Several U.S. states are taking action to protect residents from rising health insurance costs after federal support for Affordable Care Act plans expired. As federal premium tax credits ended in late 2025 without a new agreement from Congress, millions of Americans enrolled in ACA plans began facing higher monthly premiums. In response, six states have expanded or strengthened their own subsidy programs for 2026 to reduce the financial burden on households.
Why ACA Premiums Increased in 2026
For several years, enhanced federal tax credits helped keep ACA premiums affordable for a wide range of income groups. When these credits expired at the end of last year, monthly costs for many enrollees increased almost immediately. Lawmakers in Washington have continued debating whether to restore the credits, but no resolution has been reached so far. As a result, states were left to decide whether to step in and fill the gap.
States Expanding Their Own Subsidies
California, Colorado, Connecticut, Maryland, Massachusetts, and New Mexico have all increased state-funded ACA assistance for 2026. These states already operated their own health insurance marketplaces and were able to adjust their programs more quickly. By adding state money, they aimed to offset at least part of the lost federal support and prevent residents from dropping coverage due to higher costs.
New Mexico chose the most aggressive approach by fully replacing the lost federal tax credits for all residents, including recent immigrants. This decision helped stabilize coverage in the state, and enrollment for 2026 actually rose compared to the previous year. In contrast, national ACA enrollment has declined as premiums increased in many other states.
Targeted Help Based on Income
Some states are focusing their assistance on lower-income households rather than covering everyone. California, for example, is offering extra subsidies only to ACA enrollees earning up to 150 percent of the federal poverty level. For people in this income range, the added state help can reduce premiums to zero for certain plans, even though costs would otherwise be higher without federal credits.
Colorado is using a broader income range. Residents earning up to 400 percent of the federal poverty level can receive a monthly subsidy to lower their premiums, with additional help provided for family members on the same plan. This approach aims to keep coverage affordable for both individuals and families.
Why State Marketplaces Matter
Only states that run their own health insurance exchanges can directly apply extra subsidies at enrollment. The federal HealthCare.gov system is not designed to calculate state-level premium assistance. Currently, 20 states operate their own exchanges, allowing more flexibility in responding to funding changes.
Looking Ahead
With healthcare costs remaining a major concern, some federal leaders are exploring new approaches to financial assistance. However, for now, state-funded subsidies are playing a key role in keeping ACA coverage within reach for many Americans in 2026.
Disclaimer:
This article is for informational purposes only and does not provide legal, medical, or financial advice. Health insurance programs, subsidy rules, and eligibility requirements may change. Readers should consult official state marketplace resources or qualified professionals for guidance specific to their situation.
