As open enrollment for Affordable Care Act (ACA) coverage begins on Saturday Americans are about to find out the reality of the much discussed health insurance premium increases.
Just how much more Americans with ‘Obamacare’ coverage will pay depends on a multitude of factors, including which state they live in and the type of policy they are looking to purchase.
But the issue is driving a fierce political standoff in Congress over the future of key subsidies.
Premiums for ACA coverage are set to increase by an average of 26% next year, one of the largest jumps since the program’s debut. However, this overall rate hike is quickly being overshadowed by warnings that millions of enrollees could see their actual out-of-pocket costs more than double if enhanced premium tax credits expire at the end of the year.
The Trump administration has attempted to counter warnings of sticker shock by arguing that base-level plans remain affordable compared to years before the pandemic.
According to a memo sent to congressional offices, the administration is claiming that Marketplace enrollees next year will have access to plans with lower premiums after original tax credits, and more plan choices overall, compared to prior to the COVID-19 pandemic.
The Centers for Medicare & Medicaid Services (CMS) are projecting the average premium after original tax credits to be $50 per month for the lowest cost plan next year.
While this average figure is $13 more than the average cost in 2025, the administration memo argues it is $20 less than the average premium from 2020, before the enhanced, COVID-era subsidies were enacted.
The CMS fact sheet noted that nearly 60% of enrollees signing up for 2026 coverage can find plans at or below $50 a month, after factoring in the original subsidies.
“When compared to years prior to the COVID-19 pandemic, Marketplace enrollees this year will have access to, on average, plans with lower premiums after tax credits and more plan choices overall,” the memo states.
But despite the administration’s focus on the lowest-cost plans, health policy researchers and state officials warn that the impending expiration of the COVID-era enhanced premium tax credits, introduced by the Biden administration, will hit consumers receiving financial assistance drastically.
KFF estimates that if these enhanced tax credits expire, currently subsidized enrollees will see their monthly premium payments more than double, increasing by about 114%, on average.
“This reflects people with incomes below four times the poverty level receiving less financial assistance and those with incomes over four times poverty no longer being eligible for financial assistance at all and therefore being hit by a double whammy of lost tax credit and higher insurer premiums,” KFF reported this week.
State exchanges are already reflecting this expected shock. In California, monthly premium payments will rise 97 percent on average if there is no subsidy deal, according to Jessica Altman, executive director of Covered California.
In New Jersey, premiums will soar to more than $2,780 annually—a jump of more than 174%, on average. In Idaho, average out-of-pocket premiums are expected to rise by $1,200 a year, a 75 percent increase.
In Washington state, net premiums will increase 65 percent on average for enhanced premium tax credit recipients.
Without the enhanced subsidies, a family of four in the Denver area earning about $128,000 would no longer qualify for premium assistance and would see their annual premium bill soar by $14,000 for the standard silver plan.
The overall rise in the amount health insurers are charging for coverage on the ACA Marketplaces—the estimated 26% average increase—is driven by several factors. Insurers selling employer coverage cite similar pressures, including increasing hospital costs, the rising popularity of expensive GLP-1 drugs like Ozempic, and the threat of tariffs.
However, the impending subsidy expiration is an additional factor specifically driving up ACA Marketplace premiums. Insurers cited this expectation in their 2026 filings, stating they would charge about 4 percentage points more, on average, than they otherwise would have. This higher rate is charged because insurers expect healthier people to drop Marketplace coverage if the enhanced financial assistance disappears.
The average benchmark (second-lowest cost) silver premium, which is used to calculate the original tax credit, is rising 17% in states that run their own Marketplaces, and an average of 30% in states that use Healthcare.gov.
The subsidies are credited with helping drive enrollment to a record 24 million this year but such taxpayer support is at the center of the government shutdown. Democrats are demanding Republicans renew the enhanced tax credits, while Republicans insist that negotiations will not begin until the government is reopened.
Democrats and ACA advocates warn that delaying the decision risks widespread loss of coverage, as consumers seeing higher premiums during window shopping may opt out entirely.
Covered California’s Altman expressed the urgency: “I don’t really feel like I can mitigate the sticker shock, because the sticker shock is real right now,”. She added that if people decide to go without insurance, even if a subsidy deal is later reached, “it will be fewer people that we get back the longer this goes,”.
Commissioner Justin Zimmerman of New Jersey’s Department of Banking and Insurance warned that higher costs could force difficult choices.
“Consumers will soon be shopping and comparing health plans, and without these enhanced tax credits, they will be confronted by startlingly higher prices for coverage,” he said in a statement.
“We are significantly concerned that many households will be forced to choose plans with lesser coverage or choose no coverage at all as a result,” he added.
But that is a point that some Republicans have argued is a positive with Florida Governor Ron DeSantis arguing that healthy young people should consider low premium ‘catastrophic’ coverage rather than pay for coverage they rarely use.
Republicans have expressed willingness to negotiate on an extension, but only with policy changes implemented. Senate Majority Leader John Thune (R-S.D.) has been a vocal critic of the current structure, arguing that the lack of controls has fostered fraud.
“They [the enhanced subsidies] didn’t have an income limit. … They have zero-premium policies, so people don’t even know they’re covered. Insurance companies are incentivized to auto-enroll people, and so it’s become a money maker factory for insurance companies,” Thune told conservative commentator Ben Shapiro.
Proposed Republican changes include capping eligibility at a certain income level and requiring recipients to make a minimum premium payment to eliminate $0 premium plans that they say encourage fraud and “phantom enrollees”.
However, state administrators say this is the wrong time for major structural changes.
Jeanne Lambrew, a former key health adviser in the Obama administration said: “It’s just not an on/off switch….at this point, we’re just past the point where I think major changes to the premium tax credits could be implemented for Jan. 1”.