Health Issues

With the start of the new year, eight significant changes affecting Marketplace health coverage are now in place. Here’s a look at the health policy developments that are already affecting ACA premiums, premium tax credits (referred to as subsidies in this article), and other coverage costs for individual-market plan buyers.

Marketplace subsidy enhancements have expired

As of January 1, 2026, the Marketplace subsidy enhancements put in place by the American Rescue Plan are no longer in effect. This could still change, as Congress is considering measures that would reinstate them, or implement a modified version of the subsidy enhancements, but nothing has been passed yet. ^{So for the time being, the subsidy rules have reverted to the way they were before 2021.}

That means subsidies don’t cover as much of the premiums as they did for the past five years, and the “subsidy cliff” has returned, making people ineligible for subsidies if their household income (an ACA-specific version of MAGI) is more than 400% of the federal poverty level (FPL).

What you can do:

• If open enrollment is still ongoing in your state, you can still enroll or switch plans for the rest of 2026. There are several states where open enrollment continues until the end of January. After the end of open enrollment, you may find that you can still make a plan change if you have a qualifying life event that triggers a special enrollment period. Learn more about special enrollment periods.
• If your household income is a little above 400% of FPL, understand how contributions to a health savings account (HSA) or pre-tax retirement account will reduce your ACA-specific MAGI. (See below for information about how HSA access for Marketplace enrollees has been expanded for 2026.) Speak with a tax advisor.

Some states have made coverage more affordable

To address the expiration of the federal subsidy enhancements, several of the states that offer their own state-funded subsidies have modified or increased their subsidies for 2026.

If you’re in California, Colorado, Connecticut, Maryland, Massachusetts, or New Mexico, you may find that enhanced state subsidies will offset some or all of the reduction in your federal subsidy amount.

And due to a new premium alignment approach (in other words, state rules regarding how insurers add the cost of cost-sharing reductions to Silver plan premiums), many enrollees in Washington, ^{Illinois, and Arkansas might find that Bronze and Gold plans are more affordable than they were in prior years.}

What you can do:

• If you’re in a state that runs its own Marketplace (meaning it doesn’t use HealthCare.gov), you may find that the state is offering its own subsidies, on top of the federal subsidies. Don’t let open enrollment pass you by without checking to see what’s available in your state.
• Even in states that use HealthCare.gov, you might find that coverage is more affordable than you were expecting, due to a reinsurance program or premium alignment.

Low-income recent immigrants lost access to subsidies

As of January 1, ACA premium subsidies are no longer available to recent immigrants with income under the federal poverty level.

This stems from the “One Big Beautiful Bill Act” that was enacted last summer, and it’s a significant change from the rule that was previously in place from 2014 through 2025.

Before 2026, lawfully present low-income immigrants could qualify for Marketplace subsidies during the five-year waiting period before becoming eligible for Medicaid. But that’s no longer the case. These immigrants now face the same coverage gap that applies to low-income U.S. citizens in nine states that have not expanded Medicaid under the ACA.

What you can do:

• If you’re a lawfully present immigrant, ^{you can still qualify for Marketplace subsidies as long as your 2026 income is at least 100% of the 2025 FPL. In the continental U.S., that amounts to $15,650 for a single person, and $32,150 for a household of four.}

There’s no longer a cap on repayment of excess APTC

If you have Marketplace coverage and an advance premium tax credit (APTC) subsidy is being applied to your premium (this is the case for most Marketplace enrollees nearly everyone), you have to reconcile that APTC when you file your tax return.

If you end up earning less than you projected for the plan year (but not a Medicaid-eligible amount or less than the FPL), the IRS will increase your premium tax credit accordingly (either as a refund or a reduction of the amount of income tax you owe). But if you end up earning more than you projected for the plan year, you will have to repay the excess APTC that was paid on your behalf.

Through the 2025 plan year, there were caps on how much excess APTC had to be repaid, depending on your income. But that’s gone as of the 2026 plan year. Any APTC that’s paid out for the 2026 plan year will have to be fully reconciled when enrollees file their 2026 tax returns in 2027. Regardless of income, all enrollees receiving excess APTC will have to repay the full amount of excess APTC that was paid on their behalf. This will continue to be the case in future years as well.

What you can do:

• If APTC is being paid to your insurer, be sure you’ve projected your 2026 income as accurately as possible. Report any changes in your income or household size to the Marketplace, as these changes could affect your subsidy amount. You can log back into your Marketplace account at any point during the plan year to make updates to your income projection and household details, ^{and the Marketplace will adjust your APTC amount in real time. This will help to ensure that you don’t have any unwelcome surprises next year at tax time.}

Higher out-of-pocket caps are in effect

Each year, the federal government sets an upper limit for the maximum amount that health plans can require enrollees to pay out of pocket for covered, in-network care. This limit applies to all individual-market and employer-sponsored plans with effective dates of 2014 or later.

In 2025, the limit was $9,200 for a single individual. But it rose significantly in 2026, to $10,600, partly due to a rule change that was finalized in 2025.

What you can do:

• Make sure you understand the out-of-pocket limit for your policy (which might be well below the maximum allowable cap), and have a plan for how you’ll cover that cost if you need extensive medical care.
• If your plan auto-renewed for 2026 and you’re in a state where open enrollment extends through the end of January, you still have time to comparison shop and switch plans if there’s another option that will better meet your needs. In the rest of the country, plan changes are only possible for the rest of 2026 if you qualify for a special enrollment period.

Bronze and Catastrophic Marketplace plans are now HSA-eligible

Starting with the 2026 plan year, all Bronze and Catastrophic plans purchased through the Marketplace are HSA-eligible. This is a significant change from past years, when only a small fraction of Bronze Marketplace plans were HSA-eligible, and no Catastrophic plans were.

What you can do:

• If you’re enrolled in a Bronze or Catastrophic Marketplace plan, be sure you understand how HSAs work, and consider whether you might want to establish an HSA and make contributions.
• If you have a Bronze Marketplace plan (or an HSA-eligible plan at any other metal level) and you contribute to an HSA, the contributions will reduce your ACA-specific modified adjusted gross income, which determines your access to Marketplace subsidies. (Note that while Catastrophic Marketplace plans are now HSA-eligible, subsidies can never be used with Catastrophic plans, regardless of income.)
• Customers with HSA-eligible coverage can open an HSA and make contributions for 2026 at any time between January 1, 2026 and April 15, 2027.

Having a direct primary care membership no longer prevents HSA eligibility

In another rule change that took effect in 2026, people with direct primary care (DPC) memberships – including Marketplace plan buyers – are no longer prohibited from contributing to an HSA (assuming they also have HSA-eligible high-deductible health plan (HDHP) coverage).

DPC memberships allow people to pay a monthly fee to a medical office, giving them access to unlimited primary care that the practice makes available. Learn more about direct primary care.

DPC memberships have long appealed to people whose health plans have high deductibles, as a way of accessing primary care without needing to meet their deductible. But longstanding IRS rules prohibited people with HDHPs from contributing to an HSA if they also had a DPC membership. That has changed as of 2026.

What you can do:

• If you have a DPC membership or are considering one, you may find that you can contribute to an HSA in 2026, as long as you also have HSA-eligible health coverage in addition to your DPC membership. The DPC will need to meet certain requirements, including a fee of no more than $150/month for a single person, or $300/month for a family, and limits on what services can be covered.
• If you have funds in your HSA and also have a DPC membership, you can use your HSA funds to pay DPC fees. This is also new as of 2026.

Some individual-market health plans terminated at the end of 2025

At the end of 2025, some individual-market plans, including all individual plans offered by Aetna in 17 states, terminated and were not eligible for renewal. If you were enrolled in one of these plans and you didn’t pick a replacement policy, you might have become uninsured as of January 1 (if you had off-exchange coverage), or you might have been automatically mapped to a new plan by the Marketplace.

What you can do:

• Your special enrollment period due to the loss of coverage will continue for 60 days after the end of 2025 (ie, until March 1, 2026), so you still have time to pick a replacement policy.
• If you were automatically enrolled into a replacement plan by the Marketplace and you use your special enrollment period to pick a new plan during your special enrollment period, it won’t take effect until the first of the month after you enroll. Any 2026 out-of-pocket costs you incur on the plan that was chosen for you will not transfer to the new plan you select, so keep this in mind when deciding if you want to switch plans.

Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written hundreds of opinions and educational pieces about the Affordable Care Act for healthinsurance.org.

President Trump is now railing about insurance company premiums. The Ways and Means Committee and Energy and Commerce Health Subcommittee in the House just held hearings putting insurance company executives on the hot seat and examining a broad range of health cost issues. Politically, it’s an effort to shift accountability for affordability worries from Republicans to tried-and-true villains (insurance companies and drug companies), and blunt Democratic attacks to come in the midterms on affordability issues. It also helps to put health care costs back in the spotlight. What it doesn’t really do is put the costs that matter most in focus: spending for hospitals and doctors, which together represent 52% of the health care bill. With the exception of the occasional piece of legislation affecting them, such as site neutral payment for some hospital services, they have mostly been basking on the sidelines while drug companies (retail drugs are 9% of spending), and now insurance companies, take it on the chin.

The other thing Congress has been doing aggressively is reducing federal health spending through cuts in Medicaid and the ACA tax credits, shifting cost burdens to states and to consumers. It underscores how reducing health care costs has become a Darwinian game; everyone wants to reduce health care costs and spending – their own, often at the expense of someone else.

It’s like a Venn diagram with spending problems that only somewhat overlap and more often conflict.  

Here is a brief review of the multiple spending problems in play and the tradeoffs in addressing them.

National Health Spending  

When experts talk about health costs, they usually mean national health care spending, measured as health care’s share of GDP or per capita health care spending. By these measures, as you all know, the U.S. looks pretty terrible compared to other wealthy nations with not much to show for it in terms of better health outcomes (a complicated subject). Health spending as a share of our economy has plateaued, just short of 18%. When you hear the expression “bending the cost curve,” it’s the rate of increase in per capita national health spending that people want to bend downwards. Spending is increasing more rapidly again (7.2% in 2024), and the CMS actuaries now project that health spending will finally hit 20% of GDP by 2033.

My Health Care Costs

Consumers (also patients and voters) mean something very different when they talk about health costs. What they are concerned about are their own out-of-pocket health care costs, which can wreck havoc on family budgets and prevent people from getting needed care. It’s this issue, and certainly not national health spending, that animates health as an issue for voters. The U.S. subsidizes coverage through Medicare, Medicaid, a $300 billion a year tax break for employers to provide coverage to employees, and yes, ACA tax credits. To put it crudely, the government spends more so people can spend less. And because health care and insurance are so expensive, the subsidies the government provides are not enough for many lower-income and working people given the high costs of care, and a wide cross section of the American people struggle with health care bills and medical debt, especially people who are sick and need a lot of care. Obviously, however, liberals and conservatives disagree on how expansive subsidies should be.

These first two affordability problems—the national health care bill and the personal one—are different and in tension. Economists are sometimes dismissive of out-of-pocket costs, noting that out-of-pocket spending as a share of national health spending hasn’t changed much. It’s indicative of a talking-past-one-another problem we have; tell that to the 100 million Americans with medical debt or the 30-plus percent of people with chronic illness who say they can’t pay their medical bills. One solution to reducing the rate of increase in health spending favored by the conservatives is to ask people to spend more on health care, on the theory that more “skin in game” will cause people to use less care, putting the goal of reducing spending for government and the country overall ahead of the needs of people. Liberals by contrast favor more subsidies to help working people afford coverage, prioritizing health security over reducing spending. In both cases, national and personal affordability goals conflict.   

Federal and State Health Spending (and Counties)

The next two spending problems are related and famously in conflict—federal health spending and state health spending. “The Big Beautiful Bill” cut federal health spending by almost a trillion dollars over 10 years, mostly on the backs of low-income people through Medicaid cuts, advancing a longer-term goal of conservatives to cut federal health spending and shrink the federal role in health. That directly shifts burdens to states, who will be hard pressed to replace very much of the lost funding, and to people who may lose coverage, face higher bills, or fewer or no services. States in turn are concerned primarily about their own state general fund spending—not health spending overall in the state. They are constantly trying to maximize federal funding and when it shrinks and states cut back, counties are often left to pick up the slack when they can, which for most counties isn’t much of the time. The debate about federal health spending and the “One Big Beautiful Bill” was a debate about cutting Medicaid and federal health spending; pointedly, it was never a debate about, and was not fundamentally about, reducing health care costs.

Employer Premiums

Employers are almost single-mindedly focused on their premium increases, which they often view as a tradeoff with the wages and other benefits they can provide (economists take this as an article of faith, although, in the real world of budget politics of the public and non-profit sector organizations I have run, it’s been far less than clear that there’s a direct tradeoff). In a fragmented health system with large employers spread out over many markets, their tools for influencing premiums are limited, but they work hard at the margin every year to shave costs, as they are doing now developing coverage policies for GLP-1s. Next year, employers are likely to see higher premium increases with the possibility that the average cost of a family policy will approach $30,000 per year. This is likely to cause employers to increase cost sharing and deductibles at least somewhat again in 2027, after several years of relative quiet on that front—another example of spending/affordability problems and goals in conflict, in this case the interests of employers and workers. There has been wide consensus for a long time that the big taxpayer subsidy for employer health benefits is regressive and drives up health spending, as you would expect it would, and various attempts to rein it in have been proposed. Each attempt has proven to be a political non-starter. Employers and workers want health coverage, and while the tax subsidy may offend as policy, politicians don’t want to take it away.

It has always been noteworthy to me that we don’t have a health cost and affordability strategy as a nation—another casualty of our fragmented health system. CMS does spending projections and is responsible in varying ways for the ACA, Medicare and Medicaid. But there is no agency or official charged with developing an overall health cost strategy for the health system, even if that strategy lacks the enforcement mechanisms other nations may have. The laudatory efforts in several states to establish cost targets are a step in the right direction, although most focus mainly on hospital costs and lack teeth. While it’s captured in different places in different federal surveys, no agency looks over affordability—what people pay out of pocket and how that especially affects sick people—the health cost issue that animates the public and has always been a heartbeat issue for us at KFF. And with the possible exception of CMMI’s limited pilots and demonstrations focusing on Medicare, no agency looks at the underlying costs of care across the health system and what can be done about it.

That’s probably the biggest failure of all. Washington, states, employers and people would not have to scramble so much to reduce their own health spending if we did more to reduce underlying health care costs, or at least tried harder. It’s well established that the main reason we spend so much more for health care compared to other nations is the high prices we pay for health services in the U.S. But the reason our spending is rising more sharply again now is about an equal mix of utilization of services and our high prices. A hodge podge of initiatives under the rubric of “value” may be having some impact on health care use collectively, even as individual initiatives have modest effects, and some have tradeoffs that warrant scrutiny, such as narrow networks. And with industry consolidation and weak market forces in health care, and regulation out of fashion politically, little is being done to address high prices. In the absence of any meaningful way to address underlying health care costs, everyone focuses on reducing spending—their own. 

View all of Drew’s Beyond the Data Columns

In his new “Great Healthcare Plan,” President Trump has proposed to “codify” the administration’s most-favored-nation (MFN) drug pricing deals that have been agreed to by drug companies in recent months. These MFN agreements are based on the premise that the U.S. shouldn’t pay higher prices for prescription drugs than the prices paid in other comparable nations, an idea that President Trump promoted in his first term through various proposals that were ultimately not implemented.

In this second term, the Trump administration has conducted dealmaking behind the scenes to negotiate most favored nation pricing agreements with individual drug companies, bypassing more traditional regulatory or legislative approaches to secure these deals. The manufacturers have agreed to make certain products available to state Medicaid programs at most favored nation pricing, to introduce new medications at most favored nation pricing in the U.S., and to sell certain products directly to U.S. consumers at discounted prices. The manufacturers are also committing to increase their investment in U.S. manufacturing and in return they’ll receive a 3-year reprieve from tariffs that would otherwise be imposed.

In general, the details of these agreements remain confidential, which means that very little is known publicly about what exactly has been agreed to. Although price discounts for specific drugs were highlighted at various White House events, the full scope of these deals – including which drugs are subject to these agreements, what specific pricing has been agreed to, and how MFN prices are determined – is largely unknown.

As a result, it’s difficult to understand what it would mean to “codify” these deals. It’s also not clear what the mechanism would be for extending these deals to all Americans. While codifying most-favored-nation drug pricing could be helpful for bringing more transparency to these arrangements and guaranteeing that drug companies will deliver on what they’ve promised, policymakers would need substantially more information to turn these backroom voluntary deals into law.