The ACA subsidy cliff 2027 is back. For 2027 Marketplace coverage, you get a premium tax credit only if your household income is at or below 400% of the federal poverty level. For a single person in the lower 48 states, that line is $63,840. Go even $1 over and the credit drops to zero. Get your modified adjusted gross income (MAGI) under the line with legal moves like HSA and retirement contributions and you can keep thousands of dollars in help. This guide gives you the limits by household size, shows what going over actually costs, and lists the moves that bring MAGI down.
Last updated: October 24, 2026 · By Syed Kaja Moinudeen
- The enhanced subsidies ended December 31, 2025. For 2027 coverage, the credit stops at 400% of the 2026 poverty guidelines: $63,840 for one person and $132,000 for a family of four.
- At the 300%–400% income band, the IRS sets your expected contribution for the benchmark silver plan at 10.22% of income for 2027.
- Starting with 2026 tax returns, the cap on repaying excess advance credits is gone. If you go over 400%, you could owe back every dollar you received.
- HSA contributions (now allowed with bronze plans), traditional IRA, solo 401(k) and SEP contributions, and the timing of Roth conversions and capital gains are the main ways to lower MAGI.
- Open enrollment on HealthCare.gov runs November 1, 2026 to January 15, 2027. Enroll by December 15 for coverage that starts January 1.
What the ACA Subsidy Cliff Is and Why It's Back for 2027
The premium tax credit was designed with a hard income ceiling. If your household income is at or below 400% of the federal poverty level (FPL), you qualify. If it's above, you get nothing. No phase-out, no partial credit.
From 2021 through 2025, temporary "enhanced" credits removed that ceiling. Those enhanced credits expired at the end of 2025. Congress hasn't restored them as of this writing, so the cliff applies again. The IRS has already published the 2027 numbers in Revenue Procedure 2026-26. In the 300%–400% FPL band, the applicable percentage is a flat 10.22%. That means you're expected to pay up to 10.22% of your income for the benchmark (second-lowest-cost) silver plan, and the credit covers the rest.
The bigger change hits at tax time. Under the One Big Beautiful Bill Act, the IRS says the limits on repaying excess advance premium tax credits are removed for tax years beginning after December 31, 2025. In earlier years, many people who misjudged their income had their payback capped. That safety net is gone.
2027 Subsidy Cliff Income Limits by Household Size (400% FPL Table)
Marketplace subsidies for 2027 coverage are based on the 2026 HHS poverty guidelines. Those guidelines are $15,960 for one person in the 48 contiguous states and D.C., plus $5,680 for each additional person, according to the 2026 Federal Register notice.
| Household size | 100% FPL (2026 guideline) | 400% FPL (2027 cliff) | Max yearly cost of benchmark silver at the cliff (10.22%) |
|---|---|---|---|
| 1 | $15,960 | $63,840 | $6,524 |
| 2 | $21,640 | $86,560 | $8,846 |
| 3 | $27,320 | $109,280 | $11,168 |
| 4 | $33,000 | $132,000 | $13,490 |
| 5 | $38,680 | $154,720 | $15,812 |
| 6 | $44,360 | $177,440 | $18,134 |
For each person beyond six, add $5,680 to the poverty line, which adds $22,720 to the cliff. Alaska and Hawaii have higher guidelines: $19,950 and $18,360 for one person, which puts the single-person cliff at $79,800 in Alaska and $73,440 in Hawaii. At the bottom of the range, the credit generally requires income of at least 100% FPL.
How Much Going $1 Over the Cliff Really Costs: A Worked Example
The premium numbers below are hypothetical. Real benchmark premiums depend on your age, ZIP code and household, so check HealthCare.gov for your actual quotes.
Say Dana is 58, single, and a freelance designer. Her benchmark silver plan costs $1,100 a month, or $13,200 a year.
- MAGI of $63,840: Her expected contribution is 10.22% × $63,840 = $6,524. Her credit is $13,200 − $6,524 = $6,676.
- MAGI of $63,841: Her credit is $0. She pays the full $13,200.
That one extra dollar costs her $6,676. Now suppose her projected 2027 MAGI is $68,000, which is $4,160 over the line. If she picks an HSA-eligible bronze plan and puts $4,500 into an HSA plus the $1,000 age-55 catch-up, her MAGI falls to $62,500. Her expected contribution becomes $6,388, so her credit is about $6,812. The $5,500 is still her money, sitting in an account she can use for medical bills, and she gets the subsidy too.
One catch: the credit is calculated off the silver benchmark, but you can apply it to a bronze plan. If the bronze premium is lower than the credit, the credit is capped at the premium.
What Counts as MAGI for the Premium Tax Credit (and What Doesn't)
For Marketplace purposes, HealthCare.gov defines MAGI as your adjusted gross income (AGI, line 11 of Form 1040) plus three things AGI leaves out:
- Non-taxable Social Security benefits
- Tax-exempt interest, including municipal bond interest
- Untaxed foreign income
Two traps follow from that. Moving savings into munis doesn't help, because the interest is added back. And for early retirees taking Social Security, the untaxed part of the benefit still counts. Supplemental Security Income (SSI) is not included. HealthCare.gov's income guide walks through what to count for every household member who files.
Things that usually don't count: qualified Roth IRA withdrawals, HSA withdrawals for qualified medical costs, cash savings you spend, and the cost basis portion of investments you sell. Only the gain counts.
7 Legal Ways to Lower Your MAGI Below the 2027 Cliff
1. Fund an HSA (now possible with bronze plans)
Starting in 2026, the IRS treats Marketplace bronze and catastrophic plans as HSA-compatible. The 2027 HSA limits are $4,500 for self-only and $9,000 for family coverage, plus a $1,000 catch-up at age 55. You don't need earned income to contribute.
2. Contribute to a traditional IRA
The 2026 limit is $7,500, plus a $1,100 catch-up at 50. The IRS hadn't published 2027 limits when this was written. You need taxable compensation to contribute. If you or your spouse has a workplace plan (a solo 401(k) counts), the deduction phases out for single filers between $81,000 and $91,000 in 2026. That's above the single cliff, so most people near $63,840 can take the full deduction.
3. Max out pre-tax 401(k) deferrals at work
If you have a W-2 job with a 401(k), each pre-tax dollar reduces your wages. The 2026 deferral limit is $24,500. Make sure you choose pre-tax, not Roth.
4. Use a solo 401(k) or SEP if you're self-employed
See the next section.
5. Time Roth conversions
Every converted dollar is added to AGI. Do conversions in years when you're not buying Marketplace coverage, or size them carefully so you stay under the line.
6. Time capital gains and losses
Spread large sales across tax years, sell high-basis lots first, and harvest losses to offset gains. Net capital losses beyond your gains can offset up to $3,000 of ordinary income.
7. Claim every business deduction and the self-employed health insurance deduction
Legitimate business expenses reduce net profit, and net profit is what flows into AGI. If you're buying or financing equipment for your business, our guide to small business fixed asset loans covers the financing side.
| Move | Verified limit | Who can use it | Watch out for |
|---|---|---|---|
| HSA | 2027: $4,500 / $9,000 (+$1,000 at 55+) | Anyone on an HSA-eligible plan, including Marketplace bronze | No Medicare enrollment or other disqualifying coverage |
| Traditional IRA | 2026: $7,500 (+$1,100 at 50+); 2027 TBA | People with taxable compensation | Deduction phase-out if covered by a workplace plan |
| Pre-tax 401(k) | 2026: $24,500 (+$8,000 at 50+); 2027 TBA | Employees and solo 401(k) owners | Roth deferrals don't lower MAGI |
| Roth conversion timing | No limit, so the risk runs the other way | Early retirees | A conversion can push you over the cliff |
| Self-employed health insurance deduction | Premiums you pay that the credit doesn't cover | Self-employed people with a net profit | Circular calculation with the credit (IRS Pub 974) |
Self-Employed and Early Retirees: Special Strategies (Solo 401(k), SEP, Roth Conversion Timing)
Solo 401(k). As a self-employed person, you can make "employee" deferrals ($24,500 for 2026) plus an "employer" profit-sharing contribution based on net self-employment earnings. Pre-tax amounts reduce AGI. IRS Publication 560 explains how to calculate the employer piece for sole proprietors, which is lower than the 25% figure people quote.
SEP-IRA. It's simpler, with employer-only contributions. Publication 560 also covers SEP deadlines. A SEP is handy when you realize after year-end that you're slightly over the line.
Self-employed health insurance deduction. You can deduct Marketplace premiums you pay yourself, but not the portion the credit covers. Because the deduction lowers MAGI, and MAGI changes the credit, the two depend on each other. IRS Publication 974 has a simplified method and an iterative method, and the iterative one can give a better result. Tax software usually handles this. Just make sure it does.
Early retirees. You often have the most control over your income. Live on cash, Roth contribution basis and high-basis taxable investments, and keep conversions and gain harvesting below your cliff number. If you're also juggling the new Roth catch-up requirement at a former employer's plan, note that Roth catch-up contributions don't reduce MAGI the way pre-tax contributions do.
Pairing a Bronze HSA Plan With Your MAGI Plan
The bronze-plan HSA change is the most useful new tool for people close to the cliff. You don't need a W-2 job or earned income to contribute. The contribution is an above-the-line deduction, and withdrawals for qualified medical costs aren't taxed. A couple near $86,560 with family bronze coverage could deduct up to $9,000 in 2027.
The trade-off is a higher deductible. Run the numbers on HealthCare.gov. A bronze plan plus a funded HSA plus your subsidy can still come out ahead of a silver plan with no subsidy. Remember that cost-sharing reductions only apply to silver plans, and only at lower incomes.
2027 Open Enrollment Dates and How to Estimate Income on HealthCare.gov
On HealthCare.gov, open enrollment runs November 1, 2026 through January 15, 2027. Enroll by December 15 for coverage starting January 1. Enrollments through January 15 start February 1. State-run exchanges can set different deadlines.
When the application asks for your expected 2027 income, enter your projected MAGI after the contributions you're committing to. Build in a cushion. If you're aiming for $63,840, a plan that lands at $60,000 leaves room for a surprise 1099. If your income changes during the year, report it on HealthCare.gov so your advance credit can be adjusted. Going without coverage to avoid the math is a risk most people regret. Here's one story of what that can cost.
What Happens at Tax Time If You Go Over: Form 8962 and Repayment Rules
Advance credits for 2027 are reconciled on Form 8962 when you file your 2027 return in 2028. If your final MAGI ends up above 400% FPL, your allowed credit is $0. You'll owe back the full advance amount, because the repayment caps were removed for tax years after 2025. In Dana's example, that could mean a bill of about $6,676.
Before you file, check whether there's still time to fix it. HSA and IRA contributions for 2027 can generally be made up to your April 2028 filing deadline, and SEP contributions have their own deadline rules in Publication 560. A last-minute contribution can bring MAGI back under the line.
Frequently Asked Questions
What is the ACA subsidy cliff for 2027?
For 2027 Marketplace coverage, the premium tax credit is available only if household income is at or below 400% of the federal poverty level. Using the 2026 poverty guidelines, that's $63,840 for one person and $132,000 for a family of four in the lower 48 states.
Do I lose the whole subsidy if I earn $1 over the limit?
Yes. There is no phase-out above 400% FPL for 2027. At $63,841 a single person's premium tax credit is $0, no matter how high the premium is.
Are the enhanced ACA subsidies coming back for 2027?
As of October 24, 2026, Congress has not restored them, and the IRS has published 2027 percentages under the regular rules. Check HealthCare.gov for any change before you finalize your plan.
What income counts as MAGI for the premium tax credit?
Your adjusted gross income plus non-taxable Social Security benefits, tax-exempt interest and untaxed foreign income. Supplemental Security Income is not included.
Can I contribute to an HSA with a Marketplace bronze plan?
Yes. Starting in 2026, the IRS treats bronze and catastrophic plans as HSA-compatible. For 2027 you can contribute up to $4,500 for self-only or $9,000 for family coverage, plus $1,000 if you're 55 or older.
Is there still a cap on repaying excess premium tax credits?
No. The repayment limits were removed for tax years beginning after December 31, 2025. If your income ends up over 400% FPL, you may have to repay all advance credits on Form 8962.
When is the 2027 open enrollment deadline?
On HealthCare.gov, open enrollment runs November 1, 2026 to January 15, 2027. Enroll by December 15, 2026 for coverage starting January 1, 2027. State exchanges may differ.
Do Roth 401(k) or Roth IRA contributions lower my MAGI?
No. Roth contributions are made with after-tax dollars and don't reduce AGI. Only pre-tax contributions, such as traditional 401(k) deferrals, deductible IRA contributions and HSA contributions, lower MAGI.
Sources
- IRS Revenue Procedure 2026-26 (2027 applicable percentages)
- HHS 2026 Poverty Guidelines, Federal Register
- IRS: One Big Beautiful Bill provisions
- IRS Revenue Procedure 2026-24 (2027 HSA limits)
- IRS: HSA guidance for bronze and catastrophic plans
- IRS: 2026 401(k) and IRA limits
- IRS Publication 974 and Publication 560
- HealthCare.gov: MAGI and Open Enrollment
This article is educational information only and is not financial, tax or legal advice. Talk to a qualified professional about your situation.
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