The One Big Beautiful Bill Act And 2025 Open Enrollment
The One Big Beautiful Bill Act has been a hot topic this year, and for good reason. Many financial advisors and industry experts have discussed the OBBBA’s impacts on various components of financial planning, like estate and tax planning, but I haven’t seen many discuss how this bill has impacted health insurance (particularly Affordable Care Act coverage).
As the second-largest piece of healthcare reform legislation in recent years, there are a few key insights financial advisors need to know to ensure their clients’ financial and retirement plans stay on course.
Given that the ACA Open Enrollment season is fast approaching, I will focus on what financial advisors need to know about the OBBBA and how it impacts Open Enrollment for ACA coverage year 2026.
Advanced Premium Tax Credits to Expire
This is the big one. If you only read part of this article, let this be the portion you read.
If financial advisors have any clients currently enrolled in ACA coverage (or planning to enroll), this year, more than ever, it’s imperative to review their ACA coverage. Why? The enhanced Advanced Premium Tax Credits that were introduced during COVID under the American Rescue Plan and later extended by the Inflation Reduction Act are set to expire on December 31, 2025.
These enhanced credits temporarily expanded eligibility for ACA Advanced Premium Tax Credits beyond the original 400% income cap, allowing households with incomes above 400% of the Federal Poverty Level to qualify for tax credits if their premiums exceeded a certain percentage of their income. This expansion benefited early retirees and higher-income households who would not have qualified under the pre-American Rescue Plan Act rules.
Because the OBBBA did not extend the enhanced Advanced Premium Tax Credits, starting in 2026, Advanced Premium Tax Credit eligibility will revert to how it worked before the COVID relief acts. That means clients with incomes above 400% of the FPL will no longer qualify for tax credits to reduce ACA premiums. This does not mean Advanced Premium Tax Credits are going away. They will still be available for households up to 400% of the FPL, just as they were prior to 2020.
Going forward, advisors can expect and plan for two things:
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They’ll likely have more clients than they had in recent years who need more aggressive or creative income-lowering strategies to qualify for Advanced Premium Tax Credits. After all, from 2021 to 2024, there was a 275% increase in individuals on the ACA Marketplace with incomes above 400% of FPL. Many early retirees since 2022 have relied on tax credits to lower healthcare costs in early retirement, even with incomes above 400% of the Federal Poverty Level.
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A 15-20% minimum increase in ACA plan premiums as a result of clients losing their tax credit, and typical carrier premium increases year-over-year.
It’s worth noting that lawmakers might make an eleventh-hour decision to extend Advanced Premium Tax Credits, but only time will tell. At the time this article was written, there was no extension in sight.
Health Savings Accounts
One of the biggest wins from the OBBBA is that, after December 31, 2025, HSAs will be deemed compatible with bronze-level coverage and catastrophic coverage available on the ACA Marketplace. This could lead to a possible increase in ACA plan enrollments, but more importantly, it creates more options for clients looking at their plan choices on the ACA Marketplace.
For example, if an advisor has a client with an HSA who is retiring at 60, before the OBBBA, the client wouldn’t have been able to look at bronze-level plans and keep contributing to their HSA, even if that level of plan made the most sense for their healthcare coverage needs, preferences, and financial goals.
Additionally, direct primary care is now an HSA-eligible expense. This is another win since direct primary care is an increasingly popular way for clients to receive preventive and routine medical care. Anecdotally, I partner with many financial advisors with high-net-worth clients who are big fans of direct primary care. Now, advisors and these clients have a new opportunity to further optimize their HSAs and medical care costs as part of a successful comprehensive financial plan.
Lastly, the OBBBA implemented an extension that allows telehealth services to be covered by high-deductible health plans without affecting a client’s eligibility to contribute to their HSA. Before, except for preventive care, HSA contributors had to meet their deductible before telehealth coverage could count toward HSA-eligible expenses.
All these changes mean that more clients can look at high-deductible health plans as a viable option for their ACA Marketplace coverage. For advisors, they’ll need to help clients ascertain what their optimal health plan choices are with these new changes.
What To Keep In Mind During Client Meetings
The most significant impact the OBBBA has on the 2025 ACA Marketplace Open Enrollment season is eligibility for Advanced Premium Tax Credits.
As comprehensive financial advisors prepare to meet with clients during this year’s Open Enrollment, they must be aware that clients who’ve qualified for lower premiums through Advanced Premium Tax Credits in recent years might not be eligible this year. Therefore, they need to adjust their financial and retirement plans accordingly.
That could mean accounting for higher fixed healthcare costs, searching for alternative healthcare coverage options or finding ways to lower a client’s taxable income so that they qualify for an Advanced Premium Tax Credit.