The Looming ACA Premium Tax Credit Cliff: How Families Can Manage Rising Healthcare Costs

Picture this: You finally have a handle on your healthcare costs. The numbers make sense. The plan fits. But a sudden change in policy could flip everything upside down. It can feel like the ground shifting beneath your feet.

For many families, the potential expiration of enhanced ACA Premium Tax Credits at the end of 2025, still under Congressional consideration, could lead to higher marketplace premiums and new financial challenges. Early retirees, self-employed households, and families supporting multiple generations are most at risk. Premiums may rise, cash flow could shift, and retirement plans may require adjustment. Understanding these potential changes and planning strategically helps families navigate this uncertainty with confidence.

How Would Premiums be Affected?

The future of the enhanced ACA Premium Tax Credits is still uncertain. If Congress does not extend the credits for 2026, many families could face significantly higher marketplace premiums:

• Income thresholds: Households with Modified Adjusted Gross Income (MAGI) above 400% of the Federal Poverty Level (FPL) could lose the subsidy entirely.
  • For 2025, that’s roughly $48,700 for a single individual and $84,600 for a married couple.
• Potential premium increases:
  • A 60-year-old single person earning $50,000 could see annual marketplace premiums rise from around $7,200 with the credit to over $15,000 without it.
  • A married couple earning just above $85,000 might face increases of more than $22,000 per year.
• Broader impact: Even households below these thresholds could see smaller premium increases as overall marketplace costs rise. This could affect monthly cash flow, retirement savings, and household budgets.

Note: These figures are projections based on current Marketplace premiums and assume Congress does not extend the enhanced credits. Final costs for 2026 will depend on legislative action.

Practical Steps for Managing Costs

Despite the uncertainty, families can take steps to manage expenses and plan effectively:

• Review current coverage options: Compare ACA marketplace plans to ensure the best fit for income and family situation.
• Use tax-advantaged accounts: Maximize HSAs or FSAs to reduce taxable income while saving for healthcare costs.
• Coordinate family support: Adult children helping pre-Medicare parents or parents keeping children on plans until age 26 can share expenses strategically.
• Plan for future income and tax strategies: Adjust withdrawals, Roth conversions, or income streams to help manage costs and taxes long-term.
• Model scenarios with advisors: Understanding how decisions affect cash flow, retirement, and taxes reduces financial stress.

Why Multigenerational Planning Matters

Healthcare costs ripple across generations. Families can align strategies to protect coverage and finances:

• Parents keeping adult children on plans until age 26 may face higher premiums without strategic planning.
• Adult children supporting pre-Medicare parents can coordinate gifts or shared expenses.
• Aligning these decisions with estate planning, Roth timing, and long-term goals turns healthcare planning into true multigenerational planning.

Take Action Now

The ACA Premium Tax Credit cliff is still up in the air as Congress debates the future of enhanced subsidies for 2026. Families can navigate this uncertainty thoughtfully. Connect with us at Evensky & Katz / Foldes to review your coverage, explore cost-saving strategies, and plan for the future with confidence.