As open enrollment begins on November 1, tax practitioners face an urgent challenge: helping clients navigate dramatic changes to the Affordable Care Act marketplace coverage that will significantly impact both their 2026 premiums and 2026 tax returns.
The Enhanced Premium Tax Credit Dilemma
Enhanced premium tax credits, which have provided expanded subsidies since 2021, are set to expire December 31, 2025. Unless Congress acts before year-end, subsidized marketplace enrollees will face average out-of-pocket premium increases of 114%. With lawmakers failing to extend the credits before open enrollment begins, clients logging into healthcare.gov on November 1 will immediately see these higher premiums reflected in their 2026 plan options.
The impact varies by income level. Clients earning below 400% of the federal poverty level, $62,600 for individuals or $128,600 for a family of four, will still receive tax credits, but substantially reduced amounts. Those earning above these thresholds will lose eligibility entirely, facing both the elimination of subsidies and underlying premium increases from insurers. This creates particular hardship for middle-income clients who have relied on these credits to make coverage affordable.
New Repayment Risks for 2026
Tax practitioners must alert clients to a critical change: starting with the 2026 plan year, repayment limits for excess premium tax credits have been eliminated. Previously, clients who underestimated their income faced capped repayment amounts when filing taxes. Now they must repay excess credits in full.
This change poses severe risks for self-employed clients, gig workers, and others with volatile income. A client who estimates income at $60,000 but earns $65,000 could face repayment of thousands of dollars at tax time. If enhanced credits expire and a client's actual income exceeds 400% of poverty, they must repay the entire annual credit, potentially tens of thousands of dollars.
Practical Guidance for Practitioners
Tax practitioners should immediately reach out to clients with marketplace coverage to discuss these changes. Encourage clients to carefully estimate 2026 income, erring on the conservative side given unlimited repayment exposure. Emphasize the importance of reporting mid-year income changes to the marketplace to adjust advance credits and minimize year-end surprises.
Clients may consider switching to bronze or catastrophic plans with lower premiums but higher deductibles to manage monthly costs. Bronze and catastrophic plans are now automatically eligible to be paired with health savings accounts, offering potential tax advantages. However, catastrophic plans come with deductibles of $10,600 for individuals or $21,200 for families in 2026.
With Navigator program funding slashed by 90%, clients will have fewer resources for enrollment assistance. Practitioners can add value by helping clients understand these changes and calculate their true coverage costs under different scenarios.
The uncertainty surrounding enhanced premium tax credits makes 2026 tax planning particularly complex. Practitioners should monitor legislative developments closely, as any year-end extension could significantly alter client premium costs and tax positions. Until then, conservative income estimates and proactive mid-year adjustments remain the best strategies for managing client exposure.
Christine Gervais is a licensed CPA, using her skills to help businesses grow and achieve their fullest potential. Christine has a Master’s degree in accounting from Southern New Hampshire University in addition to holding her CPA license for over a decade. Notably, Christine is a nationally recognized speaker providing education to other CPAs on how to best serve clients as well as instruction on a wide variety of topics for business owners on how to maximize success. Christine prides herself on the value she can bring to clients with her extensive tax knowledge and provides strategic, forward-thinking financial strategies to help clients grow. When not behind her desk, you can find Christine spending quality time with her daughter and stepson or tending to the family’s excessively loved farm animals.
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