New Mexico health insurance premiums set to spike in 2026 due to heavy 2024 usage, rising cost

Prepare for some pain in the pocketbook: Individual and small group health insurance premiums in New Mexico are set to increase substantially in 2026.

Individual plans — sold on and off the state health insurance marketplace as part of the Affordable Care Act — will see an average rate increase of nearly 36% in 2026, the New Mexico Office of the Superintendent of Insurance announced in August.

Premium rates for small group health insurance — which are available to small employers with fewer than 50 employees — are rising, too, the office announced Monday. The average increase across all small group health insurance plans is nearly 17% for 2026.

The office is waiting for analysis to determine what impact individual consumers should expect in terms of changes in out-of-pocket premium costs. Combined, those two types of insurance plans cover more than 110,000 New Mexico residents.

The primary factor driving the increase in insurance costs: People used more medical services and prescription drugs in 2024, the year upon which 2026 rates are based, said Viara Ianakieva, Life and Health Division director at the Office of the Superintendent of Insurance.

“Utilization among the members is higher,” Ianakieva said.

The rising insurance premiums come as many New Mexicans struggle to afford basic essentials, including health care costs. In 2023, nearly half of New Mexico households lived in poverty or otherwise struggle to afford basics like housing, health care, food and transportation, according to a report released earlier this month by the United Ways of New Mexico.

Gov. Michelle Lujan Grisham has asked lawmakers to address the affordability of health insurance premiums during an upcoming special legislative session, set to begin Oct. 1. The request takes on particular relevance as upcoming federal policy changes could result in as many as 254,000 New Mexicans on Medicaid being subject to additional paperwork to remain enrolled and 88,000 New Mexicans losing Medicaid coverage altogether.

More than 75,000 New Mexico residents purchase health insurance through the individual market’s Affordable Care Act plans, which are available through Presbyterian Health Plan, United Healthcare of New Mexico, Molina Health Care of New Mexico and BlueCross BlueShield of New Mexico.

Premiums range widely based on the insured person’s selected plan, location, age and tobacco use. For a 30-year-old in Santa Fe, for example, 2026 premiums for the individual market’s Affordable Care Act plans range from about $460 to $730 per month.

However, Ianakieva stressed those figures represent the total cost of benefits but not what individuals are likely to pay out of pocket, since state and federal subsidies significantly reduce premium costs.

“Those premiums are much higher than what the average person would have to pay in the individual market,” Ianakieva said. “And then in the small group market, there is also additional relief through the health care affordability initiatives that are in our state.”

Federal and state premium assistance will continue to reduce the burden of insurance costs on individual market consumers. More than half of customers who purchase their insurance through BeWell, the New Mexico health insurance marketplace, pay less than $10 a month for coverage after subsidies.

While federal premium tax credits — which make Affordable Care Act coverage more affordable for millions of enrollees across the U.S. — may expire at the end of this year, state money from the Health Care Affordability Fund will cover the loss of the credits for households living below 400% of the federal poverty level, according to the Office of the Superintendent of Insurance.

Small group plans, meanwhile, will be available through Blue Cross Blue Shield of New Mexico, Presbyterian Health Plan, Presbyterian Insurance Co., UnitedHealthcare of New Mexico and UnitedHealthcare Insurance Co. in 2026.

The reasons behind the increase is the same for individual and small group insurance, state Superintendent of Insurance Alice Kane said. In both cases, the rising costs are the result of higher-than-expected 2024 claims, increased use of medical services and increased drug costs.

“State insurance regulators across the country are grappling with rising health insurance costs,” Kane said in a news release. “The OSI team rigorously reviewed rate requests to ensure they were fare and actuarially justified.”

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