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Written by: Molly Rimes | Modera Wealth Management, LLC
With the recent passage of the One Big Beautiful Bill Act (OBBBA), healthcare is once again in the spotlight. Much of the conversation is centered around changes to Medicaid, which have their own set of consequences, but given the nature of our profession, likely will not have a substantial impact to our clientele. However, the passage of the OBBBA is also being viewed as the shutting of the metaphorical door on the renewal of Affordable Care Act (ACA) subsidies, which is a topic of conversation for many Americans, regardless of socioeconomic status.
The ACA subsidies as we know them today were put into place in 2021 under the American Rescue Plan. Essentially, the ACA expanded the eligibility requirements to qualify for subsidies (the Inflation Reduction Act extended these provisions), and enrollment has consequently nearly doubled in the meantime. The Kaiser Family Foundation (KFF) has been leading the charge on research in this space, and they estimate that these enhanced subsidies have cut premium payments by an estimated 44% for those receiving premium tax credits1.
What does that mean for your clients?
As noted, these marketplace policies have grown in popularity over the past four years. Anecdotally, they have become increasingly popular amongst my client base for those with small businesses or working as contractors, as well as those looking to retire prior to age 65 and the associated Medicare eligibility. The calculation for qualifying for subsidies looked at income, not existing assets, so clients in these pre-Social Security and Required Minimum Distribution windows had a unique opportunity to keep their income low by relying on taxable assets rather than pre-tax options and collect a sizable subsidy to offset a significant portion of their insurance premiums. With the expanded subsidies expiring at the end of 2025, the true price for premiums is likely to increase, which is something to plan for from a cash flow standpoint.
However, there are other factors at play. With the premium costs being shifted to the participant, the anticipation is that there will be fewer enrollees in these marketplace plans, potentially scaling back to the pre-2021 levels. KFF has hypothesized that the healthier participants will balk at the rising costs and choose to self-insure, leaving a less healthy pool of enrollees remaining. With this in mind, KFF is predicting that premiums will double or more starting in 20262.
While we will not know the finalized 2026 premium rates until August, when meeting with clients impacted by these changes, it’s important to keep the following in mind:
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Cash outflows may be higher than anticipated in pre-Medicare retirement years.
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Maintaining a low income in the pre-Social Security and Medicare retirement years may not be as important as it once was, and this may present an opportunity for Roth conversions.
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Comparisons between COBRA (if available) and a marketplace plan will continue to be important, and finding a trusted third-party to assist in this can be a great value add to your client
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Itemizing deductions may be more appealing than during the Tax Cuts and Jobs Act (TJCA) years with the higher medical costs and, depending on where your client lives, the increase of the SALT cap from $10,000 to $40,000 (with phaseouts).
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If clients can pull any medical expenses forward to 2025 while they have lower out of pocket costs, it may be beneficial compared to waiting for 2026.
As for Medicare, which likely impacts more of your client base than the ACA or Medicaid changes, the actions taken by the Trump administration have been relatively minor thus far. According to Kiplinger, the notices released are essentially continuations of policies instituted under the Biden administration, but additional changes are anticipated to be released as Medicare open enrollment approaches in October3. Regardless, given the changing landscape, it can be helpful for clients to meet with a trusted professional annually to confirm that their plan continues to best suit their unique needs.
As advisors continue to look for ways to differentiate their practices from the competition, understanding these nuances within the healthcare industry are increasingly important. 2026 will bring what it may, but any planning done in advance will go a long way toward solidifying your client’s relationship.
Related: Putting the “Personal” in Personal Financial Planning
1 https://www.kff.org/affordable-care-act/issue-brief/inflation-reduction-act-health-insurance-subsidies-what-is-their-impact-and-what-would-happen-if-they-expire/
2 https://www.npr.org/sections/shots-health-news/2025/07/18/nx-s1-5471281/aca-health-insurance-premiums-obamacare-bbb-kff
3 https://www.kiplinger.com/retirement/medicare/medicare-changes-coming-in-2026
3.https://www.kiplinger.com/retirement/medicare/medicare-changes-coming-in-2026