The ACA Subsidy Cliff in 2027: The 400% Line, What It Costs, and How Early Retirees Stay Under It

Yes, the subsidy cliff is back. The enhanced premium tax credits that let people above 400% of the federal poverty line get help ended with tax year 2025, and Congress has not restored them. For 2026 and 2027 Marketplace coverage, a household whose income is even $1 over 400% of the poverty line gets no premium tax credit at all. For 2027 coverage that line is $63,840 for one person and $86,560 for a couple in the 48 contiguous states and DC. Below: the IRS tables, the 400% figures by household size, what crossing the line costs, and how early retirees stay under it.

The Short Answer

• The 400% cap is law again. The temporary rule that removed it applied only to tax years 2021 through 2025. A House-passed three-year extension (H.R. 1834) has sat on the Senate calendar since February 10, 2026.
• 2027 cliff: $63,840 (one person), $86,560 (two), $109,280 (three) and $132,000 (four) in the 48 states and DC. Alaska and Hawaii are higher.
• Top contribution rate: households between 300% and 400% are expected to pay 10.22% of income toward the benchmark silver plan in 2027, up from 9.96% in 2026 (IRS Rev. Proc. 2026-26).
• No more repayment caps: starting with tax year 2026, any excess advance credit must be paid back in full when you file.
• Open enrollment on HealthCare.gov runs November 1, 2026 to January 15, 2027; enroll by December 15 for coverage starting January 1.

What Happened to the Enhanced Subsidies

The American Rescue Plan of 2021 temporarily replaced the premium tax credit's percentage table with a more generous one and suspended the rule that only households at or below 400% of the poverty line qualify. The Inflation Reduction Act of 2022 extended both changes through 2025. The statute's own wording sets the end date: the temporary rules apply to "a taxable year beginning after December 31, 2020, and before January 1, 2026."

Nothing replaced them. The House passed H.R. 1834, a three-year extension, by 230 to 196 on January 8, 2026; the Senate placed it on its calendar on February 10, 2026, and has not acted since. None of the public laws signed through October 7, 2026 changes the credit's eligibility rule or table. The IRS puts eligibility at "at least 100 percent but no more than 400 percent of the federal poverty line," with the expansion above 400% limited to "tax years 2021 through 2025."

How the Credit Is Calculated

The credit fills the gap between a benchmark plan's price and what the law says you can afford. Four inputs decide it:

1. Household income as a percent of the poverty line. Your projected modified adjusted gross income (MAGI) divided by the federal poverty guideline for your household size. Coverage for 2027 uses the 2026 HHS guidelines, the ones in effect when open enrollment starts.
2. The applicable percentage. The IRS table below turns that poverty-line percentage into a share of income. Within each band the percentage rises in a straight line, rounded to the nearest hundredth of a percent (Treasury Regulation 1.36B-3(g)).
3. Your required contribution. Applicable percentage times household income, divided by 12 for a monthly figure.
4. The benchmark premium. The second-lowest-cost silver plan available to your household in your area. Premiums can vary by age, up to 3 to 1 between older and younger adults (45 CFR 147.102), so the benchmark for a couple in their 60s is far higher than for a couple in their 30s. Tobacco surcharges are left out of the benchmark.

Monthly credit = benchmark premium minus required contribution, but never more than the premium of the plan you actually buy. You can use the credit on a bronze, silver, gold or platinum plan (not a catastrophic plan). Buy a cheaper bronze plan and you pay less than your required contribution; buy gold and you pay more.

The cliff comes from eligibility, not from the table. At 400% of the poverty line you still get a credit. Above it, the household is no longer an "applicable taxpayer," so the credit is zero, however large the benchmark premium. On Form 8962, income above four times the guideline is entered as "401"; otherwise the percentage is truncated to a whole number (a ratio of 3.997 is entered as 399).

Applicable Percentage Table: 2026 vs 2027

Source: IRS Rev. Proc. 2025-25 (2026) and Rev. Proc. 2026-26 (2027), section 3.01; IRC 36B(c)(1)(A) for the 400% limit.

How to read it: a household at 275% of the poverty line in 2027 sits halfway through the 250% to 300% band, so its percentage is halfway between 8.66% and 10.22%, which is 9.44%. The same 10.22% figure is also the 2027 "required contribution percentage" used to decide whether a job-based plan is affordable enough to block the credit.

For comparison, the expired 2021 to 2025 table charged 0% up to 150% of the poverty line and capped everyone at 8.5% with no upper income limit. That is why many early retirees saw their net premiums jump in 2026.

The 400% Line by Household Size

These are the incomes at which the credit stops for 2027 coverage (2026 HHS poverty guidelines times four). Household size means you, your spouse and anyone you claim as a dependent, whether or not they need coverage.

Source: HHS 2026 Poverty Guidelines, 91 FR 1797 (Jan. 15, 2026): $15,960 for one person plus $5,680 per person (48 states and DC), $19,950 plus $7,100 (Alaska), $18,360 plus $6,530 (Hawaii). 400% figures are our arithmetic.

For 2026 coverage (the year you are in now), the 2025 guidelines apply: $15,650 plus $5,500 per person in the 48 states and DC. The 400% line is $62,600 for one person and $84,600 for a couple. In Alaska it is $78,200 and $105,720; in Hawaii, $71,960 and $97,280.

There is a floor too. Below 100% of the poverty line ($21,640 for a couple in 2027) there is generally no credit, unless the Marketplace estimated your income at 100% or more and paid advance credits (and the estimate was not intentionally or recklessly wrong). In states that expanded Medicaid, adults up to 138% of the poverty line generally qualify for Medicaid instead, per HealthCare.gov.

Worked Example: A Couple at the Cliff

Take a hypothetical married couple, both 62, retired early in one of the 48 contiguous states, filing jointly with no dependents. Their 2027 cliff is $86,560. We assume a benchmark silver premium of $2,800 a month for the two of them ($33,600 a year). That is an illustration, not CMS data; real 2027 prices appear on HealthCare.gov on November 1 and depend on your county and ages.

Hypothetical. Assumed benchmark premium of $2,800/month; applicable percentages from Rev. Proc. 2026-26; 2026 HHS guideline for 2 people ($21,640). Our arithmetic, rounded to the dollar.

At exactly $86,560 the couple pays $8,846 toward the benchmark plan ($737 a month). One dollar more and they pay the full $33,600, so that dollar costs them $24,754 in lost credit. At $100,000 of income the plan takes a third of their gross income.

In general, the cliff equals the annual benchmark premium minus 10.22% of the 400% income figure ($8,846 for two people in 2027). Because of age rating it is usually large for people in their late 50s and early 60s, and small or zero for younger households with cheap benchmarks.

Estimate Your Premium Tax Credit

Choose the coverage year, household size and state group, then enter your projected MAGI and your household's monthly benchmark silver premium from HealthCare.gov's plan preview. The calculator shows your required contribution, monthly and annual credit, income as a percent of the poverty line, and your distance to the 400% line. It uses the IRS tables and HHS guidelines above; your actual credit is set by the Marketplace and settled on your tax return.

What Counts as Income (MAGI)

For the credit, MAGI is adjusted gross income (Form 1040, line 11) plus three add-backs under IRC 36B(d)(2)(B): non-taxable Social Security benefits, tax-exempt interest (municipal bond interest, for example), and foreign earned income excluded under section 911. Household income adds a spouse's MAGI and that of any dependent required to file a return, projected for the coverage year.

Sources: IRC 36B(d)(2); HealthCare.gov, "What to include as income"; IRS Pub. 590-A (conversions) and IRC 408A(d) (Roth distributions); IRS Premium Tax Credit Q&A, Q8.

Two points trip people up: a capital gain taxed at 0% is still in AGI, so it counts; and Social Security counts in full, even the untaxed part, which matters if you claim at 62.

How Early Retirees Manage MAGI

Because MAGI depends on which accounts you draw from, early retirees often have some control over it. These are general mechanics under current law, not recommendations; a tax professional can test them against your numbers.

Pre-tax contributions while still working

Traditional 401(k) deferrals reduce taxable wages, and deductible traditional IRA contributions reduce AGI. For 2026 the 401(k) limit is $24,500 plus an $8,000 catch-up at 50 or older ($11,250 instead at ages 60 to 63), and the IRA limit is $7,500 plus $1,100 at 50 or older (IRS Notice 2025-67). The IRA deduction can phase out if you or a spouse are covered by a workplace plan.

HSA contributions, now possible with bronze plans

HSA contributions are deductible "even if you don't itemize," so they lower AGI. Since January 2026, bronze and catastrophic plans bought through an Exchange count as high-deductible health plans for HSA purposes under P.L. 119-21, section 71307. The 2027 limits are $4,500 for self-only and $9,000 for family coverage (Rev. Proc. 2026-24), plus $1,000 at 55 or older. See our HSA contribution limits guide for the details.

Timing Roth conversions

A Roth conversion adds the converted amount to income in the calendar year you do it, so a December conversion lands in that year's MAGI. Some early retirees convert in years when they don't need a Marketplace credit (while still covered at work, or after Medicare starts at 65) and keep conversions small in subsidy years, or convert only up to the 400% line. For the mechanics of the Roth itself, see our backdoor Roth IRA and traditional vs Roth IRA pages.

Choosing which account to spend from

Spending from cash, from Roth IRA contributions (which come out before earnings under the ordering rules), or from taxable accounts where you sell lots with a high cost basis adds little or nothing to MAGI. Spending from a traditional IRA or 401(k) adds every dollar. Our retirement withdrawal calculator can help model a mix, and building a withdrawal strategy covers the broader trade-offs.

Capital gains and the 0% bracket

For 2026 the 0% long-term capital gains rate applies up to $98,900 of taxable income for married couples filing jointly and $49,450 for single filers (Rev. Proc. 2025-32). The ACA line works on MAGI, not taxable income, and the two limits are different. A couple with $90,000 of gains might owe no federal income tax on them and still lose the entire premium credit. Watch for mutual fund year-end distributions, which add gains you did not choose. Our capital gains tax guide and calculator cover the tax side.

Still planning the move? Our FIRE calculator and Coast FIRE guide help you budget for health insurance before Medicare.

Reconciliation: Form 8962 and Full Repayment

Most people take the credit in advance: the Marketplace pays it to the insurer each month based on your income estimate. At tax time, Form 8962 compares those payments with the credit your actual income supports. Lower income means a refund of the difference; higher income means you owe it.

Until tax year 2025, the amount households under 400% had to pay back was capped. For 2025 returns those caps run from $375 (single) and $750 (other filers) below 200% of the poverty line up to $1,625 and $3,250 between 300% and 400%. Households over 400% already had to repay everything.

This already applies to 2026 plans: your 2026 income is still being set until December 31. A year-end Roth conversion, a large IRA withdrawal, a home sale with a taxable gain, or a fund's capital gain distribution can push you over the line and turn into a large balance due in April 2027. Report income changes to the Marketplace as they happen so it can adjust your advance payments.

Other Rule Changes for 2027 Coverage

• Open enrollment dates. A 2025 CMS rule set a shorter open enrollment for 2027 coverage. After a June 12, 2026 order by the U.S. District Court for the District of Maryland striking parts of that rule (City of Columbus v. Kennedy), CMS said HHS has not changed the open enrollment dates and HealthCare.gov will run from November 1, 2026 to January 15, 2027. Plans picked by December 15 start January 1; plans picked December 16 to January 15 start February 1. State-run exchanges can set different dates.
• Court stays on the 2027 payment rule. On July 16, 2026, the same court stayed several provisions of the 2027 payment rule, including stricter income verification and wider access to catastrophic plans. CMS says Exchanges will not remove advance credits in 2027 for failing to file and reconcile a prior year, though the legal duty to file Form 8962 is unchanged. The litigation is ongoing.
• Immigrant eligibility. From tax year 2027, P.L. 119-21 limits the credit for lawfully present non-citizens to green-card holders, Cuban and Haitian entrants, and certain Compact of Free Association migrants.
• Low-income special enrollment. Since 2026, plans picked through an income-based special enrollment period get no credit, and the 2027 payment rule ends the 150%-of-poverty enrollment period.
• Coming in 2028. For tax years after 2027, the law requires Exchanges to verify income and other eligibility before a month counts toward the credit, and Exchanges must offer a pre-enrollment income check starting by August 1 of the prior year.

What to Do During Open Enrollment

1. Review instead of auto-renewing. Your plan's price and your credit both change for 2027. Log in after November 1.
2. Update your 2027 income estimate. Build it from expected withdrawals, conversions, gains, dividends, interest and Social Security, not last year's tax return.
3. Compare your estimate to your 400% line. Leave a buffer for surprise income such as fund distributions.
4. Compare after-credit costs across metal levels. The credit is the same in dollars whichever plan you choose, up to that plan's premium. A bronze plan can cost little after the credit and makes you HSA-eligible; silver plans carry extra cost-sharing reductions only below 250% of the poverty line.
5. If you will be over 400% anyway, compare full-price plans, including off-Exchange plans, on premium and out-of-pocket maximum.
6. Turning 65 during 2027? The credit stops once you have Medicare Part A or Medicare Advantage. See our Medicare open enrollment guide and healthcare costs in retirement.

Sources & Methodology

• 26 U.S.C. 36B: eligibility, the 2021 to 2025 rules, MAGI.
• IRS Rev. Proc. 2025-25 and Rev. Proc. 2026-26: 2026 and 2027 percentage tables.
• 26 CFR 1.36B-1 to 1.36B-3: benchmark plan, interpolation, below-100% rule; 45 CFR 147.102: age rating.
• HHS 2026 Poverty Guidelines (91 FR 1797) and 2025 Poverty Guidelines (90 FR 5917).
• Public Law 119-21, sections 71301 to 71307, and the IRS notice Repayment caps eliminated.
• IRS Questions and Answers on the Premium Tax Credit and Instructions for Form 8962 (2025): income limits, MAGI, 2025 repayment caps.
• Congress.gov, H.R. 1834 actions: extension bill status.
• CMS statement of July 27, 2026 and CMS statement of August 4, 2026: enrollment dates and court orders.
• HealthCare.gov: What to include as income, Dates and deadlines, Medicare and the Marketplace.
• IRS Notice 2025-67, Rev. Proc. 2026-24, Rev. Proc. 2025-32, and Publications 590-A, 590-B and 969: limits and account rules.

Method notes. The 400% figures, the worked example and the cliff size are our arithmetic from the official guidelines and tables. The example's benchmark premium is an assumption, not a real quote. We follow Form 8962's convention of truncating the poverty-line percentage to a whole number before reading the table. 2027 retirement-plan limits and capital gains thresholds had not been published as of October 11, 2026, so 2026 figures are shown where noted.

This article is educational and is not tax or insurance advice. Wealthy Pot is not affiliated with HealthCare.gov, CMS or any state exchange, and we do not sell insurance. Figures were checked against the IRS, HHS, CMS, the Federal Register and Congress.gov on 2026-10-11. Your credit is determined by the Marketplace and on your tax return, and the law can change if Congress acts.

FAQ

Is the ACA subsidy cliff back for 2027?
Yes. The enhanced credits that removed the 400% limit expired after 2025, and no extension has become law as of October 11, 2026. For 2027 coverage, households above 400% of the poverty line get no premium tax credit.

What is 400% of the poverty level for 2027 coverage?
$63,840 for one person, $86,560 for two, $109,280 for three and $132,000 for four in the 48 states and DC. Alaska and Hawaii use higher guidelines.

What income is used, this year's or last year's?
Your projected MAGI for the coverage year. For 2027 coverage, that is your expected 2027 income, settled on the 2027 tax return you file in 2028.

Do Roth IRA withdrawals count toward the cliff?
Qualified Roth distributions do not count, and withdrawals of your own Roth IRA contributions are generally not taxable. Roth conversions do count, in the year you convert.

What if my income ends up over 400% after I got advance credits?
You repay all of the advance credit on your tax return. From tax year 2026 there is no repayment cap at any income level.

Can I still get a credit if I am a few dollars over?
No. Eligibility ends above 400%. Lowering MAGI before year-end, for example with a deductible IRA or HSA contribution, is the only way to get back under it.

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"The ACA Subsidy Cliff in 2027: The 400% Line, What It Costs, and How Early Retirees Stay Under It." Wealthy Pot, 2026. https://wealthypot.com/aca-subsidy-cliff/