On November 1, 2025, in Northglenn, Colorado, residents will share their stories about cutting healthcare costs while participating in the first day of ACA enrollment.
As federal subsidies for health insurance premiums from the Affordable Care Act come to an end, several states are stepping up to mitigate the financial effects.
Starting in 2026, states including California, Colorado, Connecticut, Maryland, Massachusetts, and New Mexico will offer state-funded premium subsidies to help residents manage rising costs after the enhanced federal aid expires at the end of 2025. Experts note that while state aid often isn’t as generous as the federal assistance, it will nonetheless support many low-income consumers and help maintain insurance coverage for more households.
“They’re softening the blow,” said Louise Norris, a health policy analyst at healthinsurance.org, referring to the impact of these state-level subsidies.
In 2025, approximately 2.6 million individuals across these states are set to receive boosted federal premium subsidies, translating to nearly 12% of all consumers nationwide benefiting from this sort of financial aid, according to data from KFF.
Blue states offer ACA subsidies
A sign promoting Obamacare in San Ysidro, California, on October 26, 2017.
This development could potentially heighten political divisions over healthcare subsidies. Democrats in Congress are advocating for an extension of the expired federal support, even amid a lengthy government shutdown, but their efforts have faced opposition from the Republican majority.
According to Matt McGaugh, a policy analyst at KFF, states leaning Democratic are those primarily choosing to provide extra premium assistance. However, it’s still only a limited number of states doing so.
Conversely, Republican-leaning states like Texas and Florida have experienced the largest increases in ACA enrollment since the boosted federal aid began in 2021, but the end of federal assistance will likely leave many of those consumers without insurance.
Florida and Texas are home to approximately 4.5 million and 3.7 million residents, respectively. An analysis of federal data suggests that these states contribute significantly to the total 22 million Americans who benefit from premium subsidies.
In California, the most populous state in the U.S., around 1.8 million individuals received premium tax credits last year. The debate over ACA subsidies is particularly pertinent in this midterm election year as Republicans strive to maintain their slim House majority, while affordability of healthcare emerges as a crucial topic for both politicians and voters.
Financial impact of expiration of ACA enhanced subsidy
KFF anticipates that the average premium for those who received a premium tax credit last year could more than double, climbing from $888 to $1,904 per month in 2026 due to the end of enhanced federal subsidies.
The federal aid enhancement began in 2021, building upon a framework for premium tax credits originally established in 2014 with the ACA. While the foundational federal grants will remain, there is a phased approach to providing further support to low-income families.
Nonetheless, experts maintain that these current measures do not match the value of the enhanced tax credits. With the enhanced subsidies, out-of-pocket costs were capped at 8.5% of a household’s annual income, but with the changes, this cap may increase to approximately 10%.
Moreover, the return of the so-called “subsidy cliff” will mean some households can no longer qualify for premium tax credits. Previously, middle-income families earning over 400% of the federal poverty level were eligible for these credits; however, they will now find themselves disqualified.
The federal guidelines for poverty levels will inform income eligibility for 2026.
What states are doing to bridge the gap
The healthcare.gov website on display on a laptop on November 1, 2025, in Norfolk, Virginia.
McGough pointed out that states like New York, Connecticut, Vermont, Massachusetts, New Jersey, and Washington already provided additional assistance to help residents afford health insurance alongside federal premium tax credits prior to the expiration of enhanced federal aid.
These measures remain effective, according to him.
Additionally, other states have taken steps to enhance funding as enhanced federal aid fades.
New Mexico
Experts identify New Mexico as the only state that has fully replaced enhanced federal aid for its residents. “They backfilled everything,” Norris emphasized, noting that utilization of grant money in New Mexico was efficient, leading to a rise in enrollment.
The state’s ACA enrollment is expected to decline by about 17% from the previous year in 2026, a trend contrary to national averages. By early January, approximately 1.5 million U.S. households had already lost their insurance coverage, and projections suggest nearly 5 million individuals could lose their insurance by 2026 due to the subsidy expiration.
New Mexico legislators have funded assistance until June 30, with Democratic Governor Michelle Lujan Grisham advocating for an extension if Congress fails to secure additional funding.
Connecticut
Connecticut is working to provide some level of replacement for subsidies that will expire for higher-income individuals, falling above 400% of the federal poverty line. For instance, those making between 400% and 500% of the federal poverty level are set to be eligible for half of the subsidies that will lapse.
Furthermore, Connecticut plans to fully fund the expiring enhanced subsidies for households earning between 100% and 200% of the federal poverty level, targeting those most affected by the changes.
Consequently, average premiums for families in this income group are projected to rise significantly due to the changes.
Massachusetts
Massachusetts Governor Maura Healey recently announced an additional investment in the state’s health insurance marketplace to shield residents from rising costs.
Massachusetts is set to invest an extra $250 million in its ConnectorCare health insurance marketplace in 2026, totaling $600 million, according to a recent press release. This funding is drawn from the Commonwealth Care Trust Fund and aims to shield roughly 270,000 consumers from significant premium increases due to the expiration of federal assistance.
The state will also introduce caps on medical deductibles and co-pays, as well as limit costs for medications like insulin and inhalers. Massachusetts is extending a pilot program to offer state premium subsidies to individuals earning up to 500% of the federal poverty line.
Maryland
Other states are also implementing strategies to assist vulnerable communities, particularly low-income families. Maryland is replacing enhanced federal premium subsidies for those earning below 200% of the federal poverty line. The state will also compensate for half of the expired federal aid for those with incomes between 250% and 400% of the federal poverty level.
