As open enrollment for the Affordable Care Act (ACA) approaches on November 1, Texans are facing a significant rise in health insurance premiums, marking an average increase of 35.2%. This surge comes as insurers respond to escalating costs and the impending expiration of premium tax credits, resulting in potentially alarming financial consequences for many enrollees.
The average monthly premium for a 40-year-old individual, prior to any tax credits, is projected to soar to $661 for the benchmark plan in 2026, as reported by the health policy organization KFF. This represents the most substantial percentage increase since 2018 and places Texas among the states with the highest hikes in premiums. In fact, the increase Texas residents will experience ranks as one of the most severe nationwide, surpassed by only five other states.
An analysis indicates that the premium costs for individuals will rise more sharply than the overall percentage increase due to the anticipated cessation of enhanced premium tax credits. In 2021, Congress expanded access to these credits, which subsidize insurance premiums for low- to moderate-income individuals by capping their out-of-pocket costs. With these tax credits set to expire at the end of 2025, many enrollees currently qualifying for low-cost or free plans could find themselves facing significant new expenses. For example, those earning between 100% and 150% of the federal poverty limit, who presently qualify for free plans, could see their costs shift to anywhere from 2.1% to 4.19% of their premiums based on their income levels.
Compounding the issue, national estimates suggest that average premium payments for ACA customers could more than double, soaring by 114% once the tax credits are factored in. Insurers pointed to the loss of these enhanced credits as a key factor in their decision to raise rates, a move reflected in their initial filings this summer.
Despite the approaching enrollment period, Congressional action remains stalled. A 31-day government shutdown has ensued, fueled by partisan disagreements, particularly surrounding the expiration of the tax credits. Democrats have withheld support for a Republican-backed funding bill unless a resolution regarding the credits is reached.
In Texas, average premium increases span all metal tiers of ACA plans, with the lowest-cost bronze plan’s premium rising by 19.7%, silver by 35.1%, and gold by 31.9%. Multiple factors influence individual premium costs, including the insurer, plan type, region, and enrollee age, while premium tax credits are calculated based on expected income.
Texas has a particularly large population of ACA enrollees, nearly four million, only surpassed by Florida. The state has not expanded Medicaid under the ACA, making it a significant source of coverage for many low-income residents. Almost two-thirds of Texans benefiting from the ACA earn less than 150% of the federal poverty limit, which equates to $23,475 for an individual or $48,225 for a family of four.
With the expiration of enhanced tax credits, those accustomed to zero premium payments may be compelled to adjust their plan choices or forgo coverage altogether. Furthermore, the reinstatement of a strict income threshold for subsidy eligibility could impact over 126,000 Texans earning above the federal poverty limit, resulting in steep premium increases for their coverage.
Health policy organizations estimate that the fallout from rising ACA premiums could lead hundreds of thousands, if not more than a million Texans, to abandon their health insurance plans. For those seeking to understand their potential new financial obligations, KFF provides a premium calculator, and Texans are encouraged to explore available health plan options at Healthcare.gov.
