By Justin Leader
With the enhanced ACA subsidies set to expire and insurers filing for 15–20%+ premium increases in 2026, many are bracing for what could be a massive affordability shock for middle-class families, especially those who have relied on expanded subsidies since 2021.
But what does this really mean for the ICHRA marketplace?
First, some perspective.
Yes, insurers are submitting steep increases, but historically, most are approved for less. It’s rare for approved hikes to exceed 10%, so we may not see the full brunt of those filings.
That said, the 75%+ increase will be real for middle-income families who lose their subsidies. While that may not directly impact ICHRA as a pre-tax employer strategy, it dilutes the attractiveness of the individual market, which could ultimately affect risk pools, market stability, and future pricing.
More key considerations for ICHRA planning:
Affordability Tests May Get Tricky
Employer contributions under ICHRA must meet the affordability threshold tied to the lowest-cost silver plan, which, in many states like Pennsylvania, is ironically more expensive than some gold plans. If silver premiums rise faster than others, employers could be required to increase their contributions just to remain compliant.
Middle-Class Families Will Feel It Most
Those just above the subsidy cliff could experience severe sticker shock, especially if they were only able to afford coverage due to the expanded subsidies now disappearing.
Plan Migration and Member Behavior
If the individual market becomes less affordable and less attractive, the healthier population may drop coverage, destabilizing the individual market. That affects everyone, including ICHRA enrollees, over time.
Timing Matters
As rate filings close by the end of this month, all eyes will be on what’s actually approved, not just proposed. What gets finalized will directly influence ICHRA strategy, affordability modeling, and overall interest in individual market adoption.
BLUF (Bottom Line UP Front) ICHRAs remain a powerful tool for employers, but 2026 could test the strength of the individual market as a viable long-term solution. Employers, advisors, and fiduciaries must keep their eyes on rate approvals, monitor silver plan trends closely, and brace for a possible rebalancing of ICHRA feasibility if market volatility escalates.
