Inflation in medical services and supplies, combined with high-cost prescriptions increased health insurance premiums this past year, and it will likely happen again next year. Those of us who depend on the Affordable Care Act (ACA) subsidies got a double whammy when the temporary enhancements expired.
But higher premiums and lower subsidies are just the tip of the iceberg as the ACA Marketplace continues to change. Next year, Americans may have more insurance options. Some with eye-watering deductibles. Find out how to keep your insurance costs low.
ACA Premiums & Deductibles are Climbing
Last year, multiple insurance companies increased their premiums by 6% to 12%, and policyholders can expect a similar increase in 2027. Insurers claimed medical inflation, higher utilization, and high-priced prescription prices drove costs up. At the same time, insurers under contract renegotiations cited providers demanding higher reimbursement rates.
While it’s easy to understand that inflation has increased prices, it’s difficult to ignore the profits of the largest health insurers, like:
- ·United Health Group with $32 billion.
- ·Elevance Health with $6 billion
- ·Cigna Group with $3.4 billion
- ·Humana with $1.2 billion
Dozens of insurers have informed ACA Marketplaces of higher premiums in the upcoming year. Again, they are maintaining the same factors as mounting costs, including medical inflation, contract renegotiations, prescription drug costs, higher utilization, and sicker pools (policyholders).
Similarly, insurers increase deductibles (the amount policyholders must pay for some services before the plan provides coverage). On average, deductibles went up by more than $1,000.
The Marketplace sets a maximum out-of-pocket limit policyholders can pay. In 2026, that cap is $10,600, but it will increase to $12,000 in 2027.
Health Care Subsidies Went Down
Simultaneously, subsidies for ACA plans went down. The enhanced subsidies from the American Rescue Plan and Inflation Reduction Act expired, so everyone lost a portion of their total subsidy, and some people lost them outright.
The expiration set back the income cap at 400% of the Federal Poverty Level (FPL). So, a single person earning more than $63,840 and a married couple making more than $86,560 are now ineligible for subsidies. And the percentage of income people had to pay went from 0-2% to:
- 2-4% if low income.
- 6-9.5% if middle income.
- Up to 9.5% if higher income (but less than 400% FPL).
And contrary to insurers raising premiums for most plans, premiums for benchmark plans went down, so subsidies automatically reduced. How? Because the benchmark plan is simply the second-lowest-cost Silver plan for the area. If you want coverage at the lowest cost, you need to select the benchmark plan.
So, while well-known insurers can raise the premiums, new insurers entering the market can competitively price their plans. And premiums for other tier plans (Bronze, Gold, and Platinum) are based on the Silver plan benchmark, so a decrease to the benchmark can significantly change the price policyholders pay for other plans.
Cheap Insurance Policies Until They’re Not
The Trump administration finalized some ACA reforms that will start in 2027. One of these changes includes increasing access to catastrophic plans, which typically have very low monthly premiums. However, these low premiums come at a cost: a significantly higher out-of-pocket deductible.
Catastrophic plans are meant for protection should the worst case occur, like getting into a life-threatening accident. They’re best for young, healthy adults who rarely need medical services.
Here’s what you can expect from a catastrophic plan:
- Very low monthly premium; usually between $150 and $300.
- Very high annual deductible; usually between $9,200 and $10,600.
- Free preventive care and, typically, three primary care visits.
For some, this type of coverage could save them thousands a year. For others, it could be a very expensive mistake.
Catastrophic plans have strict eligibility rules when it comes to age and affordability. Either you have to be younger than 30, or you qualify for a hardship exemption due to bankruptcy, homelessness, medical debt, very low income, etc. But these rules are disappearing in 2027.
Next year, anyone can choose a catastrophic plan regardless of age or income. And, it might be possible to use the ACA subsidies to offset the already low premiums. Prior, this insurance type was not eligible for subsidies.
So, why isn’t this the best option for everyone? Besides preventive care, everything is out-of-pocket until you’ve spent the deductible. If you visit the doctor about a pinched nerve, you pay the full $500+ bill. If you break your arm, you could spend $5,000 for non-surgical treatment.
How a Catastrophic Plan Compares to a Traditional Insurance Policy
The big selling point of a catastrophic plan is the low-cost premiums. As mentioned, the premium for these types of plans is just a few hundred a month or a couple thousand a year. Comparatively, other ACA plans could cost anywhere between $330 to $1,000+ each month. That’s $4,000 to $12,000 in a year.
The big downside of a catastrophic plan is the high deductible. New rules set the maximum out-of-pocket cost to policyholders at 130% of the standard cap (effective in 2028). The typical Bronze ACA deductible is currently $6,000 to $7,500, but the 2027 maximum can make them as high as $15,600. The other metal tier deductibles are lower.
However, some plans have multiple deductibles. For instance, some plans have a separate prescription drug deductible. Or out-of-network charges may only go toward a separate out-of-network deductible. Likewise, family plans may have a family deductible.
Using average premium and deductible ranges, your annual out-of-pocket could be:
- $11,800 to $13,600 with a catastrophic plan.
- $10,960 to $12,040 with a bronze plan.
- $10,400 to $11,600 with a silver plan.
- $9,199 to $10,300 with a gold plan.
Another thing to consider is what counts toward your deductible. With standard insurance plans, only the amount you pay above the allowed charge counts. Your copays, coinsurance, and non-covered services do not.
With a catastrophic plan, almost every dollar you pay on covered medical care counts because they (usually) do not have copays or coinsurance. The full insurance-negotiated price goes toward the deductible. Free preventive care and the copay for the three covered primary-care visits don’t.
