Healthcare Planning Before Medicare: What Changed in the Affordable Care Act for 2026
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Timestamps
- 1:36 — How a plan actually gets chosen
- 2:50 — What the Affordable Care Act covers, and who qualifies
- 3:35 — The subsidy cliff
- 5:11 — Guaranteed issue still applies
- 6:21 — The subsidy is an estimate, settled at tax time
- 10:57 — A major carrier left the marketplace
This conversation was recorded in November 2025, before the changes described took effect. It is published with the rules as they now stand noted alongside.
What the Affordable Care Act Covers, and Who Qualifies
Kirk Thompson sets out the basics. The Affordable Care Act, often called Obamacare, allows people to buy health insurance directly, and where household income falls within a defined band above the federal poverty level, provides federal subsidy money toward the premium. Marketplace coverage is open to US citizens and nationals and to lawfully present immigrants living in the United States.
There is a second route in that households often miss. Where an employer offers group coverage but the employee’s share of the premium exceeds a set percentage of household income, that coverage is treated as unaffordable, and the employee may buy a marketplace plan and receive subsidy instead.
The Subsidy Cliff Returned for 2026
This is the change with the most consequence. The enhanced subsidies, first introduced in 2021 and extended through 2025 by the Inflation Reduction Act, expired at the end of 2025, and were not in place when 2026 coverage began.
What returns with their expiry is a cliff rather than a slope. Below the threshold, subsidy is available. One dollar above it, the entire subsidy is gone, not reduced. As the conversation puts it, a household paying a few hundred a month toward a premium can find itself paying the full amount instead.
The threshold is calculated on household income and the number of people claimed on the return, which is why two households with similar earnings can land on opposite sides of it.
A Major Carrier Left the Marketplace
CVS Health announced in May 2025 that Aetna would leave the ACA individual marketplace for the 2026 plan year. Press reports at the time put its exchange membership at about a million people in 17 states, all of whom would need to choose a different carrier.
Locally, Kirk Thompson counted seven or eight carriers available in Central Florida at the time of recording, with four or five in the outlying counties, so the exit meant choosing again rather than going without.
Guaranteed Issue Still Applies
One thing did not change. An ACA-compliant marketplace plan cannot reject you or charge you more because of a pre-existing condition, though you can enroll only during open enrollment or a special enrollment period. For households leaving employer coverage early, that is the feature that makes the bridge to Medicare possible at all.
The Subsidy Is an Estimate, and It Is Settled at Tax Time
This is the part that surprises people, and it is a planning point rather than an insurance one. Subsidy is awarded on the income a household estimates it will earn in the coming year. It is then reconciled against what was actually earned.
By early February the marketplace issues Form 1095-A, which goes to the tax preparer and is settled on the return. Estimate low and the difference is owed back. For anyone whose income moves (a business owner, someone with variable compensation, anyone realizing gains), the estimate is a decision with a tax consequence attached, not a form field.
How a Plan Actually Gets Chosen
Asked how a household decides which plan to choose, Kirk Thompson starts with the doctors: are they in the plan’s network? Prescriptions come second.
Frequently Asked Questions
What is the subsidy cliff?
It is the income threshold above which marketplace subsidy stops entirely rather than tapering. Crossing it by a small amount removes the whole subsidy, which is why it is described as a cliff rather than a slope. It returned for 2026 when the enhanced subsidies expired at the end of 2025.
I have coverage through my employer. Can I use the marketplace instead?
Generally only if the employer’s coverage is treated as unaffordable: your share of the premium exceeds a set percentage of your household income. Where it does, and you do not enroll in the employer’s plan, you may buy a marketplace plan and be eligible for subsidy.
What happens if I estimate my income wrong?
If you received advance payments of the credit, it is reconciled on your tax return. The marketplace issues Form 1095-A by early February covering the prior year, and the difference between the subsidy you received and the subsidy your actual income supported is settled then, and owed back if you underestimated.
Can I be turned down for a pre-existing condition?
No. An ACA-compliant marketplace plan cannot turn you down or charge you more because of a pre-existing condition, though you can enroll only during open enrollment or a special enrollment period.
Full Conversation
This transcript has been edited for length and clarity.
ROB LOVAGLIO: Today’s episode is brought to you by Security Financial Management. Welcome back to Best Advice Podcast Guys. I’m your host, Rob Lovaglio, here as always with senior adviser at Security Financial Management, Dan LaForest. And today we have a special guest — the local healthcare expert Kirk Thompson, founder of Managed Care Benefits. Kirk, thanks for joining us.
KIRK THOMPSON: I appreciate it. Thank you for having me.
ROB LOVAGLIO: Today’s question comes from a listener in Orlando: in 2026, what are the biggest changes to the health plans that people need to be aware of?
DAN LaFOREST: Great question. The Affordable Care Act has had a lot of changes for 2026. Kirk, for people at home who don’t know what this is — what is the Affordable Care Act?
KIRK THOMPSON: A lot of people call it Obamacare. It allows people to buy health insurance, and if they’re in a certain income range they get subsidy money. If they’re between 100% and 400% of the poverty level, they get access to funds from the federal government to help pay their health insurance. Who qualifies are people who are US citizens. [Editor’s note: lawfully present immigrants living in the United States can also enroll.]
KIRK THOMPSON: One other thing I want to bring up is group health insurance. If you have access to group health insurance but your employer is asking you to pay more than a set percentage of your adjusted gross income, that’s considered unaffordable — and therefore you can come over to the Affordable Care Act plan and get subsidy money.
DAN LaFOREST: Kirk, let’s talk about how this was set up before we talk about the changes. The caveat is going to be for the people who are over the 400% of poverty level. That’s what you’re hearing about in the media. If those people are over that line, they lose all of their subsidy money. They don’t have any of it.
KIRK THOMPSON: And it’s not just from your employer — if you own your own company, if you have an S-corp or whatever, your adjusted gross income on your tax return needs to be less than 400% of the poverty level.
DAN LaFOREST: And it’s actually calculated by not only your income but the number of dependents you’re going to have on the plan. Isn’t that correct?
KIRK THOMPSON: That is correct. So this can be a complicated decision for a lot of people when they’re taking a look at what those Affordable Care Act numbers are, and it’s always good to have a health insurance agent who can walk you through not only the decisions but also the application process.
KIRK THOMPSON: Guaranteed issue is real important. If you apply for the Affordable Care Act, it covers all your pre-existing conditions. And it’s guaranteed issue — if you apply, you are going to get it if you’re a US citizen.
ROB LOVAGLIO: So what is the noise about right now? Why is this such a big difference from one year to the next?
KIRK THOMPSON: The Inflation Reduction Act allowed these excess subsidies to be in there. [Editor’s note: the enhanced subsidies began in 2021; the Inflation Reduction Act extended them through 2025.] So we had those monies available, and now they’re going away because they’re sunsetting at the end of this year. It was being negotiated, and now it’s not being negotiated anymore.
DAN LaFOREST: One of the things that is very important to understand when you’re applying for the marketplace insurance is that it’s based on what you estimate you’re going to make for the next tax year. So it’s actually adjusted at tax time based on whether it was over or under what you actually earned.
DAN LaFOREST: Each person will get a Form 1095-A at the end of January. That paper is sent out by the marketplace, and then you give it to your accountant. It will be reconciled on your taxes when you file.
KIRK THOMPSON: The other major change is the subsidy cliff. If you’re over 400% of that poverty level and you’ve been getting subsidy money, that’s now going to be shut off. If you’re a dollar over the numbers, you’re not going to have any subsidy money. Just a quick example: say you were paying four hundred a month, and the full premium was two thousand. Now you’re paying two thousand.
ROB LOVAGLIO: That’s going to hurt some families.
KIRK THOMPSON: Quite a bit.
KIRK THOMPSON: Another thing to keep in mind is there is plenty of competition in the Affordable Care Act. In this area in Central Florida there’s about seven or eight insurance companies available. And even if you go to some of the outlying areas like Lake County and Marion County, you’re going to have four or five different insurance companies you can pick from.
KIRK THOMPSON: Aetna, by the way, left. Aetna CVS is leaving at the end of this year. So there are going to be some people who have that and they need to immediately call their insurance agent and pick a different plan.
ROB LOVAGLIO: How do you determine which plan you get? Is it based on your income?
KIRK THOMPSON: We get on the computer together and put in all the different variables, and then we can figure out which plan is best for you. Primarily the best plan is: are your doctors on the list? That’s primarily what we look at. Then we look at prescriptions. But the doctor list is critical.
ROB LOVAGLIO: Kirk, thank you so much for bringing your expertise to Best Advice Podcast Guys today. Remember folks, the secret to wealth is not what you earn, it’s what you keep. Happy days everybody.
This podcast is for entertainment and educational purposes only and is not intended as personal financial advice. Before making any financial decision, please do your own research and consult a financial adviser as needed.
Continue with the August Medicare & Healthcare Pillar
- Insight: Why Medicare Planning Isn’t About Medicare — It’s About the Two-Year Lookback
- Resource: Medicare Planning Audit
- Market Commentary: August 2026 Market Commentary
Schedule with Security Financial Management
If you would like help applying this to your plan, particularly if you plan to stop working before 65 and need to understand how coverage and income interact in those years, our team works with households across Central Florida on that question.
About the Speakers
Rob Lovaglio · Host, Best Advice Podcast Guys · Security Financial Management. Rob hosts the SFM monthly podcast conversation series covering retirement, tax and estate coordination for households across Central Florida.
Dan LaForest · CRD #5491065 · Security Financial Management. Verify credentials at BrokerCheck by FINRA.
Kirk Thompson · Founder, Managed Care Benefits. Kirk is an independent health insurance professional and is not affiliated with Security Financial Management, Kestra IS or Kestra AS. His views are his own.
Disclosures
This conversation was recorded in November 2025. Rules, premiums, subsidy thresholds and carrier participation in the Affordable Care Act change annually and have changed since the recording. The information presented is for educational purposes only and does not constitute legal, tax, medical or investment advice. Security Financial Management, Inc. is a registered investment advisor under Kestra Advisory Services, LLC. Health insurance decisions should be made with a licensed health insurance professional, and tax consequences reviewed with a qualified tax professional, familiar with your specific situation. Security Financial Management is not affiliated with or endorsed by any government agency. Past performance is not indicative of future results. Securities offered through Kestra Investment Services, LLC, member FINRA/SIPC (Kestra IS). Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS). Security Financial Management, Bluespring Wealth Partners, LLC, Kestra IS and Kestra AS are affiliated through common ownership by Kestra Holdings. Verify advisor credentials at BrokerCheck by FINRA or SEC Investment Adviser Public Disclosure.