Pennie cost hikes hit low-income families and older adults the hardest

Low-income Pennsylvania families and adults in their late 50s and early 60s have been dropping out of Affordable Care Act health plans at the greatest rates after a key financial incentive expired at the end of last year, causing insurance costs to double on average across the state.

Some 98,000 people who bought health plans last year from Pennsylvania’s Obamacare marketplace, Pennie, have opted out of coverage for 2026, as of Wednesday. That means one in five previously enrolled Pennsylvania residents have dropped their coverage.

The number is expected to continue growing, as people begin getting premium bills they cannot afford, Pennie administrators said. They have already seen a significant increase since the end of open enrollment on Jan. 31, at which time 85,000 people had not renewed coverage.

» READ MORE: 85,000 Pennie customers dropped health plans as tax credits shrank and costs spiked

The agency has estimated that up to 150,000 people may ultimately drop coverage if Congress did not renew a tax credit program that ensures no one pays more than 8.5% of their income on an ACA health plan. The tax credits, which were adopted in 2021 during the COVID-19 pandemic, had been renewed annually until now.

“If the tax credits had stayed in place we probably would have seen another record enrollment further reducing the uninsured rate,” said Devon Trolley, Pennie’s executive director.

The tax credits were a defining issue in last year’s longest-ever federal government shutdown. In that budget stalemate, Democrats wanted to permanently expand the enhanced subsidies, and Republicans refused.

New Jersey has not yet released the final results for its ACA open enrollment period, which also ended Jan. 31.

The first look at the impact of the higher insurance costs comes from Pennie data at the end of open enrollment. As of Feb. 1, a total of 486,000 people had signed up for coverage in 2026, down from 496,661 the same time last year.

Some 79,500 newcomers to the marketplace partially offset the people who dropped coverage.

In the Philadelphia region, more than 27,000 people who were enrolled in Pennie last year dropped coverage for 2026. Philadelphia and Montgomery Counties saw the biggest impact, with enrollment dropping 18% in each.

Pennie leaders said people dropping plans are not enrolling in another type of insurance.

That’s notable because those who joined Pennie for 2026 were coming from another form of insurance, such as an employer-based health plan. The people leaving Pennie were expected to become uninsured, Trolley said.

Now that open enrollment is over, most people who find their plan is too expensive and drop it will not have an opportunity to select new coverage until the fall.

Pennie administrators said they heard from many lower-income families and individuals that the cost increases for 2026 were too much of a strain for already tight budgets.

Breaking down the terminations by income, the greatest drop was seen among people with incomes 150-200% of the federal poverty rate. That’s an annual income of between $23,475 and $31,300 for an individual. For a family of four, the equivalent income range would be $48,225 to $64,300.

A total of 13,562 Pennsylvanians in this income bracket declined to renew their Pennie plans for 2026 as of Feb. 1, according to the most recent available data from Pennie.

“The math just isn’t working for people in those households,” said Trolley.

People in this income bracket still qualified for some financial assistance. The ACA includes tax credits for anyone with income below 400% of the poverty rate, and these tax credits did not expire.

Higher earners who would now have to pay in full, without the help of tax credits, account for another large segment dropping coverage.

This included 11,837 people who earn more than 400% of the federal poverty rate. In the past years, the enhanced tax credit helped families in higher income brackets afford marketplace insurance.

Just under 20,000 adults between the ages 55 and 64 canceled their Pennie plans for 2026, accounting for nearly a quarter of dropouts as of Feb. 1.

About two-thirds of individuals in this age group earn enough that they would have had to pay the full price of their health plan, without any tax credits. They already pay more than younger adults for the same plan, under rules that allow insurers to charge more to cover older adults, who are likely to have more medical expenses.

“That group is where we were seeing the most significant price jumps — a couple hundred dollars to a couple thousand dollars,” Trolley said.

Another 15,356 adults between the ages 26 and 34 — many new to buying health insurance on their own — also dropped out. The ACA allows young adults to be covered under a parent’s health plan until age 26.

Graphics editor John Duchneskie contributed to this article.