For millions of Americans—especially retirees not yet eligible for Medicare—2026 could bring a painful surprise. Key subsidies under the Affordable Care Act (ACA), expanded during the pandemic and extended through 2025, are set to expire. If Congress doesn’t act, health insurance premiums could double for many households. The impact would be felt most by older adults on fixed incomes who rely on marketplace plans to bridge the gap before Medicare eligibility. What was once affordable coverage could become a budget-breaking expense.
What’s Changing in 2026
The American Rescue Plan Act of 2021 temporarily increased ACA subsidies, capping premium costs at 8.5% of income and expanding eligibility to higher-income households. These enhanced subsidies were extended through 2025 under the Inflation Reduction Act. But unless lawmakers renew them, the original ACA subsidy structure will return in 2026.
That means fewer people will qualify for assistance, and those who do may receive less. For older adults, whose premiums are already higher due to age-based pricing, the change could be dramatic.
The amount health insurers charge for coverage on the ACA Marketplaces is rising 26%, on average, in the coming year. In states that run their own Marketplaces, the average benchmark on which the tax credit calculation is based is going up 17% in 2026. States that use Healthcare.gov for insurance will see premiums rise an average of 30%. These costs are astronomical.
Folks using their employer’s insurance plans aren’t getting it much easier. Some people are seeing their premiums rise 17% or more as they renew their plans for the year to come.
But that’s not what is most alarming. If the subsidies come to an end as the year closes out, people will see their premiums more than double (we’re talking like 114%), on average. And those who are making more than 4x the poverty level, many will also lose their tax credits, making this doubly painful from a financial standpoint.
Who Will Be Hit the Hardest
Adults aged 60 to 64 are likely to feel the biggest impact. Many in this group may retire early or work part-time, relying on ACA plans until they qualify for Medicare at 65.
Without subsidies, premiums for this age group can exceed $1,000 per month—even for basic coverage. Households earning just above the subsidy threshold could see their costs double or triple. For retirees living on Social Security or modest savings, this shift could force painful trade-offs between healthcare and other essentials.
The Ripple Effect on Retirement Planning
Health insurance is one of the biggest expenses in retirement, and sudden premium hikes can derail even well-crafted financial plans. Some retirees may delay retirement, return to work, or dip into savings earlier than planned.
Others may opt for high-deductible plans that offer lower premiums but expose them to greater out-of-pocket costs. The uncertainty surrounding 2026 is already prompting financial advisors to revisit client strategies and build in buffers for potential healthcare inflation.
Policy Gridlock and Political Uncertainty
Renewing the subsidies still requires congressional action—and despite the government being on the verge of reopening, little progress has been made on this front. While the Senate is working to end the shutdown, the proposed legislation notably excludes an extension of the enhanced health insurance subsidies. Although these subsidies enjoy bipartisan support among voters, they remain a political bargaining chip in broader budget negotiations.
If lawmakers fail to act before the end of 2025, the more generous subsidy structure will expire, reverting to pre-2021 rules. Advocacy groups continue to push for permanent renewal, warning that affordable healthcare should not be left vulnerable to shifting political winds. Yet with a divided Congress and competing priorities, the future of these subsidies remains in limbo.
What You Can Do Now
Retirees and near-retirees should start planning for the possibility of higher premiums. What does that look like? Well, you can do a few things to prepare yourself.
- Review your current coverage
- Estimate future costs
- Look into alternatives (like COBRA) or short-term plans
- Early Medicare enrollment may be available for disabled individuals
- Health Savings Accounts (HSAs) can help offset future expenses if funded before retirement
Financial planners recommend building healthcare inflation into retirement budgets and staying informed about legislative developments. Being proactive now can prevent panic later.
The Role of State-Based Solutions
Some states are exploring their own subsidy programs to fill the gap if federal support ends. California, for example, has offered additional assistance to low- and middle-income residents. Other states may follow suit, but coverage and eligibility will vary. Seniors should monitor their state’s health exchange and consider relocating if healthcare affordability becomes a major concern. State-level innovation may offer relief—but it’s no substitute for federal stability.
A Health Crisis in the Making
If subsidies expire without replacement, the result could be a surge in uninsured older adults. That not only endangers individual health—it strains hospitals, increases emergency care costs, and destabilizes the insurance market. Preventive care will be skipped, chronic conditions will worsen, and financial stress will rise. The consequences go beyond premiums—they touch every aspect of senior well-being. This isn’t just a budget issue—it’s a public health warning.
While 2026 may seem far off, the time to prepare is now. Retirees should treat the potential subsidy expiration as a real risk and adjust accordingly. That means budgeting for higher premiums, exploring alternative coverage, and advocating for policy renewal. The goal is to stay insured, stay healthy, and stay financially secure—no matter what Congress decides.
If you’re retiring before 65, review your health insurance options this month—2026 could change everything. Share your thoughts in the comments.
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Teri Monroe started her career in communications working for local government and nonprofits. Today, she is a freelance finance and lifestyle writer and small business owner. In her spare time, she loves golfing with her husband, taking her dog Milo on long walks, and playing pickleball with friends.
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