For self-employed individuals and early retirees—specifically those under 65 who haven’t yet reached Medicare eligibility—open enrollment on the Affordable Care Act (ACA) marketplace can be one of the most important times of the year. This year, though, it brings more uncertainty than ever. As ACA open enrollment begins for 2026 coverage, premiums are rising sharply, and the enhanced premium tax credits that have made health insurance more affordable for millions are set to expire at the end of 2025. Unless Congress acts to extend them, many Americans could see their monthly costs skyrocket.

Let’s break down what’s happening, what it means, and what you can do to prepare.

What’s Changing (and Why It Matters)

During the Covid-19 pandemic, Congress temporarily expanded eligibility for premium tax credits and increased the size of those subsidies, ensuring that no one buying coverage on the ACA marketplace would pay more than 8.5% of their income toward health insurance premiums.

These “enhanced subsidies” made ACA plans far more affordable, even for households earning well above 400% of the federal poverty level (about $62,600 for an individual). However, those enhancements are set to expire at the end of 2025.

Part of the current gridlock in Washington stems from debates over these very subsidies. Lawmakers are at an impasse about whether to extend the enhanced premium tax credits, with the issue becoming a sticking point in negotiations to reopen the federal government.

If Congress doesn’t vote to extend them, 2026 premiums could look dramatically different. People earning just over the 400% income threshold could lose all federal assistance, meaning a 60-year-old might pay nearly $10,000 more per year for the same plan—an $800+ monthly increase.

Adding to the challenge, new IRS rules have lifted the cap on subsidy repayments. That means if you underestimate your income for the year—perhaps due to capital gains, consulting work, or part-time earnings—you could owe thousands of dollars in back taxes when reconciling your return.

How These Changes Could Affect You During ACA Open Enrollment

Premiums are expected to rise across the board, with insurers projecting average increases of about 26% nationwide. That figure reflects higher plan prices—not necessarily what you’ll pay out of pocket. If the ACA’s enhanced premium tax credits expire as scheduled at the end of 2025, many enrollees could see their actual costs climb far more steeply, especially early retirees and the self-employed.

According to KFF, more than half (51%) of individual-market enrollees earning above 400% of the federal poverty level are between ages 50 and 64. This group faces the highest premiums because ACA plans are age-rated, allowing insurers to charge up to three times more for a 64-year-old than for a 21-year-old. Without subsidies to offset that difference, older adults bear the full brunt of rising costs.

To put this in perspective:

• A 60-year-old earning just above the subsidy threshold could pay around $9,600 more per year in premiums.
• A 64-year-old might see an increase of roughly $11,000 annually.
• Even early retirees in their 50s could face several thousand dollars in added costs each year.

For those who have come to depend on premium tax credits, these changes could make coverage feel out of reach. Some may need to explore alternatives such as higher-deductible plans, joining a spouse’s employer plan, or even taking part-time work that offers health benefits to keep premiums manageable.

What to Do During Open Enrollment

If you’re feeling uneasy reading this, you’re not alone. This year’s open enrollment season brings more uncertainty than usual, and the financial impact could be significant for many households.

The good news is you still have time and options to prepare. By taking a proactive approach now, you can avoid unpleasant surprises later.

Here’s where to start:

#1: Update Your Marketplace Account

Don’t rely on auto-renewal. Log in to your ACA Marketplace account and carefully review your projected income, household size, and personal information. Small changes can significantly impact your eligibility for subsidies.

#2: Compare Plans Based on Sticker Price

When browsing options, look at the full, unsubsidized premiums. If subsidies lapse, this “sticker price” is what you’d pay. If that number feels out of reach, consider less expensive bronze or catastrophic plans that come with higher deductibles but lower monthly premiums.

#3: Revisit Your Income Strategy

For early retirees, your modified adjusted gross income (MAGI) determines subsidy eligibility. Managing when and how you draw income—for instance, from Social Security, Roth conversions, or taxable accounts—can make a big difference. Working with a financial planner can help you structure withdrawals to stay within subsidy limits.

#4: Avoid Non-ACA Alternatives (Unless You Fully Understand the Risks)

Short-term or fixed indemnity health plans may look appealing, but they often exclude pre-existing conditions, have limited benefits, and can leave you exposed to significant medical bills. Always read the fine print before opting out of ACA coverage.

#5: Keep an Eye on Congressional Updates Throughout ACA Open Enrollment

Congress could still act before year-end to extend enhanced subsidies. Because insurers may delay finalizing premiums until decisions are made, it’s wise to check back later in open enrollment. If legislation passes after you’ve already enrolled, you can typically adjust your plan or receive an updated premium credit retroactively.

#6: Don’t Pay Too Early

If you’re concerned about overpaying and can afford to wait, hold off on submitting your first premium payment until closer to your coverage start date. Should subsidies be extended, your adjusted credit will reduce your bill.

Planning Ahead for 2026

This year’s ACA open enrollment season is unlike any other. With rising premiums, evolving rules, and ongoing uncertainty in Washington, self-employed individuals and early retirees need to take a more hands-on approach than ever. Be sure to review your coverage, update your income information, and compare your options carefully, as what worked last year may no longer be the best fit for the year ahead.

Even if Congress ultimately renews the enhanced subsidies, this moment serves as a reminder that health insurance remains one of the most significant expenses to plan for before Medicare. Taking the time now to understand your options and build these costs into your broader financial plan can help you avoid surprises later and keep your coverage both affordable and sustainable throughout your early retirement years.

Lastly, you don’t have to navigate these decisions on your own. Align Financial can help you evaluate your health insurance choices in the context of your overall retirement plan, manage your taxable income to preserve potential subsidies, and identify ways to reduce out-of-pocket costs. If you’d like personalized guidance this open enrollment season, we’re here to help you find clarity and confidence in your next steps. Contact us to get started.