The ACA Subsidy Cliff Is Back: What It Costs You in 2027

The enhanced premium tax credits expired at the end of 2025. For 2027 coverage, households earning more than 400% of the federal poverty level get no premium tax credit at all — regardless of what the plan costs. That threshold is roughly $63,840 for a single person and $132,000 for a family of four.

Between 2021 and 2025, a temporary rule capped what anyone paid at 8.5% of income and removed the 400% ceiling entirely. That rule is gone. One dollar of income over the line now moves you from a subsidized premium to the full sticker price, and KFF estimates the average marketplace enrollee's payment more than doubles.

Why did my ACA premium go up so much?

Your plan probably didn't change much. Your subsidy did. The American Rescue Plan and Inflation Reduction Act temporarily expanded premium tax credits from 2021 through 2025. Congress did not extend them, so they lapsed on December 31, 2025.

Two things happened at once. Households above 400% FPL lost their credit entirely rather than having it phase out. And households below 400% saw their credit shrink, because the percentage of income they're expected to contribute went back up across every income band. Someone at 150% FPL who paid nothing for a benchmark plan now pays around 2% of income. Someone at 390% FPL now pays close to 10%.

On top of that, insurers filed higher rates for 2026 and 2027 partly in anticipation of a sicker risk pool, as healthier people drop coverage they can no longer afford. So the underlying premium rose at the same time the offset disappeared.

Am I over the 400% subsidy cliff?

It depends on your household size and your modified adjusted gross income — not your gross salary. For 2027 coverage the thresholds work out to roughly:

Figures are 400% of the 2026 HHS poverty guidelines for the 48 contiguous states and DC, which govern 2027 coverage. Alaska and Hawaii use higher thresholds. Add $22,720 for each person beyond four.

The word "cliff" is literal. There is no phase-out. A family of four at $131,900 may receive several hundred dollars a month in credit; the same family at $132,100 receives nothing. The difference in what they pay over a year can exceed the $200 of income that separated them.

This is why the arithmetic matters more than it used to. Your eligibility is based on the household MAGI you project for the coverage year, and several common financial moves change that number. Contributions to a traditional IRA, a health savings account, or a self-employed retirement plan reduce MAGI. So does a business deduction you were entitled to take anyway. If you are close to the line, the decision is worth real attention rather than a guess — and worth running past a tax professional, since we're insurance agents and this is a tax calculation.

What are the options if you lost your subsidy?

There are four realistic paths, and which one fits depends on how far over the line you are and how much care you actually use.

Lower the metal tier. If you were in a Silver plan for the cost-sharing reductions and you no longer qualify for them, Silver loses much of its point. A Bronze plan with an HSA can cost substantially less per month, and the HSA contribution itself reduces your MAGI — which occasionally pulls a household back under the cliff.

Recheck your household size and income projection. Household size for ACA purposes follows your tax household, which is not always who lives in your house. A dependent you can legitimately claim changes the FPL threshold by more than $22,000. People get this wrong in both directions.

Look at an ICHRA if you have a business. If you own a company, even a small one, an individual coverage HRA lets you fund employees' individual policies with pre-tax dollars. Several analysts expect ICHRA adoption to accelerate now that enhanced subsidies are gone.

Compare off-exchange. Without a subsidy there is no financial reason to stay on the marketplace, and the off-exchange market has options the exchange doesn't list.

What doesn't work: assuming a short-term medical plan is equivalent coverage. It can be a reasonable bridge in specific situations, but it is not ACA-compliant, can exclude pre-existing conditions, and is not a substitute for a qualified health plan. Ask before you buy one.