Prepare for Rising Healthcare Costs

Since 2021, there has been an expanded federal tax credit that reduced the out-of-pocket premium cost for health insurance plans offered through the Affordable Care Act (ACA) marketplace. The average annual savings were more than $700 a year, according to the Kaiser Family Foundation, a non-partisan research organization that specializes in health care issues. Not only was the size of the subsidy increased, but many more families were eligible for premium assistance, offering relief to millions more middle-class families.

This ends in 2026.  The enhanced ACA premium credits that have been in place since 2021 were killed in the “Big Beautiful Bill” that Congress passed in July.

It is estimated that premiums will increase by an average of 75% beginning in 2026. Yes, I said 75%.

Please don’t tell yourself this doesn’t matter to you, because you have health insurance through work. We all need to be aware of this change, how it may impact us in the future, and how it may impact loved ones right now.

• You may need an ACA plan before you turn age 65. If you are laid off, or choose to retire before you become eligible for Medicare at age 65, an ACA plan may be your best (only) option for health insurance. Don’t be lulled into thinking you can just stay on an old employer’s plan if you are laid off. While federal regulations (COBRA) mandate that you can typically continue your ex-employer's health insurance coverage for 18 months after leaving a job, that rule only applies if your former employer had at least 20 full-time employees. And while you can keep the coverage for 18 months (possibly longer in some instances), you must pay 100% of the premium cost. Actually, it’s common to be charged 102% to cover the administrative fee. That becomes very costly.
• You want to do something entrepreneurial. If you have visions of starting your own business or switching to gig work that gives you more flexibility, you need to think about health insurance. Unless you are married to someone who can cover you on their health insurance policy, the ACA will likely be your best/only option for health insurance. (In some states, you may also be eligible for coverage as a domestic partner.)
• Young adults can’t be covered on a parent’s health plan once they turn 26. If you are the parent or grandparent of a soon-to-be 26-year-old who has relied on coverage from a parent’s plan, they now face a much more expensive market for an ACA plan.

And there’s another issue that I hope we could all embrace: health insurance should not be some privilege. It should be a basic right. And in an economy where gig work or “contractor” work is more common, the ACA marketplace is vital, as these  (often full-time) gig or contractors typically receive no benefits.

The sad fact is that the higher out-of-pocket costs for ACA plans are expected to push millions of Americans to drop their coverage because they can’t afford the higher cost.

Before you, or anyone you know, considers dropping ACA coverage, I hope you will use the remaining months of this year to do some budget planning to find the money to keep yourself insured. It is obviously risky to be without health insurance. Moreover, even if you are healthy, it creates tremendous anxiety about “what if” something happens and you don’t have health insurance. No household should have to live with that fear.

We will have a better idea of actual premium increases in the next month or so. Right now, I want any of you with an ACA policy to take a look at your current premium and assume it will be double next year. Yes, I know that’s more than the projected 75% increase, but that is just an average, and in some states, the premium increase will be more than 100%.

I wish this wasn’t happening to anyone, but doing this exercise right now is a stand-in-your-truth moment. And you have a few months to consider how to budget for this increase. I want you to see if you can find the money by trimming current expenses. If you still come up short, this is what an emergency fund is made for. Not having health insurance is an emergency, in my opinion.

And if you happen to have a 25-year-old in your life, please share this terrific guide from the KFF that walks through the process of researching and finding the right ACA plan.

Anyone reading this who knows a 25-year-old (or a 26, 27, 28-year-old), who already has an ACA plan, might also step in with a bit of a subsidy, if you can honestly afford to help. And please don’t assume your young adult will know about this, or be able to figure out how to handle a higher cost. Step in now, respectfully, and start a conversation so you and they have time to make sure that in 2026, they will have health insurance.