The ACA subsidy cliff, explained

If you buy health insurance on the Marketplace, the price on the plan is usually not what you pay. Most people get a premium tax credit that lowers the monthly bill. How big that credit is, and whether you get one at all, depends on your income.

How the tax credit is calculated

1. The Marketplace finds the benchmark plan in your area: the second-lowest-cost silver plan.
2. Based on your household income, the law sets how much you're expected to pay for that benchmark plan, as a percentage of income.
3. Your tax credit is the difference. You can use it on any metal level, so a cheaper bronze plan can cost very little, or even nothing.

Our county pages show each area's benchmark premium for a 40-year-old, so you can see how the starting point differs from place to place.

What the "cliff" is

From 2021 through 2025, temporary "enhanced" subsidies removed the upper income limit. Nobody had to pay more than a set share of income for the benchmark plan, however much they earned. Those enhanced subsidies have ended.

That brings back the original rule: tax credits are generally only available up to 400% of the federal poverty level. For 2026 coverage that's about $62,600 for a single person. Earn a dollar over the line and you lose the entire credit, not just part of it. That's the cliff.

It hits hardest for older people, whose full premiums are much higher, and for people in high-cost areas.

What you can do

• Estimate your income carefully. The credit is based on your income for the year you're covered. Contributing more to a traditional 401(k), IRA or HSA lowers the income that counts, which can keep you under the line.
• Update the Marketplace if your income changes during the year, so you don't owe money back at tax time.
• Compare metal levels. With a smaller credit, a bronze or catastrophic plan may be the only affordable option, but check the deductible.
• Check Medicaid and CHIP if your income is low. Many states cover adults below about 138% of the poverty level.

HealthCare.gov's price estimator will give you your actual numbers. A licensed tax professional can help with the income planning side.