Health insurance renewal season is here, and that means the new rates for health insurance are being released.
However, in 2026, there are major changes coming to Obamacare plans offered on the state and federal marketplace due to the impending expiration of expanded subsidies and the current government shutdown.
Due to the expiration of the Inflation Reduction Act, the extra savings once granted during the COVID pandemic in 2021 will now be unavailable, causing many to re-evaluate their health insurance options.
With no end in sight and no new deals being made, here is what to expect:
- On average, the cost of individual health insurance premiums will increase by 18%, making the cost of health insurance unaffordable for many Americans.
- Health insurance deductibles will also increase, rising from $9,200 to $10,600 for individuals.
- Premiums will significantly increase for incomes of $65,000 and above (individual) and $130,000 and above (family) who previously received a subsidy.
- Individuals and families whose incomes previously granted them $0 premiums or Cost Sharing Reductions will experience an increase in premiums.
- Access to healthcare will become more expensive.
- Incorrect income estimates can result in a high tax bill.
What this means for you
Subsidies are decreasing
When the Inflation Reduction Act was passed in 2021, this expanded the amount of income you could earn to receive a subsidy. This led to individuals and families who otherwise would not have been able to qualify for a subsidy getting savings on their health insurance premiums.
This also made health insurance premiums more affordable for those with lower incomes of $35,000 or below, often resulting in plans that were $0 per month.
Now that these savings are set to expire, it is about to make it more expensive for those who received extra savings. Paying on average 18% more for a health insurance premium or paying the full price of the plan with no subsidy will be cause to look at other options.
Income estimates are more strict
When enrolling in a plan on the marketplace, you must provide your estimated yearly income to see if you qualify for a subsidy. But if these estimates are inaccurate, it can lead to a big bill come tax time.
Reporting an accurate income estimate will be more important than ever. In the past, if you were inaccurate with your reporting, there was a set rate you would have to pay back to the IRS. However, with these changes, there is no cap on the repayment of your subsidy. This means you could be subject to paying back the full subsidy, which could be thousands of dollars.
Here are some guidelines to keep in mind:
- If your income is lower and you should have been on Medicaid, your estimated income was likely higher than your actual income, leading to an overpayment of the advance premium tax credit. You will be required to repay the full amount of this overpayment when you file your 2026 taxes.
- If your income ends up being higher than what you reported when you enrolled, the premium tax credit you received is considered “excess” and must be paid back.
Monthly costs of insurance are increasing
With funding running out, the percentage of your yearly income you would spend on healthcare will increase, and can’t be capped at only spending 8.5% of your income on healthcare premiums.
Additionally, premiums are set to increase an average of 18% overall, along with deductibles rising from $9,200 to $10,600, making healthcare unaffordable.
What you can do
Unfortunately, even the cheapest health insurance plan could be out of reach for your budget, causing you to consider cancelling your health insurance.
But before you do that, consider the risks of not having health insurance. With rising healthcare costs, paying a full medical bill that is not adjusted by insurance will quickly add up and could lead to further financial ruin, like bankruptcy.
It is important to take your time and evaluate all your options before deciding on the plan you would like to enroll in for 2026.
Many plans are on auto-renewal, and if you do not take action, you will keep the same plan without having a chance to look over your options.
Additionally, carriers are leaving states, with Aetna no longer offering coverage for Individuals and Families, and United Healthcare pulling out of many counties in various states. It is important to review the letters you were sent in the mail by your carrier and the state and federal marketplace to understand what your options are.
Alternative options
Before choosing the same plan and accepting the high premium, there are some other options you can consider before the enrollment period ends on January 15th.
Choose a higher deductible plan
If your plan is a low deductible, switch to a plan with a higher deductible to save money on monthly premiums. This is especially a good option for those who are healthy and rarely utilize healthcare.
You can then pair your health insurance with a supplemental insurance, which gives you a cash benefit in the case of an accident or critical illness. This will help cover the cost of the deductible and any other expenses that you may incur.
Find a private option
Some states have private plan options that are offered outside of the state and federal marketplace. In fact, the Short Term Medical plan options were recently brought back as an option in select states, allowing enrollees to secure a plan for 12-36 months. These plans have a significantly lower premium than an Obamacare plan and can shield you from the increasing costs of health insurance premiums.
Keep in mind that if you choose this option, you will be subject to a health questionnaire. This coverage also has a high deductible, with some plans as high as $25,000, so you can enroll in a supplemental plan to help offset the high deductible costs.
Pair supplemental insurance with indemnity plans
Another option to help lower your monthly costs is to purchase an indemnity plan and add supplemental coverage.
These plans work to give you a cost benefit for each service. For example, the plan may offer $1000 per day in the hospital up to a certain number of days. Another example is they will cover 2 primary care visits per year, and prescriptions are a set rate for generics.
If you are someone who doesn’t utilize healthcare that often, this option may be worth considering because it will cover catastrophic events.
It is important to note, that this is not considered essential coverage, meaning that coverage will not offer the same benefits as an Obamacare plan or private option. Additionally, there could be problems with billing, and claims could be denied due to this coverage not being a traditional health insurance plan. Oftentimes, these plans have limitations and exclusions, so it is important to read the fine print before enrolling.
However, if you decide to choose this option, you can expect significantly lower premiums and coverage that is tailored to catastrophic events.
Stay healthy
In order to limit the cost of your healthcare usage throughout the year, it is important to stay healthy. Prioritize your health by eating right, exercising and getting enough sleep. This prevents having to take expensive medications, go to the doctor often, or have further chronic health issues.
Don’t rely on other insurance
One misconception is that you can forgo health insurance because you have a health benefit on car insurance or access to critical illness coverage through a life insurance policy.
However, you must meet specific criteria to utilize these coverages. For example, car insurance will only cover the cost of medical bills resulting in the car accident itself, so you can’t use it if you tripped down the stairs and broke your leg.
Similarly, life insurance policies with critical illness riders can be useful, but they typically do not offer coverage high enough to cover high-expense medical bills. Coverage is usually capped at $10,000-$25,000 and usually has exclusions to cover specific critical illnesses.
Overall, there are many changes coming to the healthcare industry in the upcoming year. However, it is important to stay informed about these changes to make the best decision possible for yourself and your family.
Contact me today for a free consultation.