Health insurers raised the sticker price of 2026 Affordable Care Act Marketplace plans by an average of 26 percent this year, among the sharpest jumps since the exchanges opened in 2014. Roughly 22 million of the 24 million people enrolled in Marketplace coverage still receive a premium tax credit that absorbs part of that increase, so most households will not feel the full 26 percent in their monthly bill. The credit doing the cushioning, however, shrank at the start of 2026, and the households losing the most ground are concentrated in a narrow band: people in their late 50s and early 60s who earn just enough to lose help entirely.
Insurers Priced In the Loss of the Enhanced Tax Credit
The size of the 2026 increase varies by state and by which marketplace a household uses, but the pattern is the same everywhere: insurers are charging more for the same coverage, and they say the biggest reason is not medical costs alone but the expectation that fewer healthy people will keep buying coverage once subsidies shrink.
An October 2025 Peterson-KFF analysis of approved 2026 rate filings put the national average increase at 26 percent, with benchmark silver premiums, the plans used to calculate every subsidy, rising 30 percent in the roughly two-thirds of states that rely on HealthCare.gov and 17 percent in state-run marketplaces such as Covered California and NY State of Health. A companion Peterson-KFF Health System Tracker review of the underlying filings for 312 insurers nationwide found a median proposed increase of 18 percent, the largest since 2018, driven mainly by rising hospital and drug costs, heavier use of GLP-1 medications such as Ozempic, and insurers hedging against new tariffs on pharmaceuticals and medical supplies; most insurers also built in an extra four percentage points because they expect healthier enrollees to leave once subsidies shrink. That review found even enrollees who keep a subsidy are not fully insulated: many will need to switch to a cheaper bronze plan with a deductible above $7,000 to avoid a higher bill, trading away the reduced deductibles some silver plans still offer.
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A Tax Credit That Caps a Bill, Not a Price
The Marketplace tax credit does not lower an insurer’s sticker price. It caps what a subsidized household actually pays at a set share of household income, with the federal government covering the difference between that capped amount and the full premium. Guidance from the Internal Revenue Service, last reviewed in July 2026, allows people with household income between 100 percent and 400 percent of the federal poverty line to claim the credit, reconciling whatever was paid to their insurer in advance on Form 8962 the following spring. That income ceiling is not new; it is the same ceiling that applied before 2021, when Congress temporarily removed it for tax years 2021 through 2025 and let households earning above 400 percent of the poverty line claim a credit for the first time. That temporary rule expired on schedule at the end of 2025, Congress has not reinstated it, and the 400 percent ceiling is back in force for the 2026 plan year.
Age-Rated Premiums Land Hardest Just Before Medicare Eligibility
Marketplace premiums are not flat across an insurer’s customer base. Federal rating rules let the price climb with age, so a person in their late 50s or early 60s already carries one of the highest base premiums an insurer sells, before the 2026 increase is even added on top. Peterson-KFF’s modeling of the reinstated income ceiling found the effect compounding for this group: the return of the eligibility cliff is most pronounced for older enrollees specifically because they carry higher premiums to begin with. In one comparison, a 60-year-old couple earning $85,000, just above the cutoff, would see their annual premium payment climb by more than $22,600 in 2026, pushing the cost of a benchmark plan to roughly a quarter of the couple’s income; under the temporary rule that expired at the end of 2025, the same plan would have been capped at 8.5 percent of income for that couple. That same analysis found average annual premium payments among all subsidized enrollees are set to rise 114 percent in 2026, from $888 to $1,904, once the smaller credit and the higher sticker prices are combined.
A $2,000 Difference in Income Decides Who Falls Off the Cliff
The cliff is not gradual. Peterson-KFF modeled two hypothetical 60-year-olds living in the same city: one earning $62,000, or 396 percent of the federal poverty line, and one earning $64,000, or 409 percent. The person earning $62,000 keeps a reduced but real tax credit and pays an estimated $6,175 a year for a benchmark plan, with the payment capped at about 10 percent of income. The person earning $64,000 receives no credit at all once income crosses 400 percent of the poverty line and pays the full $14,931 sticker price, close to a quarter of that household’s income for the same coverage. Peterson-KFF’s modeling, updated in December 2025, is explicit that the difference is driven by income, not health status or plan choice: a household $2,000 over the line pays thousands more than one just under it, and that gap falls hardest on enrollees old enough to carry the marketplace’s highest premiums but not yet old enough for Medicare.
This article was produced with the assistance of AI and reviewed by The Financial Wire editorial team.
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David M. Keller is a finance writer based in Columbus, Ohio, covering personal finance and consumer-focused economic topics. He earned his degree in journalism from Ohio University and began his career reporting on local business and economic trends for a regional media outlet. Since then, he has contributed to a variety of online publications, focusing on clear, practical coverage of topics such as cost of living, debt, and everyday financial decision-making.
