Are ACA subsidies ending in 2026?

The enhanced premium tax credits from the Inflation Reduction Act (which removed the 400% FPL cliff and capped premiums at 8.5% of income) are scheduled to sunset at the end of 2025 unless Congress extends them. If they expire, the pre-2021 subsidy rules return, including the hard 400% FPL cliff where subsidies drop to zero.

How much will my health insurance premium increase in 2026?

If the enhanced subsidies expire, households above 400% FPL will see the largest increases—potentially $5,000 to $15,000+ annually. Middle-income families between 300%-400% FPL could see increases of $2,000 to $5,000 per year. Lower-income households below 250% FPL will see smaller changes because the base ACA subsidies remain in place.

What should I do to prepare for 2026 subsidy changes?

First, calculate your 2026 MAGI and compare it to the 2026 FPL tables. If you're near 400% FPL, explore legal MAGI reduction strategies like HSA contributions, Traditional IRA contributions, and business expense deductions. Second, enroll during the 2025 Open Enrollment Period (Nov 1 - Jan 15) to lock in your 2026 coverage. Finally, work with a broker to model your costs under both scenarios.

The Future of Premium Tax Credits: What Happens in 2026?

The Countdown: Enhanced Subsidies Expire December 31, 2025

Since 2021, millions of Americans have benefited from enhanced Affordable Care Act (ACA) premium tax credits. These enhancements, extended by the Inflation Reduction Act (IRA) through 2025, did two critical things:

Eliminated the 400% FPL cliff: Households above 400% FPL still receive subsidies, with premiums capped at 8.5% of income
Increased subsidy generosity: Lower-income households pay even less, with many Silver plans costing $0/month

But these provisions are temporary. On January 1, 2026, unless Congress acts to extend them, the pre-2021 rules return.

What Changes on January 1, 2026?

If the enhanced subsidies expire, three major changes hit Texas families:

1. The 400% FPL Cliff Returns

Households earning above 400% of the Federal Poverty Level will lose all premium tax credits. For a family of 4 in 2026, that's any household earning more than $132,000. A family earning $132,001 would pay the full unsubsidized premium—potentially $1,800-$2,400/month.

2. Premium Caps Tighten for Middle-Income Families

Under the IRA, a family at 350% FPL pays no more than 8.5% of income for a benchmark Silver plan. Under the old rules, they'd pay up to 9.83% of income. For a family earning $100,000, that's the difference between $8,500/year and $9,830/year—a $1,330 increase.

3. Lower-Income Families Pay More Too

Even families below 250% FPL will see changes. The IRA enhanced subsidies so that households at 150% FPL paid $0 for Silver plans. Under the old rules, they would pay ~4% of income. For a single person earning $24,000, that's ~$80/month instead of $0.

Projected Impact: Texas Family of 4, $100K Income

With IRA subsidies (2025 rules): Benchmark Silver plan capped at 8.5% of income = $8,500/year ($708/month). If the plan costs $1,800/month, they receive $1,092/month in tax credits.

Without IRA subsidies (2026 rules): At $100K, this family is at 303% FPL. Under old rules, they'd pay ~6% of income = $6,000/year ($500/month). Wait—that's BETTER? Yes, in this specific case, the old rules are actually more generous because the family is below 400% FPL. The real pain hits families above 400% FPL.

Who Gets Hit Hardest?

The biggest losers if subsidies expire are:

Families above 400% FPL: Subsidies drop from ~$1,000+/month to $0. Annual cost increase: $12,000-$18,000.
Early retirees (50-64): Not yet eligible for Medicare, often with high premiums and no employer coverage. Subsidies are critical.
Self-employed professionals: No employer coverage, often fluctuating income that makes MAGI planning difficult.
Families in high-cost Texas markets: Areas like Austin and Dallas have higher benchmark premiums, making subsidies more valuable.

What Congress Might Do

Several proposals are circulating in Washington:

Full extension: Make the IRA subsidies permanent. Cost: ~$20 billion/year.
Partial extension: Keep the 400% cliff elimination but reduce generosity below 300% FPL.
No extension: Return to pre-2021 rules. Millions lose coverage or face premium spikes.

As of mid-2026, no extension has passed. Texas families should plan for the worst-case scenario while hoping for the best.

How Texas Families Should Prepare

Calculate your 2026 MAGI now. Use the 2026 FPL table ($15,960 base + $5,680 per person) to see where you stand relative to 400% FPL.
If you're near 400% FPL, explore MAGI reduction strategies: HSA contributions ($4,400 individual/$8,750 family; Rev. Proc. 2025-19), Traditional IRA ($7,500/$8,600 if 50+; Notice 2025-67), and business expense deductions.
Enroll during Open Enrollment (November 1 – January 15) to lock in your 2026 plan and subsidies.
Model both scenarios with a broker: your costs with IRA subsidies vs. without. Budget for the higher number.
Consider alternative coverage if subsidies expire: employer group plans, private PPO plans, or health sharing ministries (with full understanding of their limitations).

The Bottom Line

No one knows for certain what Congress will do. But smart families prepare for all outcomes. The best defense against subsidy uncertainty is understanding your numbers, optimizing your MAGI, and having a backup plan. Our brokers can run both scenarios for you and build a strategy that works regardless of what Washington decides.