How to Navigate a Possible Affordable Care Act Change and Ensure Clients’ Goals Stay on Track

Journal of Financial Planning: July 2025

NOTE: Please be aware that the audio version, created with Amazon Polly, may contain mispronunciations.

Although she’s years away from her own retirement, Christine Simone is obsessed with helping current and future retirees plan for and optimize their healthcare costs. She’s held notable leadership positions within the healthcare industry, working with key stakeholders from payers to providers to Veterans Affairs. She also founded an award-winning healthcare planning company, Caribou, that was successfully acquired by Move Health (https://movehealth​.io), a healthcare planning solution for the finance industry. Now, Christine is the head of partnerships of Move Health. She’s driven by her passion to slash hidden incentives in healthcare to support smarter financial decision-making, and she is within the small fraction of women founders who have raised venture capital. She can be reached HERE. 

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Many clients who retire “early” (i.e., before 65) or run a small business access health insurance through the Affordable Care Act, which was signed into law in 2010 to help people not eligible for employer-sponsored health insurance, Medicare, or Medicaid obtain affordable comprehensive healthcare coverage. There is reason to believe that the Affordable Care Act (also known as marketplace health insurance) might undergo major changes in the near future. The potential changes could have a significant impact on what clients spend on their health insurance as well as advisers’ income planning strategies.

What a Potential Affordable Care Act Change Means for Financial Planners

The Affordable Care Act made it possible for anyone to purchase private health insurance, regardless of any pre-existing conditions. This is most relevant to your clients who are entrepreneurs, self-employed, retired or planning to retire before the age of 65, or who have children who are no longer dependents. Many financial planning clients fall under these categories and expect their financial adviser to help them navigate any potential changes to their financial plans, including changes to their healthcare coverage and costs.

The main change facing the ACA is the potential elimination of the higher income threshold for premium tax credits. At the time of writing, the enhanced subsidies in the ACA marketplaces are set to end at the end of 2025. If the income threshold for these subsidies is changed at the end of the year, people purchasing subsidized coverage will face significant increases in their monthly premium payments. 

This is where you, the financial planner, come in. Financial planners need to be prepared to help clients navigate the potential changes coming to the ACA, factor the cost of health insurance into their overall financial plans, and, most importantly, explore potential ways to keep premiums affordable.

This article will explain the potential changes facing the ACA, as well as various healthcare cost and coverage solutions available to you and your clients.

Understanding Enhanced Premium Tax Credits

Premium tax credits are a type of sliding-scale subsidy that reduces the amount an ACA marketplace plan enrollee pays monthly for individual or family health plans. The American Rescue Plan Act of 2021 was signed on March 11, 2021, and allowed, for the first time, individuals with annual income 400 percent above the federal poverty level (FPL) to be eligible for premium tax credits. To be eligible, enrollees must be enrolled through a marketplace plan, have U.S. citizenship or legal residency, file federal income tax returns, and must not qualify for other programs such as Medicaid and Medicare. Additionally, enrollees must not be eligible for an employee plan that offers minimum essential coverage.

There are two ways to claim the premium tax credit. The first is to claim a monthly advanced premium tax credit (APTC) by estimating income for the coming year. If the enrollee over- or under-estimates, their premium tax credit is reconciled when they file taxes for the year. The second way is to reconcile the premium tax credit as a lump sum when the enrollee files taxes.

For example, a two-person household in Florida with an income of $150,000 could receive a reduced monthly premium for an ACA marketplace plan. Put another way, anyone with an income over 400 percent of the federal poverty level is capped at a monthly premium of 8.5 percent of their income. Before the American Rescue Plan, ACA marketplace premium assistance eligibility was capped at 400 percent of poverty (which is $60,240 for a single person or $81,760 for a couple in 2025).¹ 

There are two client segments who will be impacted the most by the elimination of these enhanced subsidies. The first is clients who want to retire before 65 and were banking on accessing marketplace healthcare coverage to “bridge the gap” between their retirement date and Medicare eligibility. The second is clients with a high income who are already on the marketplace, like business owners or retirees generating meaningful income through investments, real estate, etc.

For example, a 60-year-old couple living in Dallas and making $82,000 in 2025 would see a 259 percent premium cost increase (a jump from $581 a month to $2,088) for a silver plan on the ACA marketplace if enhanced subsidies expire at the end of 2025.² For a retired couple who still have five years until they are eligible for Medicare, this cost increase of $90,420 during those five years could greatly impact their retirement plans and create stress and uncertainty about how they’ll receive affordable healthcare coverage—unless they have a financial planner who knows how to help them navigate this change.

Financial planners already know about reducing income as a tax strategy, but I talk to many planners who are surprised to learn that the income management strategies they already do could also be used to help their clients access lower-cost ACA marketplace coverage. The same strategies you currently use to lower a client’s taxable income, for any number of reasons, can also be used to help clients qualify for ACA marketplace coverage subsidies.

Exploring Alternative Coverage Options

In the event that you’re unable to reduce a client’s taxable income enough to qualify for subsidies at the threshold determined by the American Rescue Plan Act, there are other ways for your client to receive healthcare coverage. Some options are more affordable than others, and some are more comprehensive than others. It will be important to familiarize yourself with the basics of these coverage options to help clients determine their optimal options.

COBRA

For clients who are newly losing employer coverage and either can’t or don’t want to go on a marketplace plan, a common healthcare coverage option is the Consolidated Omnibus Budget Reconciliation Act (COBRA). COBRA coverage is essentially the same health insurance coverage a client had at their former employer and covers their spouse and/or dependents if they were also on the plan. Most often, COBRA coverage extends for up to 18 months, but in some special circumstances, coverage can last up to 36 months.

Under COBRA, a client’s employer no longer cost-shares the premiums for the plan with them. The premium your client pays will be the full cost of the plan plus an additional 2 percent to cover the administration of the coverage. For this reason, COBRA coverage is often one of the most expensive coverage options but is a worthwhile avenue to consider in comparison to the marketplace. 

A few factors you and your client need to consider when deciding whether or not to use COBRA are:

1. If your client has a strong preference for their current providers, they may want to continue their employer coverage under COBRA if those providers do not participate in a plan available on the ACA marketplace.
2. If your client has already reached their deductible and/or out-of-pocket costs for the year, this continues under COBRA. If they select an individual plan when they lose employer coverage, their deductible resets, and they must reach it before the individual plan begins to cost-share with them. If they continue coverage under COBRA, the client is stuck with it until at least the end of the year—they can only switch off it during open enrollment.
3. If your client anticipates being re-employed in the near future with access to new employer benefits, COBRA costs may be more acceptable to avoid multiple plan changes (i.e., COBRA to an individual plan to a new employer plan versus COBRA to a new employer plan).

COBRA eligibility can stem from several life events, not just employment ending. These life events may include being on disability or having a reduction in work hours. 

Healthcare-Sharing Programs

Healthcare-sharing ministry (HSM) programs are most commonly offered through faith-based organizations, but there are a few that have no religious affiliation. Members of HSMs pool their money in a community fund; when a member becomes ill, they submit a request for the amount to cover the bill. HSMs typically match paying members with those who need funds for healthcare costs or pool all the monthly shares and administer payments to members directly.

HSMs have long maintained that they are not health insurance companies and do not guarantee payment for members’ medical claims. Since they do not meet the federal definition of health insurance, they are not subject to the consumer protections of the Affordable Care Act.

For clients with strong ethical, moral, or religious beliefs, and who like the idea of paying a lower monthly payment, joining an HSM is often an attractive option for bridging the gap between retirement age and Medicare eligibility.

Short-Term Health Plans

Short-term health insurance plans offer an alternative, temporary safety net for those who feel they cannot afford ACA-compliant plans or prefer broader network coverage than an ACA-compliant plan may offer. A finalized federal rule announced by the Departments of Treasury and Health and Human Services limits short-term health insurance plans sold or issued on or after September 1, 2024, to three-month terms, and to a total duration (including renewals) of no more than four months.³ These plans are not required to provide the ACA’s 10 essential health benefits, like maternity care and mental health services, are not guaranteed-issue, and are not subject to other provisions mandated under the ACA. In most cases, child-only coverage is available for children aged two to 17. Dependent children can stay on their parents’ plan until they turn 26, and the coverage is only available to adults up to the age of 64.

Short-term health plans are subject to underwriting, which means that applicants can be denied coverage due to current or pre-existing health conditions.

A few factors you and your client need to consider when deciding whether or not to enroll in a short-term health plan are:

1. If your client is relatively healthy, has no pre-existing conditions, and expects a short coverage gap, a short-term plan can be an affordable safety net.
2. If your client prefers a broader network of coverage, a short-term health plan can be an attractive option.

How Financial Planners Can Help Their Clients Navigate a Potential Pre-American Rescue Act Plan World

Let’s rewind to the years 2014–2021. During this time, the ACA marketplace was well-established but existed without subsidies for people who made more than 400 percent of the federal poverty level. Their options for healthcare coverage, if they didn’t have access to employer-sponsored health insurance, Medicare, or Medicaid, were:

• To pay an expensive premium for ACA marketplace coverage
• Short-term health plans (which, during this time, were much longer in duration)
• Healthcare sharing programs
• COBRA (if applicable)
• Going uninsured and opting to be a cash-pay patient anytime they needed care

Rather than exposing clients to healthcare coverage options that exclude people with pre-existing conditions, do not guarantee coverage, and/or introduce a great deal of risk to their financial plan, financial advisers then (and now, if the ACA marketplace changes we foresee happening do in fact happen) need to:

1. Ensure they are considering their clients’ personalized healthcare costs in all financial plans if ACA marketplace coverage is being considered, given its high cost.
2. Explore ways to lower their clients’ taxable income to qualify for lower ACA marketplace premiums as much as possible.

But how can financial advisers have these healthcare planning conversations with clients? Below are three steps I recommend as a healthcare planning expert for financial planning professionals.

First, advisers have to identify clients who most need a healthcare planning conversation in the near future. Pull a list of your clients who are currently on ACA marketplace coverage, clients who plan to retire before 65, and clients who are currently unemployed.

Once you’ve identified the most imperative clients to contact about optimizing their healthcare coverage, you can choose how to have the conversation. Call or email them to set up a meeting specifically about their healthcare coverage and necessary adjustments to their financial plan. 

The next step advisers need to take is to prep for the meeting. Advisers need to familiarize themselves with ACA marketplace coverage well enough to be able to discuss it with clients if they plan to have the healthcare planning conversation on their own. 

Here are a few things you need to prep for a meeting specifically about ACA marketplace coverage:

1. What’s your client’s current healthcare coverage plan? How much does it currently cost them annually? Are they accessing a premium tax credit today?
2. What’s their current annual gross income?
3. Within what range can you get their taxable income? Knowing this will help determine if they qualify for subsidies on the ACA marketplace.
4. Where do they live? Depending on their state, they’ll either enroll in the federal marketplace or their state’s marketplace.
5. How long will they need to be on marketplace coverage?
6. Do they have a spouse or dependents who also need to be on an ACA marketplace plan?
7. Are they tied to a specific insurance company or list of doctors?
8. How much do they spend on medications annually?
9. Are they comfortable with a high-deductible plan? Do they want a health savings account?
10. Are they OK with needing a referral to see specialists?

The answers to these questions will help narrow down what their optimal health plan options are. Once you do, you can use the full cost estimate for that plan this year in your financial plans. We don’t yet know the cost of plans for 2026, so factor in a slight inflation adjustment. Using the full cost of the plan will result in a “worst case” scenario where the threshold for premium tax credits is lowered and your clients won’t qualify. This is a more conservative approach that can be revisited once there’s more clarity on the outcome of the credits.

For clients who are newly enrolling in marketplace coverage, ensure that any premium tax credit they are claiming this year isn’t factored in for 2026. Advance notice of this change will be incredibly important and appreciated by your clients.

Closing Thoughts

Clients currently enrolled in or planning to enroll in marketplace health insurance at some point have a lot to consider, and if they are not receiving guidance from a trusted source, they could make decisions that negatively impact their financial well-being. This is why it’s critical for financial planners to familiarize themselves with different types of healthcare coverage, have a trusted partner to work closely with on these matters, and implement strategies to help clients optimize their coverage. 

To take your financial service offerings to the next level and create a truly comprehensive financial plan for clients, consider bringing in the healthcare planning tips mentioned in this article. Not only can these tips save clients some dollars on their healthcare expenses, but they will also relieve an immeasurable amount of stress and deepen your client relationships by showing clients how comprehensive your planning capabilities truly are. 

Endnotes

1. Cox, Cynthia. 20235, February 3. “Congressional District Interactive Map: How Much Will ACA Premium Payments Rise if Enhanced Subsidies Expire?” KFF. www.kff.org/affordable-care-act/issue-brief/congressional-district-interactive-map​-how-much-will-aca-premium-payments-rise-if-enhanced-subsidies-expire/.
2. Ibid.
3. 2024, April 3. “Short-Term, Limited-Duration Insurance and Independent, Noncoordinated Excepted Benefits Coverage.” Department of the Treasury Internal Revenue Service. www.federalregister.gov/documents/2024/04/03/2024-06551/short-term​-limited-duration-insurance-and-independent​-noncoordinated-excepted-benefits-coverage.