BiggerPockets Money Podcast: "Will 2026 Healthcare Costs Destroy Financial Independence for Millions?"

Air Date: November 25, 2025
Hosts: Mindy Jensen & Scott Trench
Guest: Matt McGough, Policy Analyst at KFF (Kaiser Family Foundation)

Episode Overview

This episode issues a wake-up call to those pursuing FIRE (Financial Independence, Retire Early): looming changes to healthcare subsidies may drastically increase costs for millions—especially early retirees and the self-employed. The hosts and Matt McGough (KFF) break down how expiring enhanced ACA (Affordable Care Act) subsidies could cause premiums to double or triple, explain the history and intent of those subsidies, explore political and economic ramifications, and discuss what policy change means for FIRE adherents and other ACA users.

Key Discussion Points & Insights

1. How Americans Get Health Insurance (01:21–02:38)

• Employer-sponsored insurance: ~50% of Americans
• Public programs (Medicare, Medicaid): >33%
• ACA Marketplaces ("Obamacare"): ~10% (disproportionately high among FIRE community)
• Uninsured: 8% (down from 15% pre-ACA)
• Core issue: “We pay twice the average of comparable countries per capita, but our life expectancy is four years less.” —Matt McGough (02:16)

2. Brief History and Purpose of the ACA (03:12–05:29)

• ACA Goals:
  • Expand coverage
  • Enhance consumer protections
  • Limit out-of-pocket liability with subsidies
• Problems ACA Aimed to Fix:
  • High uninsured rate (15–16%)
  • Rising costs and premiums
  • Lack of protections for pre-existing conditions
  • No caps on out-of-pocket or annual/lifetime maximums pre-ACA

3. Evolution and Mechanics of Premium Tax Credits (05:33–07:07)

• Base subsidies present from ACA's start (2014)
• Enhanced subsidies (2021, COVID response):
  • Increased credit amounts
  • Extended eligibility above 400% FPL (Federal Poverty Line, $63,000 for an individual in 2025)
  • Addressed the “subsidy cliff”—capped payments at 8.5% of income for all ACA buyers
• “People who were just a few dollars over the line used to pay thousands more… That’s the subsidy cliff.” —Matt McGough (06:13)

4. Impact of Enhanced ACA Subsidies (07:44–08:29)

• Enhanced credits made coverage "much more affordable" (08:06)
• Marketplace enrollment doubled: ~12 million (pre-COVID) → 24.3 million (2025)
• Uninsured rates reached record lows

5. The Looming 2026 Problem (09:14–11:37; 14:44–16:34)

• Two main threats:
  • Underlying ACA premium costs are rising (26% YoY for 2025 plans)
  • Enhanced subsidies are set to expire at the end of 2025 unless Congress acts
• For a typical FIRE retiree family:
  • “Going from $200 to $1,100 a month in Colorado for the same plan. In Vermont, it can go from $400 to $2,400!” —Scott (14:20)
• The loss could be “a preposterous increase that completely blows up your plan and your family’s budget.” —Scott (15:08)
• The “double whammy”: Those above 400% FPL lose all credits AND face higher base premiums

6. Political Landscape & Congressional Stakes (16:34–19:13; 22:30–26:21)

• Only 10% of Americans use ACA exchanges, but this group is vocal and highly affected
• Congress is undecided; some predict partial extension, not full status quo (16:34)
• “I thought the ACA made up 50% of Americans. It’s 10%. That’s… nominal. Now I understand why Congress is leaning towards not extending.” —Mindy (17:03)
• Republican perspective:
  • Want to control costs and may see enhanced credits as a pandemic-only fix
  • Concerned about subsidizing high-net-worth, low-income-reporting FIRE retirees
  • Some proposals focus on tying subsidies to lifestyle/health factors, but recent GOP efforts haven't addressed underlying systemic costs (23:25–26:21)
• Democratic perspective: full extension as a “cornerstone policy”

7. Geographic Premium Disparities Explained (31:33–34:23)

• Allowed pricing factors: age (up to 3x), tobacco use, family size
• State variations: Some (like Vermont) do not "age rate" premiums; this can affect premiums dramatically
• Other drivers: number of insurers in a market (competition), local provider costs, size and health of state risk pool, presence of state "reinsurance" programs

8. Penalties & Alternatives to ACA Coverage (34:23–40:57)

• ACA's federal penalty for being uninsured is now $0, but some states (CA, MA, a few others) still levy penalties
• Alternative coverage: “Health shares” and “junk” health plans (short-term, limited coverage) are not ACA-compliant; read the fine print carefully

Memorable moment:

"If you have a pre-existing condition, anything related to that may not be covered. If you have an ER visit, you could be footing the bill for a large portion. These short-term plans may not be as generous as they seem." —Matt (40:25)

9. Potential for an ‘Insurance Death Spiral’ (41:55–44:25)

• If younger, healthier people leave due to cost, only high-risk remain, pushing premiums up in a negative feedback loop
• Matt’s assessment: ACA markets have stabilizers and are unlikely to collapse entirely (“death spiral” unlikely but 4 million could lose coverage if enhanced credits expire)

10. Immediate To-Do’s for Listeners / FIRE Community (48:01–50:16)

• If you're facing these increases:
  • Consult an insurance broker or agent to explore every ACA and non-ACA option
  • Consider downgrading to a bronze plan (but be prepared for higher deductibles—average $7,000)
  • Have enough savings to cover large out-of-pocket events (“Medical debt [is] a very pervasive issue in America.” —Matt 49:34)

Notable Quotes & Memorable Moments (with Timestamps)

• “We pay twice the average [healthcare spending] of comparable countries per capita, but our life expectancy is four years less.” —Matt McGough (02:16)
• “People have started to take this as, you know: 'Oh, I don’t have to pay these high rates anymore.' ...especially people in the FIRE community—they’re counting on [ACA credits].” —Mindy (08:29)
• “If Congress does not extend the subsidies... going back to that cliff scenario... that could completely blow up your plan and your family’s budget.” —Scott (16:36)
• “The problem is not unique to but is particularly acute in health insurance: adverse selection.” —Scott (29:19)
• “The ACA is awesome. But also these subsidies were never invented for the FIRE community.” —Mindy (28:09)
• “Millions of Americans... will have to do math on this subject for the first time because they can't afford it in the first place. And for the FIRE community, our privilege is being able to do that math...”—Scott (36:09)
• “These health shares, short-term limited duration plans, may be seen as a viable option... but do not have the same protections as ACA-compliant plans.” —Matt (40:04)
• “I do not think the intent of the policy underlying all of this is to subsidize multimillionaires... I think it’s a bad plan to rely on that 100%.” —Scott (52:27)
• “It could be a FIRE killer.” —Scott (54:58)

Major Action Items & Takeaways

For FIRE Pursuers and Early Retirees

• Don’t rely solely on ACA subsidies for your retirement health plan
• Prepare for sharp premium increases in 2026—potentially 2x, 3x, or more
• Alternative plans (health sharing ministries, high-deductible major medical) may be necessary but carry greater risks and exclusions
• Consult with brokers/agents before open enrollment to understand your state’s specific options
• Build a larger emergency fund for out-of-pocket risks—max out HSA contributions where possible
• Monitor Congressional action closely; changes may happen late and with only partial relief

For All Listeners

• If you’re self-employed, a small business owner, or a gig worker—pay attention to how ACA subsidies affect your situation
• Remember the broader context: 90% of Americans are NOT on the ACA; but the impact is life-changing for the 10% who are

KFF Resources

• “Go to kff.org, where you’ll find all the information you could possibly want on US health policy.” —Matt (50:49)
• "The news division, survey research, calculators—it's world-class." —Scott (51:35)

Final Thoughts (Hosts, 52:16–56:46)

• Scott: Be cautious. Health care costs are growing faster than inflation, and the FIRE community especially may be caught off guard. Don't plan on ACA subsidies "in perpetuity" as a multi-millionaire with low reported income.
• Mindy: 10% of Americans on the ACA was "shocking"; FIRE community needs to budget for much higher premiums going forward and consider uncomfortable alternatives.

In Summary

If you’re planning your financial future around early retirement, the next couple years will bring a seismic shift in healthcare expenses. The time to run your numbers and prepare alternatives is now.

For more in-depth, neutral information on health policy and ACA calculations, visit kff.org.

End of Content Summary.