Millions of Americans are bracing for a sharp increase in health insurance costs as enhanced federal subsidies for Affordable Care Act (ACA) plans are set to expire at the end of the year. The change could force many to make difficult choices between their health coverage and other essential expenses, with some facing premium hikes of over 100%.
The expiration of these pandemic-era subsidies, combined with an average rate increase of 26% from insurers for the upcoming year, is creating a perfect storm for the 24 million people enrolled in ACA marketplace plans. For many, the financial shock could mean forgoing insurance altogether, a decision with potentially life-altering consequences.
Key Takeaways
- Enhanced ACA subsidies, which lowered insurance costs for millions, are scheduled to expire at the end of 2025.
- Policyholders could see their monthly premium payments more than double on average, according to health policy experts.
- The rising costs are forcing individuals and families to consider dropping coverage, choosing high-deductible plans, or cutting back on essential care.
- The issue is a point of contention in Washington D.C., with the extension of the subsidies tied to federal funding negotiations.
The Financial Precipice for Policyholders
The enhanced subsidies, first enacted in 2021, were instrumental in driving ACA enrollment to a record 24 million people this year. By capping what a household pays for a benchmark plan as a percentage of their income and extending eligibility to more middle-class families, the assistance made coverage affordable for many who were previously priced out. More than 90% of all enrollees currently receive some form of financial aid.
Without an extension, the financial landscape will change dramatically. According to analysis from KFF, a nonpartisan health research organization, premium payments are projected to more than double on average. This increase will not be felt evenly, with certain demographics facing particularly severe financial strain.
Lower-income individuals, many of whom currently pay little to nothing for their plans, could suddenly face monthly bills of several hundred dollars. For this group, which makes up nearly half of all enrollees, such an increase represents a significant portion of their disposable income.
Personal Stories of Financial Distress
The numbers translate into real-world anxiety for people across the country. Elizabeth Wick, a 57-year-old therapist from Arlington, Texas, received notice that her monthly premium will jump from $862 to $1,380. With her current $400 subsidy likely disappearing, she fears the increased cost will force her to close the private practice she recently opened to find a job with employer-sponsored benefits.
“Health insurance will determine what my life will look like, whether or not I can continue with my private practice,” Wick said, highlighting the deep connection between healthcare access and economic stability.
The situation is even more dire for those with serious health conditions. Sunni Montgomery, 63, is battling lung cancer and relies on her ACA plan for chemotherapy and regular scans. Her premium is set to skyrocket from a manageable $541 per month to an impossible $1,758.
“I have to face the reality that I am probably going to become a late-stage cancer patient who’s uninsured,” Montgomery said. “I have fought this so hard. I want to live.”
By the Numbers: The Subsidy Impact
- 26%: The average rate hike proposed by insurers for 2026 ACA plans.
- 90%: The percentage of the 24 million ACA enrollees who receive premium subsidies.
- $20,000: The potential annual premium increase for an older couple making $85,000 a year, according to KFF analysis.
The Agonizing Choice to Go Uninsured
Faced with premiums that would consume a large portion of their income, some families are making the difficult decision to drop their health insurance entirely. Chris and Donna Vetter of Somerset County, Maryland, saw their monthly premium quote jump from $401 with subsidies to $1,975 without them.
Chris, 62, and Donna, 60, both manage chronic conditions—atrial fibrillation and asthma, respectively. They have concluded that they have no choice but to go without coverage. “I’m just scared, and I don’t know what to do,” Donna said. “If anything should go wrong — God forbid a car accident, heart attack, cancer — we’ll have nothing.”
This sentiment is echoed by others who are now weighing the risks of forgoing preventative care, skipping medications, and hoping to avoid a medical emergency. Even younger, self-employed Americans are feeling the squeeze.
Kris McKegney, a 23-year-old accountant from Vermont, would see his premium for his current plan increase from $300 to $1,250 a month. He is now considering a catastrophic plan with a high deductible, which would mean paying out-of-pocket for most of his medical needs. “The tax credits have helped millions of people access health care, and it seems very cruel to then take that away,” McKegney stated.
Understanding the ACA Subsidies
The Affordable Care Act of 2010 established premium tax credits to help people afford health insurance purchased on the marketplace. The original subsidies were available to those earning between 100% and 400% of the federal poverty level. The enhanced subsidies, passed as part of the American Rescue Plan Act in 2021 and later extended, removed the 400% income cap and increased the amount of assistance for those already eligible, making coverage significantly more affordable.
Life Decisions Dictated by Insurance Costs
The looming subsidy expiration is not just a financial issue; it is influencing major life decisions. In Bethlehem, New York, Nolan LeRoux and Emily Clute, both 35, recently got married. They have considered not filing their marriage license because they would likely qualify for more financial aid as individuals than as a married couple under the old subsidy rules.
Their combined premium is set to be over $1,360 per month. As a barber and a tattoo artist, they are now contemplating working more hours just to afford their health coverage, a prospect that dampens the excitement of their new life together.
“There are not many things health care-wise that are particularly affordable,” LeRoux said, explaining their reluctance to go uninsured. “It’d be a lot of stress because I don’t know exactly how we would pay for a medical bill that was in the five figures.”
As the end-of-year deadline approaches, the fate of the enhanced subsidies remains uncertain, caught in a political stalemate on Capitol Hill. For millions of Americans like the Vetters, Wick, and Montgomery, the outcome of these negotiations will have a direct and profound impact on their health, finances, and future.
