By Marc Shaffer
Health Insurance on the Marketplace Is Getting More Expensive in 2026. Here’s What to Know and What You Can Do.
For many Americans who are self-employed, between jobs, or retired before age 65, health insurance comes from the Federal or state Marketplace created by the Affordable Care Act.
Unlike employer sponsored plans, Marketplace coverage is often expensive, which is why many households rely on the Premium Tax Credit, also known as the PTC, to help reduce their monthly premiums. If you are on a Marketplace plan today, or expect to be in the next few years, there is an important change coming in 2026 that could significantly increase your health insurance costs.
The good news is that with thoughtful planning, some of the biggest increases can often be reduced or avoided. Let’s break this down…
What Is the Premium Tax Credit?
The Premium Tax Credit is a subsidy that helps lower the cost of health insurance purchased through the Marketplace.
Instead of sending you a credit at tax time, the PTC is usually applied monthly, lowering your insurance bill right away. The amount of credit you receive is based mainly on your household income, household size, and the cost of insurance in your area.
The goal is to limit how much of your income you are required to spend on health insurance premiums.
What Changed During COVID and What’s Changing Again in 2026?
From 2021 through 2025, Congress temporarily expanded the Premium Tax Credit. These changes lowered out of pocket costs for many people and allowed households with income above 400 percent of the Federal Poverty Level to qualify for subsidies. This helped many families, early retirees, and self-employed individuals keep health insurance affordable.
However, those expanded rules expired at the end of 2025. Starting in 2026, the rules revert back to how they worked before COVID. That means most people on Marketplace plans will pay more for insurance, and households with income over 400 percent of the Federal Poverty Level will no longer qualify for any subsidy at all.
Why the 400 Percent Income Line Matters So Much
Under the 2026 rules, the Premium Tax Credit has a hard cutoff. If your income is even one dollar over the limit, the subsidy goes away completely. For 2026, that income limit is approximately $62,600 for a single person, $84,600 for a married couple, and $128,600 for a family of four.
If your income stays below those levels, you may still qualify for help. If it goes above, you pay the full cost of insurance. For some households, especially couples in their early 60s or families covering multiple people, losing the credit can mean hundreds or even thousands of dollars more per month in premiums.
Who Is Most Affected?
These changes tend to hit hardest for early retirees who are not yet on Medicare, self-employed individuals, families covering multiple people on one plan, and households whose income is just above the 400 percent threshold. Single individuals with higher incomes may see smaller changes, while larger households and older couples often feel the impact much more.
Why Income Planning Matters More Than Tax Brackets
When you are on Marketplace insurance, your income level can matter more than your tax bracket. There are situations where someone could owe little or no income tax but still face very high health insurance costs because their income crossed the subsidy line.
That is why planning around Modified Adjusted Gross Income, often referred to as MAGI, becomes so important. MAGI is the income number used to determine eligibility for the Premium Tax Credit.
Planning Strategies for People Who Are Still Working
If you are still working or self-employed, the most effective strategies usually focus on reducing income that counts toward MAGI without reducing your lifestyle. Common tools include pretax retirement contributions such as traditional 401(k) plans, IRAs, or solo 401(k) plans. For business owners, solo 401(k) plans can be especially powerful.
Health Savings Accounts and Flexible Spending Accounts can also reduce MAGI while helping pay for medical expenses with pretax dollars. Self-employed individuals may also have flexibility around the timing of income and expenses. Delaying income into the following year, accelerating deductible expenses, or making business investments can all help manage income near key thresholds.
Planning Strategies for Retirees or Those Between Jobs
For people no longer working, income planning becomes even more important.
Once income is recognized, it is often hard to undo. We often help clients start by creating a MAGI budget for the year. This sets a target income number that keeps them eligible for the Premium Tax Credit.
From there, we plan how to fund spending using a mix of traditional IRA withdrawals, Roth IRA distributions, and taxable investment accounts. This approach helps cover living expenses while keeping income within the desired range.
While this may feel counterintuitive compared to traditional tax strategies, preserving health insurance subsidies can sometimes be worth more than optimizing taxes alone.
Already Enrolled for 2026? You Still Have Options.
Even if you have already enrolled in a Marketplace plan for 2026, it is not too late to adjust. If your income changes during the year, you can update your Marketplace application to reflect that change. This can lead to a recalculated Premium Tax Credit and lower monthly premiums for the remainder of the year. This step is especially important if you are close to the income cutoff or expect changes due to retirement contributions, business income, or investment withdrawals.
The Big Takeaway
Health insurance through the Marketplace is getting more expensive in 2026, especially for households near the 400 percent income threshold. But with proactive planning, many of the most painful increases can be softened or avoided.
If you are retiring before age 65, self-employed, or currently using Marketplace coverage, this is an area where coordination between income planning, tax planning, and cash flow planning can really pay off.
At Searcy Financial® Services, we help clients look at the full picture so there are fewer surprises and more confidence in the plan. And if you are in the process of shopping for coverage, we are also happy to connect you with a trusted health insurance resource who can help you compare options, understand the differences between plans, and choose coverage that fits your needs. Our goal is to make sure you feel supported on both the planning side and the practical, day-to-day decision-making side.
Thank you for trusting us with these important conversations.