Frequently Asked Questions
What is the ACA subsidy cliff?
The subsidy cliff occurs at 400% of the Federal Poverty Level (FPL). If your household income exceeds this threshold, you lose ALL premium tax credit subsidies. For a family of 2 in 2026, the cliff is approximately $86,600. Going even $1 over means you could pay thousands more per year in premiums.
How do I qualify for ACA subsidies in 2026?
You qualify if your income is between 100% and 400% of FPL, you're not eligible for affordable employer coverage or government programs (Medicare, Medicaid), and you purchase coverage through the marketplace during open enrollment or a special enrollment period.
Why did premiums increase in 2026?
Enhanced premium tax credits from the American Rescue Plan (2021) and Inflation Reduction Act (2022) expired on December 31, 2025. These enhancements had eliminated the cliff for incomes above 400% FPL and reduced the maximum contribution percentage. Without them, many enrollees see premium increases of 20-75%.
How can I reduce my MAGI to stay below the cliff?
Key strategies include: maximizing pre-tax 401(k) contributions ($24,500 limit in 2026), making traditional IRA contributions, contributing to an HSA ($4,400 self/$8,750 family), timing capital gains realizations, and deferring any optional income to a different tax year.
Do any states offer additional subsidies?
Yes. California, Colorado, Connecticut, Maryland, Massachusetts, New Jersey, New Mexico, Vermont, and Washington have enacted state-level subsidies. Check your state marketplace for additional savings beyond federal premium tax credits.
