Obamacare premiums are poised to jump next year, driven by expiring federal subsidies and the highest proposed rate hikes since 2018, setting up a pocketbook shock for millions of marketplace enrollees, unless Congress intervenes. The core driver is the scheduled sunset of enhanced premium tax credits at year-end, which could lift out-of-pocket bills by roughly 75%, on average, for subsidized customers on top of insurers’ underlying rate increases for 2026, according to analyses cited by both The New York Times and Fortune.
What’s changing
- Enhanced tax credits that have lowered Affordable Care Act (ACA) marketplace premiums since 2021 are set to expire at the end of this year unless lawmakers pass an extension, a development that could expose more than 20 million people to higher bills as open enrollment approaches.
- KFF’s review of 2026 insurer filings shows a median proposed premium increase of about 18% for the individual market, the steepest climb in years, with carriers explicitly adding roughly 4 percentage points to account for expected market churn if subsidies lapse and healthier members exit.
- The Times reports Democrats are pushing to extend the credits in spending negotiations while Republicans cite the decade-long cost—estimated around hundreds of billions—creating a standoff that raises the odds of premium spikes if no deal emerges before plans take effect.
The consumer hit
- For subsidized enrollees, the loss of enhanced credits would raise the share of premiums paid out of pocket—turning a $100 monthly bill into roughly $175 on average, or a $900 annual increase, before counting any base rate hikes insurers are seeking for 2026, Fortune reports based on Peterson-KFF tracking of filings.
- Nearly 24 million people are enrolled in marketplace coverage today—more than double 2020 levels—a surge widely attributed to enhanced subsidies that expanded eligibility up the income scale and reduced premiums for many lower-income households to near zero, making any rollback especially broad in impact.
- Independent estimates suggest millions could lose coverage if credits expire, as higher costs push healthier individuals out of the risk pool and compound insurer pricing, a dynamic reflected in carrier justifications to state regulators.
Insurers’ pricing math
- Beyond subsidy policy, carriers cite medical inflation, hospital and physician costs, and expensive new drugs—especially GLP‑1 therapies—as key forces behind double-digit filings, marking the most aggressive round of proposed hikes since the last era of policy uncertainty in 2018, according to Peterson-KFF and KFF briefs.
- Filings in multiple states include contingency scenarios: Some assume enhanced credits expire, while others submit alternates assuming an extension, illustrating how policy uncertainty is directly embedded in 2026 rate requests reviewed by analysts.
- Several carriers also flagged potential import tariffs on drugs and medical supplies as incremental pressure, adding a few percentage points to premiums on top of utilization and pharmacy trends, Fortune reported from the national filings sample.
The politics—and timeline
- Congressional negotiations are fluid: Republicans control both chambers, and while some in the party signal openness to an extension under constituent pressure, leaders have not advanced a renewal, leaving odds uncertain as budget talks unfold this fall, per Fortune’s reporting on the Hill dynamics and polling.
- The New York Times notes Democrats are seeking to tie an extension to must-pass funding to avert a lapse, framing the move as necessary to avoid a sharp premium shock during enrollment; failure to act would leave consumers exposed when 2026 rates—finalized by late summer—roll into effect on Jan. 1.
- With open enrollment nearing, the gap between net premiums (what households pay) and gross premiums (what insurers charge) will matter: Even if underlying 2026 rates settle near the proposed median, the expiration of enhanced credits is what turns moderate hikes into large net-bill increases for subsidized buyers.
What to watch next
- Any short-term deal that extends enhanced credits for one to two years could blunt the 75% net premium jump while leaving baseline 2026 increases in place, a scenario carriers and analysts have modeled in alternate filings reviewed by Peterson-KFF.
- If Congress does not act, expect enrollment shifts as healthier members churn out, further pressuring 2026 risk pools and potentially reinforcing the very morbidity adjustments carriers built into rates, according to KFF’s analysis of filings and market behavior.
- Either path will crystallize quickly: State regulators are finalizing approvals now, and consumers will see the results—and the status of subsidies—in marketplace plan previews ahead of open enrollment.
For this story, Fortune used generative AI to help with an initial draft. An editor verified the accuracy of the information before publishing.
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