Preparing for 2026 ACA Subsidy Changes After Expiration of Temporary Tax Credits

Summary and Key Takeaways: TL;DR

In 2026, Californians who receive ACA health insurance subsidies through Covered California may face higher premiums due to the expiration of temporary federal tax credits. These changes will most impact middle-income households who previously qualified for expanded financial help under the Inflation Reduction Act. Understanding how your income aligns with the returning subsidy rules and reevaluating your coverage options can help you stay prepared.

• Subsidy Rollback in 2026: Temporary ACA tax credits end after 2025, restoring pre-pandemic eligibility limits and reducing aid for many.
• Middle-Income Households Most Affected: Those earning just above 400% of the Federal Poverty Level may see the steepest premium increases.
• Premiums Rising Across the Board: Health insurers project 10–25% increases, compounding the effect of subsidy losses.
• Plan Ahead With Income Estimates: Early income planning and coverage review can help avoid surprises during open enrollment.
• Explore Alternatives With a Broker: Licensed brokers can help you compare on- and off-exchange plans that align with the new financial landscape

ACA Subsidy Expiration: How Californians Can Prepare for 2026

Many Californians who rely on Covered California for affordable health insurance will face meaningful changes in 2026. With temporary federal aid ending, households that have benefited from expanded ACA subsidies may see higher monthly costs, especially those earning slightly above the returning eligibility limits.

This guide breaks down how expiring tax credits may drive premium changes, which income ranges could feel the biggest impact, and what steps you can take now to protect your budget.

Why ACA Tax Credits Will Shift in 2026

During the pandemic, the Inflation Reduction Act expanded financial help for marketplace consumers. For the first time, many middle-income Californians received subsidies even if they earned above the usual cutoff. This temporary boost lowered premiums for thousands of people, particularly families and self-employed individuals who often shoulder high health coverage costs.

However, these enhancements only applied through 2025. When the law sunsets, Covered California returns to the original structure: subsidies generally phase out above 400% of the Federal Poverty Level, or about $124,800 for a family of four based on current guidelines. As a result, many households that recently qualified for assistance will no longer meet the threshold starting in 2026.

 

These earlier subsidy expansions helped stabilize marketplace enrollment trends, so their expiration will likely influence how consumers shop next year.

What Health Insurance Premium Increases May Look Like

Although every household will experience the change differently, the biggest increases are expected among people whose incomes sit just above the returning eligibility cap. Temporary financial help pushed their premiums lower than ever before, so losing those credits creates a sharper jump. These are the households most likely to see larger premium increases:

• Single adults earning roughly $60,000–$90,000
• Couples earning around $100,000–$150,000
• Families of four earning about $130,000–$170,000

Many households in these ranges received moderate or even significant subsidies under the temporary rules but will no longer qualify when the original ACA structure returns. A family that currently pays about $1,000 per month could see premiums rise to $1,500 or more once the credits expire.

This situation is heightened by projected statewide rate increases. Insurers expect premium adjustments of roughly 10–25% depending on the carrier and region. That means households may face two cost pressures at the same time: the loss of enhanced subsidies and higher base premiums.

Why Premiums Are Rising Beyond Subsidy Changes

Even without the tax credit adjustments, health insurance costs in California are trending upward. Carriers are responding to rising medical expenses, prescription drug pricing, and higher care utilization. These system-wide pressures affect plans on and off the marketplace.

For consumers, this means that premium increases are likely no matter what—though the amount varies by plan, metal tier, and county. Combined with the subsidy sunset, 2026 could mark one of the most significant year-to-year cost shifts since Covered California launched.

How To Prepare for the 2026 Marketplace

Planning ahead will help you manage costs more effectively and avoid last-minute surprises. These three actions can make the biggest difference.

1. Estimate Your 2026 Income Now

Your projected income determines your eligibility for financial help, so review your expected earnings early. Consider any changes such as raises, commission shifts, job transitions, retirement planning, or additions to household size. Since subsidies revert to stricter limits, updating your income accurately becomes even more important.

2. Reevaluate Your Coverage and Compare Plans

Start exploring plan options well before open enrollment. A plan that worked under expanded subsidies may no longer be the best fit once pricing adjusts. Look closely at your care usage, prescription needs, provider preferences, and metal tier. You may find opportunities to save by adjusting networks or cost-sharing levels.

A few tips for picking a plan include:

• Reviewing whether your preferred doctors remain in-network
• Checking how each plan handles your medications
• Comparing deductibles and copays to see how they match your typical care patterns

These small details can significantly affect your 2026 costs.

3. Talk With a Broker About Alternative Coverage

A knowledgeable broker can help you compare on-exchange and off-exchange options, determine whether you still qualify for subsidies, and identify plans that offer better value under the new pricing structure. If you lose eligibility for ACA tax credits entirely, off-exchange plans may sometimes provide competitive alternatives.

This conversation can also help you think through whether pairing a lower-premium plan with savings strategies like HSAs or flexible networks makes sense for your situation.

Two Checkpoints To Stay Ahead of 2026 ACA Subsidy Changes

Before the 2026 changes arrive, it helps to focus on two key checkpoints: 

• Confirm your income relative to the returning subsidy rules. Knowing whether you’ll clear or fall above the 400% FPL line gives you a realistic picture of what to expect.
• Reassess your care needs. Coverage should match your current health, not last year’s routine. If your medical usage has changed, a different metal tier or carrier could better support your budget.

Position Yourself for a Smoother 2026 With Help From Sackett Insurance

As expanded ACA tax credits expire, many Californians will face noticeable premium increases. The combination of returning eligibility limits and insurer rate adjustments makes 2026 an important year to reassess your coverage.

If you're feeling overwhelmed by your options, Sackett Insurance is here to help. Our expert brokers will assist you in comparing plans, understanding how the changes may impact your budget, and exploring both on- and off-exchange options. Reach out today for personalized guidance to make the best choice for your coverage needs.