Looking Ahead to the 2026 Healthcare Landscape

The recent passage of the One Big Beautiful Bill Act (OBBBA) has ushered in a new era of healthcare policy reform. Although much of the public conversation has focused on changes to Medicaid, these adjustments are unlikely to affect most of our clients. However, a provision that was not included in the bill but that may affect you is the shift in how Affordable Care Act (ACA) subsidies are handled moving forward and which could substantially impact out-of-pocket healthcare costs for those not yet eligible for Medicare.

ACA Subsidies: A Brief Recap

Since 2021, expanded ACA subsidies have helped many Americans—regardless of income level—afford health insurance. These changes, initially introduced through the American Rescue Plan and later extended by the Inflation Reduction Act, significantly increased the number of people who qualified for financial help through the ACA marketplace. In fact, enrollment nearly doubled, and according to the Kaiser Family Foundation (KFF), these enhanced subsidies cut premium payments by an average of 44% for those receiving premium tax credits.[1]

For many of our clients, especially individuals planning to retire before age 65, small business owners, or independent contractors, these subsidies have provided critical relief. Since eligibility was based on income (not assets), it created a unique opportunity to manage income levels strategically while still receiving significant financial help with insurance premiums.

What’s Changing?

These expanded subsidies are set to expire at the end of 2025. Without Congressional renewal, this means:

• Premiums in 2026 are likely to be significantly higher.[2]
• ACA coverage may no longer be as affordable, especially for early retirees or those with variable income.
• The pool of insured people might shift, with healthier individuals potentially choosing to self-insure rather than pay higher costs—causing even higher premiums for those who remain. KFF has predicted that premiums could double or more starting in 2026.[3]

We won’t know the finalized 2026 premium rates until August 2025, but now is the time to start planning. The general consensus is that if Congress were planning to extend these enhanced subsidies, it would have been included in the OBBBA.

How This Could Affect You

If you’ve been relying on ACA marketplace plans, here are some key planning considerations:

• Expect Higher Insurance Costs: Health insurance premiums may be higher than originally budgeted for in your pre-Medicare retirement years. We’ll want to review your financial plan with this in mind.
• Income Strategy May Shift: Up until now, keeping income low helped maximize subsidies. With subsidies likely going away, there may be new opportunities for Roth conversions or other income strategies without worrying about subsidy loss.
• Compare ACA vs. COBRA: If you’re transitioning from employer coverage, comparing COBRA and ACA plans will be more important than ever.
• Tax Planning Opportunities: With potential increases in healthcare costs, itemizing deductions may be more beneficial. This is especially relevant if you live in a state that benefits from the increase in the SALT cap (from $10,000 to $40,000 with phaseouts).
• Medical Spend in 2025: If you anticipate medical needs, it might be advantageous to schedule procedures in 2025 while costs are still lower, rather than waiting until 2026.

Medicare: Minimal Change for Now

For clients already on or approaching Medicare, changes have been relatively minor. According to Kiplinger, current policy notices continue the approach established under the previous administration, with more detailed updates expected as open enrollment begins in October.[4] Regardless, an annual review of coverage options remains a recommended best practice to ensure your plan continues to meet your individual healthcare needs.

Looking Ahead

The healthcare landscape is becoming increasingly complex, and proactive planning is more important than ever. Understanding the interplay between income strategies, insurance premiums, and tax planning can help you stay ahead of the curve and avoid surprises. As always, we are here to help you make informed decisions tailored to your specific goals and circumstances.