration will have dramatic consequences, reverting the system back to the original, less generous ACA subsidy structure for 2026.

According to health policy analysts, the changes will hit millions of Americans hard:

Household Income Category Pre-Expiration Reality (Through 2025) Post-Expiration Reality (Scheduled for 2026)
Above 400% FPL Subsidies available if the benchmark plan costs more than 8.5% of income. Lose ALL subsidies (The “Subsidy Cliff” returns).
Below 400% FPL Pay a smaller percentage of income toward the premium. Subsidy amounts will shrink; consumers will pay a higher percentage of their income toward the premium.

The average subsidized enrollee is projected to see their net annual premium payments more than double if the enhanced tax credits are allowed to expire. For a middle-aged couple earning just over the 400% FPL threshold, the annual premium shock could be in the tens of thousands of dollars.

 

Navigating Your Options in a High-Cost Environment

 

If you’re shopping on the Marketplace now, here is what you need to know:

  1. The Enhanced Subsidies are Still in Effect for Your 2025 Plan: You can still benefit from the lower caps and expanded eligibility for this year’s coverage.
  2. Shop Around, Every Year: Don’t auto-renew! Plans and prices change significantly year to year. You may find that a different plan—even from a different metal level (Bronze, Silver, Gold)—offers a lower net premium thanks to how the subsidy calculation works.
  3. Know Your Income Estimate: Your subsidy is based on your expected household income for the year you are seeking coverage. A slight overestimate or underestimate can greatly affect your eligibility and monthly premium amount.

The clock is ticking on the enhanced subsidies. For the millions who rely on the Marketplace, the affordability of health insurance in the coming years rests on a looming legislative decision.

 

If you have been priced out of the marketplace we can help.

2026 Open Enrollment: Americans fear spike in healthcare costs, making some Republicans nervy

Andy |

By Jeff Miller

For the past few weeks, Shana Verstegen has been “sick to her stomach” wondering what might happen to her family’s health insurance next year.

Ms Verstegen and her husband both work for a small business as fitness trainers, meaning they have to pay for their own plan.

The Wisconsin parents of two have saved an estimated $800 (£601) a month on their health insurance through Affordable Care Act, also known as Obamacare, premium tax credits.

Set to expire at the end of the year, the federal subsidies are now at the heart of the battle over the US shutdown. Democrats will not back a spending deal that reopens the government unless Republicans renew the subsidies.

Ms Verstegen and others are watching anxiously, wondering what kind of financial consequences they would face if a deal can’t be reached.

“Everything’s getting more expensive now anyway, and this would be another major hit for our family,” she said.

Health policy experts say time is running out to prevent millions from losing their health insurance because the price hikes will make it unaffordable.

The tax credits were first introduced through former President Barack Obama’s Affordable Care Act (ACA) in 2014 and then expanded during the Covid pandemic.

Some Americans could see their monthly cost of insurance – also known as a premium – rise by hundreds of dollars on 1 November, said Leighton Ku, a health policy professor at George Washington’s Milken Institute School of Public Health.

“If you are one of the 20 or so million people who’s getting your health insurance through the marketplace, if you’re about to see prices on average double, that’s a big deal,” he said. “It’s going to be too late real soon.”

Red states would be hardest hit

 

Of the roughly 24 million people who get their health insurance through the ACA Marketplace, a vast majority benefit from the premium subsidies.

Stacy Cox, a photographer in Utah, has saved over $10,000 a year on average since she started benefiting from the subsidies in 2022.

“It is an absolute lifeline for so many of us,” said Ms Cox, who has an autoimmune disease.

But if the tax credits are not extended, Ms Cox said she will have to quit her newly launched photography business and find a different job that provides health insurance.

Around seven million people like Ms Cox are expected to stop buying health insurance through the marketplace if the tax credits end, Ku said. Of those, around four to five million are expected to lose health care coverage altogether because they won’t be able to find other means, data suggests.

Many of those who will be affected are working-class people who don’t qualify for Medicaid, the government-run programme which provides healthcare insurance for low-income adults, children, pregnant women, elderly adults and people with disabilities.

The hardest hit could be those in 10 US states – most of which vote Republican – that have chosen not to expand eligibility for Medicaid.

“One of the political paradoxes of all this is that the places that get hurt the most are states that are more conservative,” said Ku.

If the subsidies expire and healthier people begin to opt out of insurance, that will also raise premium prices overall for Americans, as a sicker pool of customers will drive up healthcare costs, said Elizabeth Fowler, a distinguished scholar at Johns Hopkins Bloomberg School of Public Health.

“You start to get into a death spiral where premiums become even more expensive and more out of reach for more people,” she said.

Divisions emerge among Republicans

 

Some Republican leaders in Congress have maintained they will discuss the future of subsidies once the government reopens.

But at least a few Republicans want their party to take action now.

Representative Marjorie Taylor Greene, a close ally of President Donald Trump’s, has said she is in favour of the tax credits, adding that her own children’s premiums would go up if they end.

“I’m absolutely disgusted that health insurance premiums will DOUBLE if the tax credits expire this year,” the Georgia lawmaker said.

Republican Senator Lisa Murkowski this month introduced a bill to extend the credits for two years, while Senators Dan Sullivan and Tommy Tuberville are also in support.

Trump appeared open to negotiating with Democrats over their health care agenda, saying last Monday that if it’s “the right deal, I’d make a deal”. But he seemed to walk back those remarks later.

Experts said Republicans’ opposition to the subsidies is representative of their general dislike of the ACA, also known as Obamacare.

“Some of it has to do with the belief that it’s big government intrusion, and so they resent it for that,” Ku said.

In addition to the expiration of the tax credits, Republicans were also able to target the ACA this year through Trump’s tax and spending bill, which made steep cuts to Medicaid, changes Democrats are also seeking to reverse.

Republicans argue those cuts are aimed at eliminating waste, fraud and abuse of federal funding.

Time ticking to save subsidies

 

The deeper cuts to Medicaid are not expected to take effect for years but the Democrats who want the healthcare premiums to stay at current levels have to race against a looming deadline – the 1 November open enrollment period.

Some Republicans have argued that the subsidies can be resolved later since they only expire at the end of the year, but Ku said some health insurers have already changed their rates in response to the expiration, and may not be able to change them.

If the subsidies are not renewed before November, people will make their insurance decisions assuming their premiums are set to double, even if the credits are renewed at a later date.

“The mechanics of fixing this problem this late in the game are complicated,” Ku said.

Ms Verstegen said if her rates go up, her family will have to make financial sacrifices. Her family already has a deductible of $14,000, and she is still paying back a major hip surgery from two years ago.

“I truly believe that if this goes away next year, a lot of people are going to be very upset, and that’ll show up in elections,” she said.

Health care affordability was not a top issue in 2024 or other recent elections, as Americans have grown accustomed to accessing health insurance through the ACA.

But if people start to see their insurance prices rise, especially in red districts, that could prove a political liability for the Republican Party, Ku said.

“If I were a representative from Texas or Georgia, I would be feeling some doubts,” he said. “But in a game of chicken, you never want to show your doubts.”

Need assistance in finding affordable Health Insurance?

Contact: Andy Orlikoff

www.AZhealth.us

623-742-3878

Your Health Insurance IS Going To Increase By The Biggest Percentage in 15 Years!

Andy |

 

Your Health Insurance Is About to Get More Expensive—Here’s Why

 

If it feels like your health insurance costs are always going up, you’re not imagining it. According to a recent survey from Mercer, a consulting firm, health benefit costs are projected to increase by 6.5% in 2026—the highest jump in 15 years. This trend is a wake-up call for both employers and employees, as everyone’s wallets are about to feel the pinch.

 

What’s Driving the Price Hikes?

 

The rise in costs isn’t just due to one single factor; it’s a perfect storm of several powerful trends:

 

How Employers Are Responding

 

Facing these mounting costs, employers are looking for ways to manage their budgets. The survey found that a growing number of companies plan to make changes to their health plans in 2026. This often means raising deductibles and co-pays, which shifts more of the financial burden directly onto employees.

However, some employers are also exploring new strategies to curb costs without simply making their employees pay more. They are focusing on managing high-cost claims and using high-performance network plans, which guide employees toward a curated list of providers known for quality care and lower costs. At the same time, many companies are still prioritizing employee well-being by expanding access to mental health services.

 

What This Means for You

 

For most employees, these changes will mean a higher paycheck deduction for health coverage. On average, employees can expect to see their premium share rise by 6% to 7% in 2026.

This is why your next open enrollment period is more important than ever. It’s crucial to take a close look at all your options. You’ll need to balance the monthly premium with potential out-of-pocket costs like deductibles and co-pays. Choosing a high-performance network plan might seem restrictive, but it could save you a significant amount of money in the long run.

Don’t wait until the last minute. By understanding these upcoming changes, you can make an informed decision that protects both your health and your wallet.

I can help you with options.

Andy Orlikoff 623-742-3878

www.AZhealth.us

ACA health insurance will cost the average person 75% more next year, research shows

Andy |

See the report here: https://www.npr.org/sections/shots-health-news/2025/07/18/nx-s1-5471281/aca-health-insurance-premiums-obamacare-bbb-kff