With enhanced premium tax credits for Affordable Care Act coverage set to expire at year-end, financial advisors need to work with affected clients on strategies to address the likely spike in health insurance premiums.
An expiration could deal a particular financial blow to retirees younger than 65 and not yet eligible for Medicare.
Congress could extend the credits, which it approved in 2021 during the COVID-19 pandemic to make coverage more affordable and available to more people, but the Senate recently ended the government shutdown with only a promise to vote on premium relief next month.
The Republican-controlled Congress has opposed a straightforward extension of the enhanced premium tax credits, which, if left to expire, would result in about 7.3 million people losing subsidized ACA health coverage and 4.8 million people becoming uninsured, according to the Robert Wood Johnson Foundation.
The Kaiser Family Foundation estimates that premiums will more than double in 2026 without the enhanced credits, rising 114% to an average of $1,904 a year from $888 in 2025. The increases could be far higher for certain enrollees.
Those with incomes above 400% of the poverty line would be subject to large increases in premium payments, KFF notes. On average, a 60-year-old couple making $85,000, or 402% of the federal poverty level, would see yearly premium payments rise by over $22,600 in 2026, after accounting for an 18% annual premium increase, the foundation estimates.
“This would bring the cost of a benchmark plan to about a quarter of this couple’s annual income, up from 8.5%,” KFF says.
“Over half of enrollees at risk of losing these tax credits are between 50 and 64. This population already pays up to three times more for coverage than younger enrollees and will see astonishing rate hikes,” the Medicare Rights Center says.
With open enrollment for ACA plans in progress, here are seven moves that advisors might consider in working with clients on their health insurance for 2026.
1. Understand the 2026 ACA “cliff.”
“Since there is now a ‘cliff’ for the premium tax credits, which offset ACA health insurance costs, we are helping clients closely monitor their tax strategy” to reduce their income when possible to less than 400% of the federal poverty line, Zack Swad, Swad Wealth Management president and wealth manager, told ThinkAdvisor by email.
“Being below the limit versus above the limit could mean the difference of up to $20,000+ per year for a retired couple.”
2. Fine-tune clients’ tax moves.
“Strategies we are using are tax-loss harvesting, asset location and maximizing deductions where possible,” Swad said.
3. Pay attention to retirement income sources.
“We are also strategic about which accounts to tap to create income for our retired clients. In the past the traditional wisdom was to tap from Roth accounts last. This situation could create an exception to that rule,” Swad said.
“For example, say a retired couple's MAGI is $90,000 in 2026,” he said, referring to modified adjusted gross income. “That would result in zero subsidies. However, if they could lower their income below the $84,600 threshold, (they) could be entitled to substantial tax credits.”
Kurt Supe, CPA and retirement planner, posted on X that he saved a 58-year-old retired couple thousands a month in ACA premiums, and lowered their tax bill, largely by taking withdrawals from taxable brokerage funds rather than their individual retirement accounts, which would have been taxed as ordinary income and made them ineligible for the health care subsidies.
4. Consider the timing.
George Maroudas, wealth advisor at PGM Wealth, recommended strategically timing large-income events, such as property sales, withdrawals or Roth conversions, postponing them until the client is eligible for Medicare.
5. Look for safety in ETFs.
Maroudas also suggests managing taxable investment income by looking to tax-efficient exchange-traded funds rather than mutual funds to lower the risk for unexpected capital gains distributions. Small planning adjustments can make the difference between receiving thousands in tax credits or losing them completely, he wrote.
6. Explore other options.
If the enhanced premium tax credits do indeed expire, clients might consider other options, such as health insurance plans not on the ACA marketplace, Oak Street Advisors suggested in a blog post.
7. Analyze the trade-offs.
Oak Street also recommends analyzing trade-offs between ACA subsidies and other sensitive financial decisions, including Social Security timing.
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