As of 2024, nearly 21.3 million people in the United States have health insurance coverage through the Affordable Care Act (ACA) and their local Marketplace. But changes in the political makeup of Washington are always at work to make changes to this law. In 2021, for example, there was a shift from Republican to Democrat which resulted in a major change to the ACA. The American Rescue Act of 2021 (Covid-19 Relief Law) eliminated the “subsidy cliff” under the Affordable Care Act and expanded Marketplace subsidies above the original 400% of poverty cutoff for two years (2021 and 2022). This change had a big impact on folks approaching retirement age who had income above the 400% mark. The following example demonstrates the impact.

For a household of two people who are age 64 each and too young for Medicare (Medicare starts at age 65), the cost of a Marketplace plan with the subsidy cliff in place was prohibitively expensive if their income is at all above the 400% of poverty level cutoff. In year 2021, the 400% of poverty level cutoff was $68,960 in annual income for a household of two people. For the 64 year old couple that makes just one dollar over that cutoff, the monthly premium for a middle of the road priced Marketplace plan would be $3,125 or a shocking $37,500 per year. That amounts to roughly 46% of their household income just for health insurance. However, if their household income was just one dollar less, the exact same insurance coverage would cost just $557 per month or $6,684 per year. That amounts to roughly 9.6% of their income which is high but much more reasonable.

The American Rescue Act of 2021 offered some great relief for folks over the income cutoff for a subsidy by limiting the cost of health insurance to no more than 8.5% of their household income. In the example above, the couple making just one dollar over the cutoff would have the $37,500 health insurance capped at a cost of no more than $5,862 per year or $489 per month which is a much more reasonable amount. A continuation of these subsidies was included in the Inflation Reduction Act of 2022 and will now last through year 2025.

On December 31, 2025, the temporary Affordable Care Act (ACA) tax subsidy expansions expired, while the underlying ACA premium tax credit remains. The “America Rescue Plan Act”, followed by the “Inflation Reduction Act”, provided temporary enhancements that were not meant to be permanent.

What ended were the temporary provisions that limited premium contributions to 8.5% of household income and removed the income cap for the premium tax credit. In 2026, the traditional ACA rules returned, including the 400% federal poverty level income ceiling for the federal premium tax credit.

For households, this means many people are paying more for their health insurance in 2026.