ACA health insurance premiums to increase 18-20% by 2026

If you’re already strapped financially, you’re in for another blow: Health insurance premiums in the ACA market will rise 18-20% by 2026. That is the largest increase in eight years.

And that’s just the basics. If Congress lets the increased premium subsidies expire at the end of 2025, your actual out-of-pocket costs could increase by 75% or more.

Let me explain what’s happening and what it means for your budget.

The numbers are brutal

According to analysis of 312 insurers nationwide:

• Median premium increase: 18%
• Average increase: About 20%
• Range: Some plans drop by 10%, others increase by 59%
• 125 insurers propose increases of 20% or more
• Only 4 insurers propose reductions

This is the largest proposed increase since 2018. And it is not random: there are specific reasons for this.

Why premiums are increasing

Healthcare costs continue to rise

The underlying costs of medical care are growing at an annual rate of approximately 8%. Hospital stays cost more. Doctor visits cost more. Everything in healthcare costs more. This is not news, but it is increasing year by year.

GLP-1 drugs are crushing budgets

Here’s a jaw-dropping statistic: One insurer reported that specialty medications used by just 2% of members account for more than 50% of their drug spend.

GLP-1 drugs like Ozempic and Wegovy – the weight-loss and diabetes drugs widely advertised – have seen costs rise 25-30% per quarter through 2024. If a small percentage of users consume half of your drug budget, everyone’s premiums go up.

Rates may add more

Potential import tariffs on pharmaceuticals and medical supplies could increase premiums by another 3 percentage points. That is speculative, but insurers have already priced this in.

The subsidy cliff: the real danger

Here’s what most people don’t realize: 92% of ACA market enrollees receive subsidies who reduce their own premium costs.

These increased subsidies will expire on December 31, 2025.

If Congress does not extend them, the majority of subsidized participants will have their costs increase by more than 75%. Not 18-20% – seventy-five percent or more.

This is the budget breaker. The 18% premium increase is baked in. The expiration of the subsidy is the wild card that could push people over the edge.

What this means for your finances

Let me put this into perspective. If you currently pay $300/month for health insurance with subsidies, and these subsidies disappear while premiums increase by 20%:

• Your premium can vary from €300 to €525+ per month
• That’s €2,700+ extra per year
• Money that has to come from somewhere

For people who are new to paying off debt, this is the kind of unexpected expense that breaks the math. And as I always say: Guilt is what’s left when the math is broken.

What you can do

Don’t panic, but don’t ignore this either.

1. View the subsidy situation. Watch for Congress to extend the enhanced premium tax credits. This decision has more impact on your costs than the premium increase itself.
2. Shop during open registration. Premium increases vary enormously per insurer (from -10% to +59%). Your current plan may increase by 30%, while a comparable plan only increases by 12%.
3. Run the numbers before dropping cover. Going uninsured to save money is a gamble that can backfire catastrophically. One hospital stay can generate more debt than years of premium payments.
4. Include this in your timeline for paying off your debts. If the cost of your health insurance is about to increase, your debt repayment plan should take that into account. Pretending it won’t happen doesn’t make it go away.

The bottom line

Health insurance is one of those expenses that feels optional until it isn’t. Rising premiums are a financial reality that is coming, whether you are prepared for it or not.

The increase of 18-20% is significant. The potential expiration of the subsidy is potentially devastating. Both are beyond your control.

What you can control is how you plan it. Build it into your budget. Buy your options. And don’t let these be the surprise expenses that send you into a spiral.

Because it has been my experience that the expenses that break people are not the expenses they plan to spend; it’s the expenses they pretend won’t happen. (Source: Peterson-KFF Health System Tracker)