ACA Subsidy Cliff 2027: One Dollar Over $63,840 and the Credit Goes to Zero

It is early November and you are filling in one box on HealthCare.gov: what you expect to earn next year. You type $64,000, because that is roughly what last year looked like. For 2027 coverage that number sits $160 above $63,840, the line where a single person's premium tax credit stops shrinking and simply ends.

That line is 400% of the federal poverty level. The drop at it is what people call the subsidy cliff, and the word is accurate. At $63,840 the credit is worth thousands of dollars a year. At $63,841 it is worth nothing, and no phase-out sits in between.

Almost every page that mentions the cliff stops at the thresholds, which are the easy part. What decides whether this matters to you is the size of what you lose, and that is not one number: it is 5.6 times as large at age 60 as at age 40, and more than doubles again for a couple. Every figure below was read from IRS, HHS and KFF pages on August 26, 2026, and the 2027 premium amounts are projections rather than published rates, which I explain before I use them.

Where the 2027 numbers come from, and why the cliff is visible in the IRS table

Two documents decide your answer, and one of them settles the argument about whether the cliff still exists.

The IRS published Rev. Proc. 2026-26 on July 21, 2026 with the applicable percentage table for 2027. That table says what share of your income you are expected to pay for a benchmark plan before the credit covers the rest.

Read the last row again. The table ends at 400%. Between 2021 and 2025 there was a row above it that capped anyone's contribution at 8.5% of income no matter how high the income went, and that row is the thing that expired. Its absence, printed in the IRS's own procedure, is the cliff. Inside a band the percentage moves in a straight line between the initial and final values, which is why a household at 250.6% of the poverty line pays 8.68% rather than 8.66%.

The second document is the poverty guideline. Marketplace eligibility for 2027 runs on the 2026 HHS poverty guidelines published on January 15, 2026, not on a 2027 figure that does not exist yet. That one-year lag is where most of the wrong numbers on the internet come from.

One more figure from the same procedure, for people with a job offer of coverage: the required contribution percentage for the employer affordability test rises to 10.22% for plan years beginning in 2027, from 9.96% in 2026.

Your cliff, by household size

The cutoff scales with the household, and the gap between sizes is larger than most people assume.

Each additional person adds $5,680 to the poverty line, so each one buys $22,720 of extra room under the cutoff. A family of four has $132,000 of headroom, which is why the cliff is rarely their problem and the repayment rule further down usually is. A single 60-year-old consultant with $70,000 of billings has the opposite situation.

Check where you live and what income is being measured before you use these. Alaska and Hawaii run on higher poverty guidelines, so their cutoffs are higher than every figure in that table. And the income being measured is modified adjusted gross income for Marketplace purposes, which is adjusted gross income plus tax-exempt interest, untaxed foreign income and the non-taxable portion of Social Security. It is not gross pay, and the difference between the two is the whole subject of the levers section.

For scale, the 2026 cutoffs were $62,600 for one person, $84,600 for two and $128,600 for a family of four. The 2027 line sits about 2% higher, which moves a borderline household by roughly $1,200 of income.

What the credit is worth if you stay under the line

Below the line the arithmetic is generous and mechanical: you pay a set share of your income, and the credit pays everything above it.

Multiply your income by the applicable percentage for your position on the poverty scale, and that product is your annual share of the benchmark plan. The benchmark is the second-lowest-cost silver plan in your county. Whatever that plan costs above your share is the credit, and the credit does not care how expensive your county is. Here is that share as a monthly dollar figure for a single filer, computed from the two documents above.

Those seven numbers are not projections. They fall out of the IRS percentages and the HHS guidelines with nothing assumed, and every one of them matches the plan year 2027 table that the Center on Budget and Policy Priorities publishes at Health Reform: Beyond the Basics, which rounds them to $29, $65, $86, $180, $288, $408 and $544. The 138% row is the useful one for checking a calculator, because getting it right requires interpolating inside a band rather than reading a single rate.

Turning that share into a credit needs one more input, and this is where certainty ends. The 2027 benchmark premium for your county does not exist yet. It gets published with the plan finder around November 1, 2026. So I built a national stand-in: KFF puts the 2026 average benchmark for a 40-year-old at $625 a month, and insurers have proposed a median increase of 15% for 2027 across 276 filings in all 50 states and DC. That gives a projected 2027 benchmark of $719 a month at age 40, and the CMS default age curve scales it to other ages. Every credit figure from here to the end of this article carries that projection inside it.

One check on that stand-in, and one thing the check cannot reach. Rebuilding CBPP's published 2026 national premium examples out of the KFF benchmark and the age curve lands within 0.3% on both a 45-year-old individual and a 60-year-old couple, so the method holds. What no method fixes is the 15% itself: proposed rates are not final rates, and in 2026 the median proposal of 18% finalized at 20%. If 2027 repeats that pattern, every credit below is understated.

A single 40-year-old earning $40,000 sits at 250.63% of the poverty line, pays 8.68%, and owes $3,472 a year, or $289 a month, toward a benchmark plan projected at $8,625. The credit covers the remaining $5,153 a year. A family of four on $90,000 sits at 272.73%, owes $8,432 a year, and against a projected family benchmark of $27,576 receives about $19,144 a year in credits, which is $1,595 a month moving to an insurer on their behalf.

The cliff is not a slope, and its height depends on your age

At exactly 400% of the poverty line every single filer owes the same $6,524 a year. What the credit is worth on top of that is 5.6 times as large at age 60 as at age 40, because the benchmark premium an older person faces is far larger.

The full arithmetic, with the piece that is published separated from the piece that is projected:

A 40-year-old who takes a $500 side job in December loses about $2,101, which stings and is survivable. A 60-year-old couple in the same position loses $27,786 on income of $86,561, and the marginal tax rate on that single dollar is not a figure any tax table contains.

That age gradient is the part missing from the pages that rank for this. They all state that the cliff exists, and none of them says that its price at 60 is 5.6 times what it is at 40, which is exactly the fact that decides whether a December Roth conversion is a rounding error or a catastrophe. I lean toward the view that the age curve, not the threshold, is the part worth remembering.

Two levers move your MAGI back under the line

Both are above-the-line deductions, which is a tax term and not a reference to the 400% mark: they come off before adjusted gross income is set, so they pull down the very number the Marketplace measures. Both are also the reader's own money rather than a payment to anyone.

The health savings account is the larger one for most people. Rev. Proc. 2026-24 sets the 2027 contribution limits at $4,500 for self-only coverage and $9,000 for family coverage, with another $1,000 available from age 55. A deductible traditional IRA adds $7,500 plus a $1,100 catch-up from age 50 on 2026 figures, though deductibility phases out if a workplace plan covers you and the IRS has not announced the 2027 amounts yet. For the self-employed, a solo 401(k) or SEP is bigger than both, with a 2026 elective deferral of $24,500 before any profit-sharing contribution.

The HSA lever used to be theoretical for Marketplace buyers, because almost none of them held a qualifying plan. That changed. Section 71307 of the 2025 budget law, implemented by IRS Notice 2026-5, treats every bronze and catastrophic plan offered through an Exchange as an HSA-qualified high deductible plan for months beginning after December 31, 2025. Before that rule, about 2% of HealthCare.gov enrollees held an HSA-eligible plan, down from 7% in 2020, while roughly 30% of enrollees, about 7.27 million people, chose bronze anyway. Those people can now open an HSA against a plan they already own. Off-Exchange bronze counts if the same plan is sold on the Exchange, and SHOP bronze does not.

Stack a $7,500 deductible IRA on top and the headroom becomes $12,000 of gross income, which covers most of the drift between a rough estimate in November and the real number in December. The same idea in the opposite direction is why the choice between a Roth and a traditional 401(k) deferral matters more than usual for Marketplace buyers, and why the new mandatory Roth catch-up rule takes a lever away from higher earners over 50. Retirees weighing the standard deduction should note that the $6,000 senior deduction is a below-the-line deduction and does nothing for MAGI. If you are choosing between account types in the first place, the HSA versus FSA comparison covers which one you can actually open.

The repayment rule is the part that should worry you more

The cliff only catches people whose income is near the line. The repayment change catches anyone who estimated wrong, and it arrived quietly.

Advance credits are paid to your insurer monthly on the strength of an income estimate, then reconciled on your tax return. Through tax year 2025, a household that ended up under 400% of the poverty line repaid at most $375 to $1,575 filing single, or $750 to $3,150 for other statuses, regardless of how much excess credit it had received. Section 71305 of the 2025 budget law deleted those caps for tax years after 2025. The first return under the new rule is the one filed in early 2027.

So the family of four from earlier, receiving about $19,144 a year in advance credits, now owes the entire amount as additional tax if the year closes at 401% of the poverty line. That household sits $42,000 under the cliff, so what caught them was the estimate rather than the threshold. The one carve-out is for people whose actual income turned out low enough for Medicaid or CHIP, who still do not repay. The practical move is unglamorous: report income changes to the Marketplace during the year rather than discovering them in April, the same discipline that quarterly estimated taxes on 1099 income demand of anyone self-employed.

What can still change your answer

The arithmetic above is not your outcome yet, and what stands in between is ranked here by how much it moves the number.

Your county's benchmark is the biggest. Everything here runs on a national average, and real credits run on the second-lowest-cost silver plan where you live, which varies enough that a household in one state can face a benchmark far above or below the $719 used here. Use these figures for the shape of the thing, then pull your own number from the plan finder when it opens.

Congress is next, and it flips the whole article if it acts. No extension is enacted as of August 26, 2026. The Senate rejected two competing bills 51-48 on December 11, 2025, the House passed a three-year retroactive extension 230-196 on January 8, 2026 through a discharge petition, and the Senate did not take it up, with a veto threatened. A year-end deal before enrollment closes is not impossible.

Then there are the accidental ways over the line. A Roth conversion in December is the classic one, because it lands in MAGI and no withholding hides it. Capital gains realization does the same. A Roth 401(k) deferral, unlike a traditional one, gives you nothing here. And the self-employed face a genuine loop: the health insurance deduction depends on the premium, which depends on the credit, which depends on MAGI, which depends on the deduction. The IRS publishes an iterative method for it, and any calculator that does not acknowledge the loop is guessing.

Last, the escape hatches, which are real but expensive. The 2027 rules let people above 250% of the poverty line buy catastrophic plans, where the annual cost-sharing limit is $12,000 for an individual and $24,000 for a family, up from $10,600 and $21,200 in 2026, and rising to $15,600 and $31,200 in 2028. Cheap premium, very large exposure. Several state exchanges also run their own subsidy programs on top of the federal credit, so residents there do not fall the full distance. Which states fund one for 2027 is worth checking directly rather than trusting a list, because the programs change year to year.

There is a floor as well as a ceiling. Below 100% of the poverty line there is no premium tax credit at all, Medicaid expansion states pick people up at 138%, and in the ten states that did not expand, a coverage gap remains.

I ran it cold, and the check came back at $544 a month

Before writing any of the above I handed the rules to a model with no fact sheet, no sources and no answer key, to see whether the arithmetic survives contact with something that had never seen it.

The prompt supplied the applicable percentage bands, the 2026 poverty guidelines, the projected age-21 benchmark rate of $562.40 a month and the CMS age factors, and it forbade the model from substituting numbers from memory. It then asked for the cliff at three ages, for a couple, and for the HSA case. Here is the part that matters, with the mathematical notation flattened into plain lines and no figure altered.

What the cold run proves, and the one number to test any calculator with

The transcript quoted in the AI answer block above is what I keep calling the cold run: one conversation with GPT (gpt-5.6-sol) on August 26, 2026, handed the applicable percentage bands, the poverty guidelines, the projected benchmark rate and the age factors, with no sources, no fact sheet and no answer key. Every figure it produced reproduces the table I built independently from the IRS procedure and the HHS guidelines, down to the couple's $27,786. One dollar separates the two versions of the couple's annual benchmark, $36,632 in the run against $36,633 in my table, because the run rounded the monthly figure before multiplying by twelve. The credit is identical either way. The run also printed each division rather than asserting a result, which is the only reason any of it is checkable.

Use the last line as your gate on any calculator or chatbot you try. A single person at $63,840 owes $544 a month, and that number needs nothing projected or assumed. Anything that cannot land on $544 is running a different table, most likely the 2026 one or the expired enhanced rules, and nothing downstream of it is worth reading. The other useful part is where the run drew its own boundary: it listed the age factors and the benchmark rate as numbers I gave it, not as facts it knew, which is exactly right, because the benchmark is the one input here that nobody knows yet.

What is left open, and stays open until November, is whether the median proposed increase of 15% survives regulatory review and what the second-lowest-cost silver plan costs in your specific county. KFF's worked example shows why those are different questions. A 40-year-old in Indianapolis earning $65,000 paid $316 a month in 2025 while the enhanced credits were still in place, then $477 in 2026 once they expired and he was paying the full premium himself, and would pay $546 in 2027 if the filed rates are approved. The step from $316 to $477 is the credit disappearing, not a rate increase. The step from $477 to $546 is the rate increase, and at about 14% it sits right on the 15% median. The 18% proposed and 20% finalized figures quoted earlier are the 2026 rate round, measured the same way across insurers rather than on one household's bill.

FAQ

What is the ACA subsidy cliff income limit for 2027 coverage, by household size?

Marketplace eligibility for 2027 runs on the 2026 federal poverty guidelines, so 400% of the poverty line is $63,840 for one person, $86,560 for two, $109,280 for three, $132,000 for four and $154,720 for five. Each additional person adds $5,680 to the poverty line and therefore $22,720 to the cutoff. Alaska and Hawaii use higher guidelines, so their cutoffs are higher than these. The comparable 2026 figures were $62,600, $84,600 and $128,600 for one, two and four people, which makes the 2027 thresholds roughly 2% higher. The number that matters is modified adjusted gross income for Marketplace purposes, not gross pay: it is adjusted gross income plus tax-exempt interest, untaxed foreign income and the non-taxable part of Social Security.

Did Congress extend the enhanced premium tax credits, or is the cliff still there for 2027?

As of August 26, 2026 no extension has been enacted, and the cliff applies to plan year 2027. The enhanced credits from the American Rescue Plan and the Inflation Reduction Act expired on December 31, 2025. On December 11, 2025 the Senate rejected both a Democratic three-year extension and a Republican HSA alternative, each 51-48. On January 8, 2026 the House passed a three-year retroactive extension 230-196 through a discharge petition, and the Senate did not pass it. The structural confirmation is in the IRS table itself: Rev. Proc. 2026-26 stops its applicable percentage table at 400% of the poverty line, with no row above it, which is exactly the row the enhanced rules supplied. Congress can still act before or during open enrollment, so check the status again before you enroll.

If I underestimate my income, how much of the advance credit do I have to pay back?

All of it. Section 71305 of the July 2025 budget law removed the repayment caps in section 36B(f)(2) for tax years after 2025, starting with the return you file in early 2027. Through tax year 2025 a household that stayed under 400% of the poverty line repaid at most $375 to $1,575 filing single, or $750 to $3,150 for other filing statuses, no matter how large the excess credit was. That ceiling is gone. A family of four that took roughly $19,000 in advance credits during the year and then landed at 401% of the poverty line owes the entire amount back as additional tax. One exception survives: people whose actual income would have made them eligible for Medicaid or CHIP do not repay. This is why an income estimate that drifts upward mid-year is worth reporting to the Marketplace as it happens.

When does open enrollment for 2027 coverage actually close in my state?

It depends on your state, and the federal deadline is under litigation. A 2025 CMS rule shortened the HealthCare.gov window to November 1 through December 15 starting with plan year 2027, and a federal court vacated that provision on June 12, 2026 in City of Columbus v. Kennedy, with the appeal still live. As of August 10, 2026 most states are running November 1, 2026 through January 15, 2027. Idaho starts October 15, and Connecticut and Massachusetts start October 23. California, DC, New Jersey and New York run to January 31, Massachusetts to January 23, and Rhode Island to December 31. One date works under every version of the rule: December 15 is the deadline for coverage that begins January 1 everywhere, so treat that as your real deadline and ignore the argument.

Once the plan is in place, the rest of the year is paperwork, and two of this site's earlier posts cover the parts that go wrong most often: checking a hospital bill for errors and appealing a denied claim. If you are retiring before 65 and bridging to Medicare on a Marketplace plan, the break-even math on claiming Social Security at 62 versus 67 interacts with everything here, because benefits count toward MAGI.

Sources

• Internal Revenue Service, Rev. Proc. 2026-26, released July 21, 2026 (the 2027 applicable percentage table, ending at 400% of the poverty line with no row above it; the 10.22% required contribution percentage for plan years beginning in 2027): https://www.irs.gov/pub/irs-drop/rp-26-26.pdf
• HHS Office of the Assistant Secretary for Planning and Evaluation, 2026 Poverty Guidelines, published January 15, 2026 (the guidelines that govern 2027 Marketplace eligibility; $15,960 for one person, $5,680 per additional person; separate Alaska and Hawaii tables): https://aspe.hhs.gov/topics/poverty-economic-mobility/poverty-guidelines
• Center on Budget and Policy Priorities, Health Reform: Beyond the Basics, read August 26, 2026 (the published plan year 2027 expected-contribution table used to verify every row of the monthly share figures): https://www.healthreformbeyondthebasics.org/premium-tax-credits-answers-to-frequently-asked-questions
• Peterson-KFF Health System Tracker, How much and why ACA Marketplace premiums are going up in 2027, updated August 3, 2026 (the median proposed increase of 15% across 276 insurers; the 2026 median proposal of 18% finalizing at 20%; the Indianapolis worked example at $316, $477 and $546): https://www.healthsystemtracker.org/brief/how-much-and-why-aca-marketplace-premiums-are-going-up-in-2027
• Internal Revenue Service, Rev. Proc. 2026-24, released May 29, 2026 (2027 HSA contribution limits of $4,500 self-only and $9,000 family, with a $1,000 catch-up from age 55): https://www.irs.gov/pub/irs-drop/rp-26-24.pdf
• Public Law 119-21, sections 71305 and 71307, with IRS Fact Sheet FS-2025-10 and IRS Notice 2026-5 (removal of the section 36B(f)(2) repayment caps for tax years after 2025; bronze and catastrophic Exchange plans treated as HSA-qualified high deductible plans for months beginning after December 31, 2025).
• KFF State Health Facts, Marketplace Average Monthly Benchmark Premiums, 2026 plan year (the $625 national average benchmark for a 40-year-old used as the projection base), and 45 CFR 147.102 with the CMS default age curve (the age factors of 1.278 at 40, 1.786 at 50, 2.714 at 60 and 0.765 for a child under 15).
• healthinsurance.org, open enrollment deadline FAQ, page updated August 10, 2026 (state-by-state 2027 open enrollment dates; the vacatur of the shortened federal window in City of Columbus v. Kennedy, D. Md., June 12, 2026).
• Cold run transcript, GPT (gpt-5.6-sol) through the Codex CLI, August 26, 2026, single turn, rules supplied and no sources provided to the model.

Disclaimer

This is an educational explainer about published federal rules, not tax, legal or insurance advice, and none of it is specific to your situation. The income thresholds, applicable percentages and monthly contribution amounts come from Rev. Proc. 2026-26 and the 2026 HHS poverty guidelines and are published figures. Every premium and credit amount is a projection built on a national average benchmark of $719 a month at age 40, derived from KFF's 2026 figure of $625 and the median proposed 2027 increase of 15%, and your real credit runs on the second-lowest-cost silver plan in your county, which is published with the plan finder around November 1, 2026. Proposed rates are not final rates. The status of the enhanced premium tax credits is stated as of August 26, 2026 and Congress can change it. Alaska and Hawaii use different poverty guidelines, state exchanges may add their own subsidies, and the self-employed health insurance deduction requires an iterative calculation that is not performed here. Check your own figures against HealthCare.gov or your state exchange before enrolling.