Millions of Americans are facing significant increases in health insurance premiums and out-of-pocket costs for 2026. This comes as open enrollment periods are underway for employer-sponsored plans, Medicare recipients, and those purchasing coverage through the Affordable Care Act (ACA) marketplace. Understanding these changes and making informed decisions is crucial to managing healthcare expenses.
Key Takeaways
- ACA marketplace premiums could rise 114% if enhanced subsidies expire.
- Employer-sponsored plan deductions may increase by 6.5%, the largest jump in 15 years.
- Reviewing 2025 medical spending is vital for planning 2026 coverage.
- Comparing high-premium/low-deductible versus low-premium/high-deductible plans is essential.
- Consider Health Savings Accounts (HSAs) or Flexible Spending Accounts (FSAs) for tax advantages.
ACA Marketplace Faces Major Premium Hikes
Individuals and families relying on the ACA marketplace for health insurance could see dramatic cost increases. Premiums for these plans are projected to climb by an average of 114% if enhanced subsidies, which are currently a key issue in government funding debates, are allowed to expire at the end of 2025.
Approximately 22 million of the 24 million ACA marketplace participants, including many self-employed individuals and small-business owners, currently receive these premium tax credits. The potential expiration of these subsidies directly impacts their affordability.
Important Statistic
ACA insurers are already raising premiums for next year by an estimated 26% on average. This increase is partly due to the expectation that healthier individuals might drop coverage if the enhanced subsidies are no longer available.
Health policy analysts advise caution when viewing current premium quotes. Louise Norris, a health policy analyst, noted that the prices seen today might not be the final cost. "If those subsidy enhancements get extended, or if they get modified and extended, you might end up paying a different premium than what you’re seeing now," Norris explained.
For those enrolled in ACA plans, it is wise to delay final enrollment decisions until closer to the December 15 deadline, setting a reminder to recheck prices in late November. This allows time to see if Congress extends or modifies the subsidies, potentially leading to lower costs.
Employer-Sponsored Plans Also See Increases
The majority of Americans, about 165 million people, get their health insurance through their employers. While these plans typically see more moderate increases compared to the ACA marketplace, employees are still facing notable hikes.
Payroll deductions for employer-sponsored health coverage are expected to rise by an average of 6.5% for 2026. This represents the steepest increase in 15 years, according to findings from global consulting firm Mercer.
"It’s invisible for a lot of people because it’s paycheck deduction," said Zach Teutsch, founder of Values Added Financial. He highlights how these increases can often go unnoticed until a closer look at pay stubs.
Why Costs Are Rising
Several factors contribute to the escalating costs. Insurers face rising healthcare service prices, increased demand for medical care, and the ongoing uncertainty surrounding government subsidies. These elements push premiums higher across all types of plans.
Steps to Prepare for 2026 Enrollment
With costs on the rise, millions of Americans must make careful choices about their health insurance. Financial advisors and health policy experts offer key steps to take before enrolling for 2026 coverage.
1. Review Your 2025 Healthcare Spending
Before looking at 2026 options, it is important to tally your out-of-pocket costs for 2025. This includes co-payments, medical bills, prescriptions, and even over-the-counter expenses. Tracking these expenditures helps estimate potential 2026 costs and determine the type of coverage you will need.
2. Assess Your Health Needs and Plan Changes
Even if your insurer offers the same plan options, premiums and deductibles likely increased. Your health needs may also have changed. Check if your current providers remain in-network and understand coverage for out-of-network services. A new diagnosis, such as a chronic illness, or a planned surgery might require a different plan to better manage costs.
3. Compare High-Premium/Low-Deductible vs. Low-Premium/High-Deductible
Many employer plans offer two main choices: pay more upfront with higher premiums and a lower deductible, or pay less upfront with lower premiums and a higher deductible. A deductible is the amount you pay before your insurance begins to cover costs.
- High-premium, low-deductible plans: These are often suitable for individuals with ongoing health issues or those who anticipate frequent medical care. You pay more each paycheck but less when you need services.
- Low-premium, high-deductible plans: These plans can save money for healthy individuals who rarely visit the doctor. However, they carry a higher financial risk if a major medical event occurs. For ACA plans, bronze level plans often fall into this category.
The Risk of Being Uninsured
Experts strongly advise against being uninsured. An emergency room visit or intensive care stay can quickly reach six figures. "The idea of a multi $100,000 hospital bill is not uncommon at all," said Louise Norris. "It’s one thing to set up a payment plan with the hospital to pay off, say a $7,000 deductible. It’s a totally different thing when you’re looking at trying to set up a payment plan for a $400,000 bill."
4. Explore Direct Primary Care (DPC) Options
For those with chronic care needs or who visit the doctor more often, a direct primary care physician can be an alternative or addition to a bronze-level health insurance plan. DPC involves a monthly subscription fee, typically $50 to $150, which covers basic primary care visits and may include services like lab work and X-rays.
Carolyn McClanahan, a physician and certified financial planner, explains that DPC payments are cash-based and do not count toward your deductible. "It never goes under insurance. It’s basically cash pay," she said. It is important to ask questions to ensure the DPC doctor is a good fit for your needs and personality.
5. Utilize Tax-Advantaged Accounts: FSAs and HSAs
Two powerful tools for managing healthcare costs are Flexible Spending Accounts (FSAs) and Health Savings Accounts (HSAs).
- Flexible Spending Accounts (FSAs): If your employer offers an FSA, you can contribute pre-tax dollars to pay for eligible out-of-pocket medical expenses, co-payments, deductibles, prescriptions, and vision or dental care. This lowers your taxable income and allows you to pay for healthcare with money that would otherwise have been taxed.
- Health Savings Accounts (HSAs): HSAs are another tax-advantaged option for medical, dental, and vision expenses, but they require enrollment in a qualifying high-deductible health plan. Unlike FSAs, HSA funds roll over year to year and can be invested for long-term growth, offering a triple tax advantage: tax-deductible contributions, tax-free growth, and tax-free withdrawals for qualified medical expenses. Recent legislation has expanded access to HSAs through more marketplace health plans.
Navigating the complex landscape of health insurance requires careful consideration and proactive planning. By understanding the potential cost increases and utilizing available tools and strategies, Americans can make more informed decisions to protect their health and their finances.
