The Affordable Care Act’s (ACA) marketplaces are providing affordable health insurance plans to a record 24 million Americans in a price-competitive market. Working-class people have enjoyed lower premiums due to bigger tax credits since 2021; 93 percent of marketplace enrollees receive these tax credits. Insurer participation is robust: 96 percent of HealthCare.gov enrollees had a choice of three or more plans in 2024. In states that have not expanded Medicaid eligibility, marketplace coverage is a lifeline for low-income working people. Enrollment in Texas grew to nearly 4 million by the end of this year’s open-enrollment period; in Florida, enrollment reached 4.6 million.
Working-class families and individuals with low and moderate incomes have been among the most important beneficiaries of the ACA’s coverage expansions. They are the least likely to work for employers who offer coverage and the most in need of a way to get good, affordable health insurance.
Yet Republicans in Congress and the Trump administration are decidedly not focused on maintaining and improving the affordability and comprehensiveness of marketplace plans. Congress has yet to extend the large tax credits expiring at the end of this year. Failure to do so will spike consumers’ annual premium costs by $387 to $2,914, depending on income. In addition, the administration has proposed regulatory changes that have surely flown under the radar of most Americans but will hit consumers hard in the pocketbook. Here is a closer look at two of those proposed changes:
- an increase in out-of-pocket maximums for both marketplace and employer plans and an increase in what people who receive tax credits contribute to their premiums
- more flexibility for insurers that will increase out-of-pocket costs for people with marketplace plans.
Higher Out-of-Pocket Maximums
The administration is proposing a change in how premiums and out-of-pocket maximums (i.e., the maximum amount people have to pay out of their own pocket for health care) grow each year. These adjustments to out-of-pocket maximums also apply to employer plans. Because growth in health care costs and incomes fluctuate each year, people’s premium contributions and out-of-pocket spending limits are adjusted to account for this fluctuation. The administration is proposing to change how this adjustment is calculated; as a result, people who receive tax credits will contribute more to their premiums and will also have higher potential out-of-pocket costs.
In 2026, the administration’s new approach would increase the annual out-of-pocket limit to $10,600 for individual coverage and to $21,200 for family coverage, a 15 percent increase over 2025, and a 4 percent increase over 2026 using the current methodology.
One study estimates that a family of four earning $85,000 a year could pay $313 more in premiums annually under the policy change and $900 more in out-of-pocket costs, if it reached the out-of-pocket maximum. In other words, this family could pay a higher premium for a health plan that provided less protection for their health care costs.
More Flexibility for Insurers, Higher Costs for Consumers
The proposed rule also could increase out-of-pocket costs for marketplace enrollees by giving insurers greater flexibility in meeting the actuarial value (AV) requirements for plans sold in the marketplaces. The AV of a plan is the average share of medical spending that an insurer pays, as opposed to the share that a consumer shoulders in deductibles, copayments, coinsurance, and out-of-pocket limits. Plans that require enrollees to pay more out of pocket when they get health care, such as by meeting higher deductibles, have lower AVs. Because lower AV plans require consumers to bear more costs when they get care, they also have lower premiums. Marketplace plans fall into four tiers, from the lowest AV (i.e., highest cost sharing) to the highest AV (i.e., less cost sharing): bronze (60% AV, or covering 60% of costs on average, with consumers bearing the remaining 40%), silver (70% AV), gold (80% AV), or platinum (90% AV). In addition, people with incomes less than 250 percent of the federal poverty level ($37,650 for an individual and $78,000 for a family of four) are eligible for cost-sharing-reduced (CSR) silver plans with higher AVs of 94 percent, 87 percent, and 73 percent, depending on income.
Because actuaries may come up with different AV estimates for plans, the ACA grants the U.S. Department of Health and Human Services (HHS) the flexibility to allow variation around these levels. Under the original regulations, HHS limited this variation to +/– 2 percentage points, meaning that a silver plan could range from covering 68 percent of medical costs on average to 72 percent.
During the first Trump administration, HHS changed the limits in ways that increased potential out-of-pocket costs for consumers. The Biden administration subsequently changed the limits back and added more protections for consumers in bronze plans, which have the highest potential out-of-pocket costs. In addition, HHS set more limits on silver-level and CSR plans that protected consumers from high out-of-pocket costs and ensured people received the full value of marketplace tax credits.
Now HHS is proposing to revert these limits back to those implemented in the first Trump administration as well as drop the additional protections added by the Biden administration.
One study estimates that a silver plan with the new lower AV limit of 66 percent, compared to 70 percent, would increase out-of-pocket costs for a family of four earning $85,000 by $714.
Higher Premiums for Less Cost Protection
The administration’s proposed changes could increase the amount people who receive tax credits contribute to their premiums in 2026, a change which will affect the vast majority of those who buy plans in the marketplaces. If Congress does not extend the larger premium tax credits by year end, premiums will spike even higher next year. And these much-higher premiums will buy less coverage since the administration is also proposing changes that increase out-of-pocket costs. These combined policies will be a double financial hit to working-class families, likely leading to coverage losses, delayed health care, and medical debt.
