The ACA subsidy cliff is back. Starting in 2026, people who earn more than 400% of the federal poverty level get no premium tax credit at all. For 2027 coverage, that line is $63,840 for one person and $132,000 for a family of four. Earn one dollar over it, and you pay the full price of your plan. Below the line, you pay no more than 10.22% of your income for a benchmark silver plan. The good news: legal moves like retirement and HSA contributions can lower the income that counts and keep your credit.
- Enhanced tax credits ended after 2025, which brought back the 400% income cap.
- For 2027, households under the cap pay between 2.15% and 10.22% of income for benchmark silver.
- Starting with 2026 taxes, there's no limit on paying back extra credits if your income runs high.
- Pre-tax retirement and HSA contributions can lower your subsidy income below the cliff.
What the ACA Subsidy Cliff Is
From 2021 through 2025, enhanced tax credits capped benchmark premiums at 8.5% of income, with no upper income limit. Then those credits expired. As a result, the original rule returned: above 400% of the poverty level, there's no credit.
For 2027 coverage, the Marketplace uses the 2026 poverty guidelines. That puts the cliff at these incomes:
| Household size | 400% of the poverty level |
|---|---|
| 1 person | $63,840 |
| 2 people | $86,560 |
| 3 people | $109,280 |
| 4 people | $132,000 |
Figures are for the 48 contiguous states and D.C. Learn the basics in our health insurance subsidies guide.
What You'll Pay at Each Income for 2027
| Income (share of poverty level) | Income for 1 person | Most you pay for benchmark silver |
|---|---|---|
| Under 133% | Under $21,227 | 2.15% of income |
| 133% to 150% | $21,227 to $23,940 | 4.30% |
| 150% to 200% | $23,940 to $31,920 | 6.78% |
| 200% to 250% | $31,920 to $39,900 | 8.66% |
| 250% to 400% | $39,900 to $63,840 | 10.22% |
| Over 400% | Over $63,840 | No limit, full price |
In states that expanded Medicaid, adults under 138% of the poverty level usually qualify for Medicaid instead. See income-based health insurance for details.
How Big the Cliff Can Be
Here's a simple example. Take a single 40-year-old with a benchmark plan of about $719 a month, our estimate for 2027.
- At $63,000 in income, the most this person pays is 10.22%, or about $537 a month.
- At $64,000, the credit disappears, so they pay the full $719.
- The difference is about $2,200 a year, from earning just $1,000 more.
For older adults, the gap is much wider. Premiums rise with age, so a 60-year-old can lose a credit worth more than $10,000 a year by crossing the line. That's why the cliff matters most for early retirees. See our early retirement health insurance guide.
A licensed Vivna agent will check your projected income and compare plans with and without a tax credit, at no cost to you.
The New Payback Rule
Your tax credit is paid in advance, based on your income estimate. Then, at tax time, it's checked against what you actually earned.
In the past, repayment caps limited how much lower-income families had to pay back. However, starting with tax year 2026, those caps are gone. So if your income comes in over the cliff, you could owe back every dollar of credit you received. Report income changes during the year to avoid that.
Got a raise or a bonus mid-year? Update your Marketplace application right away. A smaller credit now is far easier than a large tax bill next spring.
Seven Ways to Lower Your Premium
- Contribute to a traditional 401(k) or 403(b). Pre-tax savings lower your modified adjusted gross income, the number the Marketplace uses.
- Fund a deductible IRA. Traditional IRA deductions can lower that income too.
- Open an HSA. Bronze and catastrophic Marketplace plans are HSA-eligible. The 2027 limits are $4,500 for one person and $9,000 for a family.
- Estimate income carefully. Self-employed? Count business expenses before you estimate.
- Compare bronze plans. They cost less each month. See bronze vs. silver plans.
- Check job-based coverage. If an employer plan costs 10.22% of household income or less, it counts as affordable. In that case, it may also cost less than a full-price Marketplace plan.
- Ask about a catastrophic plan. An affordability exemption may let you buy one. Read catastrophic health insurance.
Talk with a tax professional before changing your contributions. Then call 888-730-6001 with your new estimate, and we'll rerun your quote.
If You're Over the Cliff
Above 400%, you pay full price for any Marketplace plan. Even so, you have choices:
- Shop off the Marketplace. Without a credit, the same plans may be available directly from insurers.
- Consider short-term coverage. In approved states, healthy people may pay much less with short-term health insurance. However, it excludes pre-existing conditions. Compare it in short-term vs. ACA.
- Look at longer-term options. UnitedHealthcare's TriTerm Medical lasts about three years. See tri-term vs. short-term.
- Review every option. Our guide to health insurance without subsidies lists more.
ACA Subsidy Cliff: FAQs
What is the ACA subsidy cliff for 2027?
It's 400% of the poverty level: $63,840 for one person and $132,000 for a family of four.
Will the enhanced subsidies come back?
As of October 2026, no extension has become law. We'll update this guide if that changes.
What income counts for the subsidy?
Your household's modified adjusted gross income, which is close to your adjusted gross income on your tax return.
Does Social Security count as income?
Yes. For subsidies, taxable and non-taxable Social Security benefits both count.
What if I lose my job mid-year?
Update your application. Lower income can raise your credit, and losing job coverage opens a Special Enrollment Period.
We'll find the lowest-cost plan for your income. Call Monday through Friday, 9am to 6pm.
Sources
- IRS Internal Revenue Bulletin 2026-31: Revenue Procedure 2026-26
- HHS: Poverty guidelines
- Commonwealth Fund: More ACA premium spikes to come in 2027
- BenefitChamps: What changed for 2027 Open Enrollment
- HealthInsurance.org: 2027 ACA open enrollment changes
Income figures use the 2026 HHS poverty guidelines for the 48 contiguous states and D.C.; Alaska and Hawaii are higher. Premium examples are estimates. This is general information, not tax or legal advice; talk with a tax professional about your situation. Short-term health insurance is not ACA-compliant coverage and is available only in approved states. Vivna Insurance is a licensed, independent agency (NPN 19168641). We are not affiliated with HealthCare.gov or any government agency.