ACA Subsidies, Rising Costs, and What Employers Are Doing Next

As employers plan for the year ahead, the conversation around healthcare affordability is shifting. While recent congressional votes failed to advance another extension of enhanced premium tax credits, the more important development is not legislative. It is operational. Employers, brokers, and employees are actively responding to sustained cost pressure by reassessing how coverage is funded, selected, and supported.

From the perspective of one of the country’s largest ICHRA administrators, our Open Enrollment 2026 data provide insight into how employees react when affordability pressures intersect with choice. These trends highlight the limitations of subsidies alone and point to practical strategies employers can use to manage costs. Offering alternative funding approaches like ICHRAs allow employers to maintain control over spending while providing employees with options tailored to their individual health and financial needs.

Subsidies Continue to Buy Time, Not Cost Control

ACA subsidies remain an important affordability tool for many people, offsetting premiums and helping maintain participation in the individual market. However, subsidies are inherently temporary and subject to political cycles. The recent failure to extend enhanced subsidies underscores a broader reality: temporary policy changes may ease costs briefly, but they do not address the underlying drivers of healthcare inflation.

Medical costs continue to rise due to factors including specialty drug utilization, higher provider reimbursement rates, and growing demand for services. Subsidies reduce the immediate financial burden but do not slow these cost drivers. As a result, employers are exploring alternatives that provide predictability while still supporting employee access to coverage.

ICHRA Enrollment Data Shows Active Cost Management

Enrollment patterns among our ICHRA participants illustrate how people respond when employers offer choice-based alternatives in an environment of rising costs. Key observations from Open Enrollment 2026 include:

• High plan-switching activity: 84% of returning members changed plans, up from 64% the previous year, which shows increasingly active engagement in coverage decisions.
• Carrier movement: Nearly 29% switched to a different insurance carrier entirely, while over 55% chose a different plan within the same carrier, reflecting both loyalty and optimization.
• Metal tier preferences: Gold plans remained the most popular at 42%, with Gold and Silver together to account for more than 75% of selections. Bronze plans increased by over seven percentage points, demonstrating affordability-driven adjustments across age groups.
• Age-based coverage trends: Unsurprisingly, older members favored comprehensive coverage, with 46% of those aged 56-64 selecting Gold plans compared with 34% of members aged 21-25.

These patterns suggest that employees respond to rising costs by making deliberate adjustments to their coverage when they have clear information and the ability to select among available options.

Market Competition Absorbs Disruption

Enrollment outcomes among members also highlight the stabilizing role of competition. No single carrier captured more than 14% of total enrollment, and plan selection remained highly distributed. When Aetna exited the individual market for 2026, for example, members redistributed across multiple carriers, with no single carrier capturing more than 18% of the displaced enrollment. 

This experience signals that in a competitive market, employees can exercise choice without creating concentrated disruption. For employers evaluating alternatives to traditional group coverage, it underscores the value of maintaining diverse options and funding models that encourage employees to make informed decisions.

Employers Seeking Alternatives to Rising Costs

Employers are not abandoning group coverage en masse, but with enhanced ACA subsidies expired, more companies are looking for ways to provide affordable options for workers who may not have previously had access to employer-sponsored coverage. Individual market pricing does not directly dictate group plan costs, yet the limits of relying on subsidies highlight the need for alternative strategies.

Defined contribution strategies, flexible funding approaches, and hybrid benefit structures are attracting attention because they allow employers to cap financial exposure while enabling employees to make informed decisions.

These approaches provide predictability in budgeting while preserving employee access to coverage that aligns with individual health needs and financial circumstances. They are not theoretical. They are actively being implemented by employers seeking control over costs in a volatile market.

The Role of Education in Cost Containment

Choice alone is not enough. Members engage actively, but the quality of their decisions depends on the information available. Most individuals understand deductibles and premiums, but fewer understand network design, provider reimbursement, or how utilization affects out-of-pocket costs. As responsibility shifts to individuals, education and guidance become increasingly important.

Brokers and employers who provide clear, accessible guidance improve confidence and decision quality. Programs that place employees in a position to choose without support are likely to underperform.

Moving Forward With Discipline

The expiration of enhanced ACA subsidies is pushing employers to rethink how they manage healthcare affordability for their workforce. Rising premiums are prompting more organizations to explore alternative funding strategies, like ICHRA, to provide employees — especially those who may not have previously had access to employer-sponsored coverage — more flexible and affordable options. Our data shows that when employees are offered a range of plans and clear guidance, they make considered choices that balance personal needs with financial realities.

Employers who implement funding models that align incentives, maintain predictability, and support employee understanding are better positioned to manage affordability. For brokers and advisors, the opportunity lies in translating these behaviors into actionable strategies for clients.

The lesson truly is operational: The market’s response to subsidy changes and rising costs is not passive. Employees make deliberate trade-offs when empowered with information and options. With alternative funding mechanisms like an ICHRA, employers and their advisors can leverage that behavior to maintain coverage quality, control costs, and support workforce engagement in the years ahead.