The enhanced premium tax credits that had held down Affordable Care Act marketplace costs since 2021 expired on 1 January 2026. Average premium payments rose by about 114% — from roughly $888 in 2025 to $1,904 in 2026, on KFF’s analysis.
Most coverage stops at that number. The structural change underneath it matters more, and far fewer people know about it.
The subsidy cliff is back
Under the enhanced credits, there was no income ceiling. Premiums were capped as a share of income, so as you earned more, the subsidy shrank gradually and eventually reached zero on its own.
Under the original ACA rules, which now apply again, there is a hard cut-off at 400% of the federal poverty level.
| With enhanced credits | Now | |
|---|---|---|
| Above 400% FPL | Still capped as a share of income | No credit at all |
| Shape | A slope | A cliff |
Why “cliff” is the right word and not a metaphor. At one dollar below the threshold a household may receive a credit worth thousands. At one dollar above it, the credit is zero — not reduced, not tapered. The same insurance, the same family, a dollar of difference. This produces the genuinely perverse situation where taking extra work in December can leave a household worse off for the whole year. Anyone whose income lands anywhere near that line needs to know exactly where it falls for their household size, because it is the single largest financial decision in the marketplace and it is invisible until you cross it.
What the numbers look like for a person
A commonly cited illustration: a 40-year-old earning $50,000 could pay roughly $2,000 more per year for a benchmark silver plan than under the enhanced credits.
Averages hide enormous variation. The change lands hardest on older enrollees, on people in areas with few insurers, and on anyone just above the 400% line — where the loss is not a percentage increase but the entire subsidy.
The lever most people have, and it is not the plan
Eligibility is assessed on modified adjusted gross income. That figure is not simply what you earn — certain pre-tax contributions reduce it.
- Traditional IRA contributions reduce MAGI.
- Health savings account contributions, if you have an eligible plan, reduce MAGI.
- Self-employed retirement plan contributions can reduce it substantially for people with variable income.
For a household sitting just above 400%, reducing MAGI below the line can restore a credit worth far more than the contribution itself. That is an unusual situation in personal finance and it is worth taking to a tax professional rather than attempting from a article — the calculation is specific to household size, state and plan.
The other things worth checking
- Metal tier. If the subsidy has gone, the calculation changes entirely — a bronze plan with a high deductible may now beat a silver one that was cheaper only because of the credit.
- Medicaid eligibility at the other end of the income range, which varies by state.
- Off-exchange plans. If you receive no credit, there is no longer a reason to buy on the exchange, and the off-exchange market may have different options.
- Open enrollment dates. Typically from 1 November, but state-run exchanges differ — check yours.
The scale of it
An Urban Institute and Commonwealth Fund analysis estimated around 4.8 million Americans would drop coverage in 2026 because of the higher premiums.
That is the number that makes this a policy story rather than a personal-finance one. But for any individual household, the actionable part remains the same: find out where the 400% line falls for your household size before you make decisions about income or coverage.
Enhanced premium tax credits introduced in 2021 expired on 1 January 2026. KFF analysis found average ACA marketplace premium payments would more than double in 2026, rising approximately 114% from an average of about $888 in 2025 to $1,904 in 2026, with an illustrative example of a 40-year-old earning $50,000 paying roughly $2,000 more annually for a benchmark silver plan. An analysis by the Urban Institute and the Commonwealth Fund estimated approximately 4.8 million people would drop coverage in 2026. With the expiry, premium tax credit eligibility reverts to the original Affordable Care Act structure, including the cut-off at 400% of the federal poverty level. Figures were reported by KFF, the American Journal of Managed Care, CNN and Fidelity. Federal poverty level thresholds change annually and vary by household size and state. This article is general information and is not tax, legal, insurance or financial advice; readers should confirm current rules at healthcare.gov or their state exchange and consult a qualified professional about their own circumstances.
Frequently Asked Questions (FAQ)
What happened to ACA subsidies?
The enhanced premium tax credits, introduced in 2021, expired on 1 January 2026. Premium tax credits still exist under the original Affordable Care Act rules, but they are less generous and are structured differently.
How much did premiums rise?
KFF analysis found average marketplace premium payments would more than double, rising about 114% — from roughly $888 in 2025 to $1,904 in 2026 on average. What an individual pays varies widely by income, age and location.
What is the subsidy cliff?
Under the original ACA rules, premium tax credits stop entirely above 400% of the federal poverty level. There is no taper: at 400% you may receive a substantial credit, and slightly above it you receive nothing. The enhanced credits had removed that cliff by capping premiums at a share of income instead.
Can I do anything about my income for this purpose?
Possibly. Eligibility is based on modified adjusted gross income, and some pre-tax contributions — such as to a traditional IRA or a health savings account — reduce it. For someone marginally above the cliff, that can be the difference between no credit and a large one. This is a question for a tax professional, not a rule of thumb.
When is open enrollment?
Marketplace open enrollment for the following year typically begins on 1 November. Confirm the exact dates on healthcare.gov or your state exchange, as some state-run marketplaces operate different windows.
How many people are affected?
An analysis by the Urban Institute and the Commonwealth Fund estimated that around 4.8 million Americans would drop coverage in 2026 as a result of the higher premiums.
