Virginia and Michael McGrath were caught off guard in late November when they received a letter notifying them that their health insurance premiums would rise by around 20% next year.
Starting January 1, plans with EmblemHealth will cost $862 a month, which is $140 more than what they’re currently paying.
“We really can’t manage that,” Virginia McGrath expressed, indicating that the couple, both in their 70s, would need to strategize on how to handle the extra expenses. Virginia has a major surgery planned for January, but they believe it’s not the right moment to make any changes to their coverage.
Many Americans, including those on Long Island, are voicing their concerns over increasing health insurance premiums scheduled to take effect in the new year, as all types of insurance costs continue to rise.
Analysis of Rising Premiums
- Economists highlight that there’s a growing affordability crisis for Long Islanders, particularly affecting low- and middle-income families already strained by inflation and tariffs.
- Policy experts warn that these hikes could lead to reduced consumer spending and an increase in the number of individuals opting out of health insurance, which risks further premium increases down the line.
- The potential expiration of enhanced tax credits, especially for those under the Affordable Care Act, adds to rising financial burdens, with some individuals facing hundreds of dollars more each month.
This spike in costs intensifies the strain on already tight household budgets. Experts suggest that some policyholders, particularly younger people without significant health needs, might even decide to drop their insurance altogether.
Martin Melkonian, an economist at Hofstra University, mentioned that higher premiums tend to “result in lower spending overall,” particularly impacting low- and middle-income households that depend on tax credits to afford ACA plans.
“I think a lot of people are just hanging on by a thread these days,” Melkonian noted.
If federal measures aren’t taken, the enhanced premium tax credits under the ACA are set to expire at the end of 2025, leaving many individuals facing even greater out-of-pocket expenses.
Long Island Premium Trends
The majority of Long Islanders have some form of health insurance, with 96.2% in Nassau County and 95.3% in Suffolk County, according to census data. The 28,000 residents relying on federal tax credits for their ACA plans are expected to feel the biggest impact, facing an average 32% increase in 2026, on top of losing enhanced income-based tax credits.
Plans such as Medicare and employer-sponsored insurance are also experiencing premium increases due to factors like hospital mergers, an aging populace, and rising healthcare expenses. In September, employment insurance plans were projected to rise by an average of 6.5%, the steepest jump since 2010. A consulting firm estimated that without implementing cost-cutting measures, average benefit costs could climb nearly 9%.
In New York, small group plans for businesses with 100 or fewer employees are set to increase by an average of 13%, while individual-based plans may go up by about 7.1%, according to a review. The state’s Department of Financial Services has approved some of the largest price hikes for state-regulated plans in years, though these increases are still less than what insurers initially sought.
Meanwhile, Medicare premiums are anticipated to rise by around 10%, according to a consumer advocacy group.
Matthew McGoff, a policy analyst at KFF, stated that rising costs could force some individuals to seek additional employment just to cover their insurance premiums.
Some may turn to lower-cost plans with higher out-of-pocket costs, while younger, healthier individuals might choose to forego private insurance entirely—a decision that could contribute to higher overall premiums in the future.
Stephen Kent, chief economist at the Long Island Association, noted that increased spending on bills equates to less disposable income circulating in the local economy, particularly in high-cost areas like Long Island.
Chris Riley, 80, from Manorville, expressed his frustration that increases in Medicare premiums have outpaced the annual cost-of-living adjustment on his Social Security check, which he relies on for retirement along with his savings.
“For everyone on Social Security, the rise in benefits is quickly devoured by the Medicare premium hikes,” Riley explained.
Effects on Small Businesses
Vanessa Baird Streeter, CEO of the Long Island Health and Human Services Council, indicated that the upcoming loss of enhanced tax subsidies will particularly harm small business owners and many middle-class families that depend on federal tax credits.
“People will likely have to make tough choices about what to prioritize—food, insurance, or mortgage payments,” she said.
Under current laws, households with incomes up to 400% of the federal poverty line are eligible for tax contributions. Those making above this threshold may still qualify for an enhanced credit if their ACA premiums exceed 8.5% of their household income.
Reports suggest that nearly half of adults under 65 enrolled in ACA individual market insurance are connected to small businesses, whether as employees of businesses with fewer than 25 employees, self-employed entrepreneurs, or small business owners.
Baird Streeter noted that ACA premiums have surged by as much as 50% in certain areas of Long Island, adding another financial strain to small businesses already grappling with rising costs due to inflation and tariffs.
“Long Island is characterized by small businesses,” she highlighted. “We’re talking about local shops, and it’s definitely these owners who will feel the pinch.”
Small businesses comprise about 90% of Long Island’s business landscape and employ hundreds of thousands of people.
Health insurance premiums are, for some small business owners, approaching the costs of rent. Joseph Garcia, vice president of the association, stated, “It was already challenging to create and maintain small businesses; these increases won’t help.”
Kent added that rising premiums might also discourage entrepreneurial efforts in Long Island, making individuals hesitant to start their own businesses.
McGaugh mentioned that escalating premiums could drive existing small business owners to seek more stability through employer-sponsored health plans elsewhere.
Long Islanders, as well as small business owners, face ongoing uncertainty about future ACA subsidies, Kent emphasized. Recently, the Senate rejected a proposal to extend ACA subsidies for an additional three years, as well as a Republican alternative aimed at establishing new health savings accounts instead.
