Written by KFF Health News’ Julie Appleby
In order to determine the exact cost of their Affordable Care Act health insurance for the upcoming year, people who are considering starting a business or retiring early before they are old enough for Medicare might want to wait until November. Significant rises are anticipated.
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Due in part to policy changes pushed by the Trump administration and Congress, premiums for ACA health plans, commonly referred to as Obamacare, which many early retirees and small business owners depend on for coverage, are increasing. The end of December also marks the expiration of more substantial tax subsidies that have assisted the majority of policyholders in paying for coverage.
Following that, subsidies would revert to their pre-COVID-19 levels. An income cap that prevents those who make more than four times the federal poverty threshold from receiving any tax credits to assist in the purchase of insurance would also be reestablished. People considering optional life changes should consider the possible cost if politicians do not move to renew the credits, even though Congress may act to do so.
In a few months, Lauren Jenkins, an insurance salesperson whose firm assists individuals in obtaining coverage in Oklahoma, stated, “I would hate for people to make a big decision now and then realize, I’m not even going to qualify for a tax credit next year.” When combined with the rate hikes, that may be substantial, particularly for someone who is close to or in retirement, as the monthly cost might easily exceed $1,000.
However, the actual situation will be different.
Since the amount of subsidies recipients receive is mostly determined by household income and local insurance premiums, income is the most important factor.
Next year, consumers who earn more than 400% of the federal poverty threshold will lose all subsidies, resulting in the largest dollar rise in out-of-pocket costs.This year, that amounts to $84,600 for a couple and $62,600 for an individual.
The law that was initially passed during the COVID pandemic to generate improved subsidies eliminated this subsidy cliff, but if it expires the next year, it will return. According to KFF data, around 1.6 million individuals with incomes over 400% of the poverty criteria purchased ACA insurance this year, with many of them receiving tax credits to assist with the costs. KFF Health News is part of the nonprofit organization KFF, which provides health information.
According to David Chase, vice president of policy and advocacy for the Small Business Majority, an advocacy group based in Washington, D.C., which is pushing Congress to renew the benefits, many small business owners make about that amount of money.
Additionally, small business owners or their staff make up a sizable portion of ACA enrollment because, in contrast to bigger companies, the majority of small businesses do not provide group health coverage.
According to Mila Kofman, executive director of the DC Health Benefit Exchange Authority, small company owners make up seven out of ten individuals in the Washington metropolitan area who are eligible for reduced rates [because to the tax credits].
By the end of December, Congress must decide whether to renew the subsidies. Inaction could result in financial hardship for policyholders and political fallout for legislators, but permanent action could cost taxpayers $335 billion over the next ten years.
According to news reports, several Republican senators are concerned about the midterm elections because of the possible consequences from the January implementation of new rates and reduced subsidies.
In a memo, Republican pollsters Tony Fabrizio and Bob Ward cautioned the GOP that since more than two-thirds of Trump voters and three-quarters of Swing voters support the premium assistance, extending the enhanced credits could make the difference between winning and losing some midterm elections.
While proponents attribute a record 24 million enrollments in this year’s ACA plans to the increased subsidies, detractors have held them accountable for cases in which consumers or sales brokers participated in fraudulent enrollment.
According to Brian Blase, president of the conservative research tank Paragon Health Institute, the increased subsidies were a temporary COVID pandemic policy implemented by congressional Democrats on a party-line vote and were set to expire after 2025. They should be allowed to expire because they have resulted in significant fraud and waste, as well as a reduction in employer coverage.
Senior research fellow Ed Haislmaier of the conservative Heritage Foundation admitted that those making over 400% of the poverty level would not be pleased to lose their subsidies, but he anticipates that the majority will continue to be enrolled because they wish to avoid incurring large medical bills that could jeopardize their savings or businesses.
According to him, they are self-employed, middle-class, or upper-class individuals who are early retirees with substantial incomes and a wealth of assets to support them. These individuals consider insurance to be a form of financial security.
He believes that by addressing two of their other main ACA concerns—that annual deductibles are too expensive and that insurers’ networks of hospitals and physicians are too small—lawmakers will get the political support of voters in this group.
According to Haislmaier, providing these folks with financial assistance through subsidies only addresses one of their issues, and that is the one they are least concerned about. The political dynamics of this are as follows.
This is how some fictitious consumers would experience the termination of subsidies.
Although they would not be as generous as the current subsidies, people living in homes with incomes below four times the poverty level would still receive them.
For instance, according to a KFF online calculator, people whose income is at the lower end of the income spectrum, say slightly over 150% of the poverty threshold, or roughly $23,000, will go from paying the national average of roughly $2 per month, or $24 toward coverage for the year, to $72 per month, or $864 annually.
The cost of their benchmark plan would likewise be significantly higher for a couple in Portland, Oregon, who are 55 years old and have a household income of $85,000. Currently, their monthly premium payments amount to approximately $600, or 8.5% of their household income, with the remaining $1,000 coming from subsidies.
Because they make more than four times the poverty level, the same couple would not receive any federal assistance if the tax credits expired the next year. According to the initial 2026 premium rates submitted to state regulators, they would pay the entire monthly premium, without any subsidies, which comes to roughly $1,800, according to KFF policy analyst Jared Ortaliza.
According to Jenkins, the insurance agent from Oklahoma, people should start seeing insurance rates late this fall and definitely by November 1, when the ACA’s open enrollment period starts. This allows people time to consider if they want to make adjustments to their plan or their lives, such retiring early or leaving a job that offers health insurance. Open enrollment closes on January 15 of this year. Beginning with the 2027 sign-up session, that open time will be shortened by roughly one month under the new legislation.
She advised those who do enroll for 2026 to keep a careful eye on their earnings during the year, particularly those who work for themselves or are retiring early.
She claimed that breaking through that income cap would be simple.
They will be required to repay any tax credits for which they were initially eligible if they do. For instance, they might over their limit if their revenue increases suddenly throughout the year. Gaining a new customer account, taking out more money from retirement accounts than anticipated, or even winning big at the casino could all result in an increase in income.
Jenkins stated that even if they won $5,000 at the casino, they would still be $500 over their annual limit. After winning a few thousand dollars at the casino, they may be required to repay $12,000 in tax credits.
KFF Health News, 2025. Tribune Content Agency, LLC is the distributor.
