Blue States Introduce Stopgap ACA Premium Assistance After Federal Subsidies Expire

WASHINGTON — Six states are funding their own premium subsidies for Affordable Care Act (ACA) marketplace plans in 2026, aiming to cushion consumers from sharp cost increases caused by the lapse of enhanced federal aid at the close of 2025.

Federal support ends, state programs emerge

Enhanced federal premium tax credits, available from 2021 through 2025, had limited household payments to 8.5 percent of income and expanded eligibility beyond 400 percent of the federal poverty level. With those provisions gone, the original ACA subsidy structure — which tops out near 10 percent of income and excludes many middle-income families — is once again the national standard.

California, Colorado, Connecticut, Maryland, Massachusetts and New Mexico have responded by allocating state funds to keep premiums from spiking for residents who buy insurance on their exchanges. Together, the six states accounted for roughly 2.6 million of the 22 million Americans who received enhanced aid in 2025, according to data compiled by the nonprofit KFF.

The scale of state assistance varies. Analysts describe most programs as partial replacements that lessen, but do not erase, higher costs. Even so, they are expected to deter some households from dropping coverage, a risk that looms larger in states choosing not to intervene.

Nationwide premium impact

KFF estimates the average subsidized enrollee’s monthly premium will more than double in 2026, jumping from $888 to $1,904, once the augmented federal credits disappear. Middle-income families are hit especially hard because they lose eligibility altogether when income exceeds 400 percent of poverty, about $63,000 for an individual or $129,000 for a family of four.

Early federal enrollment figures show roughly 1.5 million consumers had already left the marketplaces by January. The Urban Institute projects that nearly 5 million people could become uninsured during 2026 if no additional relief arrives from Congress.

Political divide deepens

The state-level interventions underscore partisan differences over the ACA. Democratic lawmakers continue to press for a federal extension of the expired subsidies, while the Republican-led House has opposed new spending. The six states adding aid are all governed by Democrats, whereas the largest enrollment gains during the enhanced-subsidy era occurred in Republican-controlled Texas and Florida, where no replacement funds are planned.

Details of each state program

New Mexico: The only state to fully backfill the lost federal support. Residents see no reduction in subsidy size, and enrollment has risen about 17 percent year over year. Financing is authorized through June 30, with Governor Michelle Lujan Grisham calling for continuation if Congress does not act.

Connecticut: Offers two tiers of aid. Households between 100 percent and 200 percent of the poverty level receive a full replacement of the expired federal amount, while those between 400 percent and 500 percent receive half. The initiative addresses consumers whom officials label “particularly hard hit” by the subsidy cliff.

Massachusetts: An additional $250 million from the Commonwealth Care Trust Fund raises total state spending on ConnectorCare subsidies to $600 million for 2026. About 270,000 enrollees under 400 percent of poverty will see little or no premium increase. The state also set new limits on deductibles, co-payments, and the prices of insulin and inhalers. A separate pilot covering residents up to 500 percent of poverty continues for another year.

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Maryland: Fully replaces lapsed federal subsidies for households below 200 percent of poverty and covers half of the lost amount for those between 250 percent and 400 percent. The Maryland Insurance Administration says the measure targets lower-income residents most vulnerable to premium hikes.

California: Budgeted $190 million to hold monthly premiums at 2025 levels for enrollees up to 150 percent of poverty and offers modest additional help up to 165 percent. Analysts note that the allocation offsets only a small portion of the estimated $2.5 billion state residents lose with the federal enhancements gone.

Colorado: Provides up to $80 a month for an individual and $29 for each additional covered family member. The subsidy applies to incomes between 100 percent and 400 percent of poverty and is projected to replace roughly 40 percent of the foregone federal benefit.

Outlook for 2026 enrollment

Market watchers expect enrollment patterns to diverge by geography. States with replacement funding anticipate steadier participation, while others may experience significant attrition as premiums rise. Texas and Florida together had more than 8 million subsidized enrollees in 2025, representing over one-third of all recipients nationwide; analysts warn many of those consumers may abandon their plans during the current coverage year.

Whether additional states will fund their own subsidies remains uncertain. Prior to the federal lapse, Washington, New York, Vermont and New Jersey already offered modest supplements that remain in force, but no new programs have been announced outside the six current initiatives. Industry observers say legislative calendars and budget constraints make widespread adoption unlikely before the 2027 plan year.

For now, the patchwork approach leaves the affordability of ACA plans dependent on state action, a reversal of the nationwide parity created by the enhanced federal credits three years ago.

Crédito da imagem: Getty Images Entertainment