In this article
- Who is eligible for an ACA premium subsidy?
- How is eligibility for premium tax credits different in 2026?
- Are health insurance subsidies available to fewer consumers for 2026 plans?
- How many consumers receive premium subsidies?
- Can I get ACA subsidies if my employer offers health benefits?
- Are people with Medicaid or CHIP eligible for premium subsidies?
- Am I too old for a premium subsidy?
- Is my income too low for me to be subsidy-eligible?
- Do I have to be a U.S. citizen to get a premium subsidy?
- Are people with higher incomes less likely to be eligible for subsidies in 2026?
- ACA subsidies are based on the cost of Silver plans
- How to estimate your ACA subsidy in five easy steps
- Sample subsidy calculations for 2026
This article explains the premium tax credits (premium subsidies) created by the Affordable Care Act (aka Obamacare). These income-based subsidies are available through the health insurance Marketplace/exchange in every state.
Subsidy amounts differ from one person to another, and they’re adjusted each year to keep pace with premiums. (Here's how that works.) But as we’ll discuss below, subsidies don’t cover as much of enrollees’ total premiums in 2026 as they did in the past several years.
Who is eligible for an ACA premium subsidy?
Premium subsidy eligibility is based on income (ACA-specific MAGI). To qualify for a subsidy, a household must have an income of at least 100% of the federal poverty level (or above 138% of the federal poverty level in states that have expanded Medicaid). And as of 2026, there is once again an income cap of 400% of the poverty level (discussed in more detail below).
In addition to income, other factors determine eligibility for premium subsidies. To qualify for ACA Marketplace premium subsidies:1
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- You can’t be eligible for Medicaid, CHIP, or premium-free Medicare Part A.
- You can’t be eligible for employer-sponsored coverage that’s considered affordable and that provides minimum value. Learn more about how this works.
- You must enroll in coverage through the Marketplace/exchange in your state, as subsidies are not available outside the Marketplace (off-exchange). To use the Marketplace, you must be lawfully present in the United States, not enrolled in Medicare, and not be incarcerated.2
- If you’re married, you must file a joint tax return with your spouse.
How is eligibility for premium tax credits different in 2026?
The American Rescue Plan (ARP), which provided significant, albeit temporary, enhancements to the ACA, was signed into law by President Biden in March 2021. And the Inflation Reduction Act (IRA), which Biden signed into law in August 2022, extended some of these enhancements through 2025.
The ARP and IRA include several provisions that made Marketplace health insurance more affordable.
From 2021 through 2025, the ARP and IRA increased the size of premium tax credits and eliminated the upper income limit for subsidy eligibility.
But those provisions expired at the end of 2025, after Congress failed to agree on another extension. As a result, subsidy rules for 2026 reset to the way they were before the ARP.3
Are health insurance subsidies available to fewer consumers for 2026 plans?
For 2021 through 2025, subsidies were more robust than they usually are. There was no “subsidy cliff” for those five years. Instead, nobody purchasing coverage through the Marketplace had to pay more than 8.5% of their household income (an ACA-specific calculation) for the benchmark silver plan. And people with lower incomes paid a premium that was a smaller-than-normal percentage of their income for the benchmark plan – as low as $0 for people with income that didn’t exceed 150% of the federal poverty level.
But these subsidy enhancements sunset at the end of 2025. As a result, subsidies don’t cover as much of enrollees’ premiums in 2026, and the “subsidy cliff” has returned, making subsidies unavailable to people with household income above 400% of the federal poverty level (FPL). In the continental United States, 400% of FPL is $62,600 for a single individual in 2026, and $128,600 for a family of four (the dollar amounts are higher in Alaska and Hawaii).4
During the open enrollment period for 2025 coverage, more than 1.6 million people who provided income data to the Marketplace had incomes above 400% of FPL.5 Although many of them were eligible to receive subsidies in 2025, none of them are eligible for federal subsidies in 2026 because their income is over 400% of the federal poverty level.
Loss of federal CSR funding resulted in larger premium subsidies
In addition to the enhanced subsidies under the ARP and IRA, subsidy amounts were already considerably larger than they were before 2018. This has been the case since the Trump administration stopped funding cost-sharing reductions (CSR – a different type of ACA subsidy that lowers deductibles, copayments and coinsurance)6 in the fall of 2017.
To cover the cost of CSRs, insurers in most states now add that cost to Silver plan premiums (known as “Silver loading”). That makes the Silver plans disproportionately expensive, and since premium subsidies are based on the cost of the benchmark Silver plan, it also makes the premium subsidies disproportionately large. Silver loading continues to be used in nearly every state in 2026. So, although the ARP subsidy enhancements expired at the end of 2025, Silver loading continues to make premium subsidies larger than they would have been if the federal government had continued to fund CSR.7
How many consumers receive premium subsidies?
More than 24.3 million people enrolled in Marketplace plans during the open enrollment period for 2025 coverage, and more than 22 million of them were receiving premium subsidies.8
For those enrollees, premium subsidies covered the bulk of their premiums: The average full-price premium was $619/month, and the average premium subsidy was $550/month. The overall average after-subsidy premium (including people who didn't get a subsidy at all) was just $113/month.8
In short, the subsidies are a significant part of the "affordable" portion of the Affordable Care Act. With each successive open enrollment period, awareness of the law's premium tax credits (subsidies) has continued to grow. But many people may still be wondering, "Am I eligible to receive a premium subsidy – and if so, what should I expect?"
Can I get ACA subsidies if my employer offers health benefits?
If your employer offers coverage that's considered affordable and provides minimum value, you're not eligible to receive a subsidy in the exchange.1 The family glitch previously caused some families to be ineligible for subsidies due to the way affordability of employer-sponsored health plans was calculated, but the IRS fixed the glitch in the fall of 2022, meaning that some families became newly eligible for Marketplace subsidies in 2023.
If your employer offers affordable coverage that provides minimum value, you are already receiving a “subsidy” from your employer in the form of pre-tax health insurance benefits and an employer contribution to your premiums. The exchanges are designed to offer subsidized health insurance benefits to people who are self-employed, retired before age 65, or working for a company that does not offer affordable health benefits.
Note that some employers offer coverage that is either not affordable or does not provide minimum value (by doing this, large employers can avoid the potentially larger penalty they would pay if they didn't offer coverage at all). Large employers are subject to a penalty if they offer these plans and their employees opt for a subsidized plan in the exchange/Marketplace instead. If your employer offers a plan that doesn't meet the affordability rules and/or the minimum value rules, you do have access to premium subsidies in the exchange if you're otherwise eligible based on your income, immigration status, etc.1
Are people with Medicaid or CHIP eligible for premium subsidies?
Premium subsidies aren't available to people who qualify for Medicaid or CHIP.1 But Medicaid and CHIP (the Children's Health Insurance Program) generally provide even more financial assistance than premium subsidies.
It's important to understand that CHIP eligibility often extends to much higher incomes than Medicaid eligibility. Kids in households with MAGI at 200% of the federal poverty level (FPL) are eligible for CHIP in nearly every state, and there are several states where CHIP eligibility extends to above 300% of the poverty level. (In some states, CHIP is separate from Medicaid, while other states have integrated CHIP with their Medicaid program.)9
If your kids are eligible for Medicaid or CHIP, they aren't eligible for premium subsidies. That means the subsidy amount you'll see when you enroll is just for the adults in your household, as the kids will be on Medicaid or CHIP instead.
Am I too old for a premium subsidy?
There's no upper age limit for subsidy eligibility. But most people become eligible for premium-free Medicare Part A when they turn 65. In that case, they lose their eligibility for premium subsidies.1
But if you're not eligible for premium-free Medicare Part A because you don't have enough work history in the U.S., you can continue to buy coverage in the exchange, and you'll continue to receive premium subsidies if your income makes you eligible. (See question A6 in this guide from CMS.)10
Is my income too low for me to be subsidy-eligible?
Premium subsidies aren't available to people with income below the poverty level.1 This is because when the ACA was written, it was expected that everyone with income below the federal poverty level would be eligible for Medicaid. But two years after the ACA was enacted, the Supreme Court ruled that states couldn't be forced to expand Medicaid,11 and some states still haven't expanded coverage.
This results in a coverage gap for adults with income below the poverty level in those states with income below the poverty level in those states. In most cases, they're not eligible for Medicaid because they're in states where Medicaid eligibility has not been expanded to include childless adults, and where Medicaid income limits for parents are quite low.12 But they're also not eligible for premium subsidies. In 2026 this applies to people in nine states that have not elected to expand Medicaid.13
Do I have to be a U.S. citizen to get a premium subsidy?
No, you don't have to be a U.S. citizen to get premium subsidies. Premium subsidies aren't available to people who aren't in the U.S. legally, although they are available to immigrants who are lawfully present in the U.S.
From 2014 through 2025, ACA premium subsidies were available to immigrants with income below the poverty level if they had been lawfully present in the U.S. for less than five years.14
This was because in most cases, there's a five-year wait after a person gains lawfully present status before they can become eligible for Medicaid. So premium subsidies for these individuals were designed to ensure that everyone lawfully present in the U.S. could have access to affordable health coverage. But starting in 2026, subsidies are no longer available to recent immigrants (lawfully present in the U.S. less than 5 years) with household income below the poverty level. This is due to the "Big Beautiful Bill" that was enacted in July 2025.15
Starting in November 2024, DACA recipients became eligible to enroll in Marketplace plans and qualify for income-based subsidies. But this was soon blocked in 19 states that challenged the provision in court, and starting on August 25, 2025, DACA recipients were no longer eligible for Marketplace coverage in any state. Those who were enrolled in Marketplace plans were disenrolled at that point. This was due to the Marketplace rule that HHS finalized in June 2025.
A note about state-run exchanges and undocumented immigrants: Washington's health insurance exchange received federal approval to allow undocumented immigrants to enroll starting in the fall of 2023, and Washington allows those enrollees to qualify for state-funded subsidies. Colorado debuted a separate enrollment platform in the fall of 2022, which allows undocumented immigrants to enroll in coverage with state-funded subsidies. In the rest of the country, undocumented immigrants cannot use the exchange at all. And federal subsidies are never available for undocumented immigrants.
Are people with higher incomes less likely to be eligible for subsidies in 2026?
As noted above, people with household income above 400% of FPL are not eligible for federal health insurance subsidies beginning with plan year 2026 (a few states are offering state-funded subsidies to enrollees with income above 400% of FPL).
Marketplace enrollees with household income that doesn’t exceed 400% of FPL can still qualify for a federal subsidy in 2026. But compared with 2025 subsidy amounts, they have to pay a larger percentage of their own income in after-subsidy premiums.
It's important to understand that contributions to a health savings account (HSA) and/or pre-tax retirement plans will reduce your income for subsidy-eligibility purposes. This is still true in 2026, and can be useful in terms of avoiding the subsidy cliff. As of 2026, all Bronze Marketplace plans are HSA-eligible, meaning that enrollees can make contributions to an HSA if they have a Bronze Marketplace plan.16
This allows potentially millions of additional Marketplace enrollees to contribute to an HSA and reduce their ACA-specific modified adjusted gross income. This is especially important given that the "subsidy cliff" has returned in 2026, and enrollees are only eligible for subsidies if their ACA-specific MAGI doesn't exceed 400% of FPL. (Note that Marketplace Catastrophic plans are also HSA-eligible as of 2026, but subsidies are never available with Catastrophic plans. So while a person with a Catastrophic Marketplace plan can contribute to an HSA, they still won’t be able to get a subsidy, regardless of their MAGI.)
ACA subsidies are based on the cost of Silver plans
Now that we know who is eligible, let's take a look at how the subsidies work. The subsidies are tax credits that help middle-income and low-income people afford health insurance when they don't have access to affordable employer-sponsored coverage or government-sponsored coverage (typically Medicaid/CHIP or Medicare). Most eligible enrollees take those tax credits in advance, paid directly to their health insurance carrier each month to offset the amount that has to be paid in premiums. This is called an advance premium tax credit, or APTC.
But you can also pay full price throughout the year for a plan through the exchange, and then claim your subsidy as a lump sum when you file your taxes. Subsidy reconciliation is completed when you file taxes, using Form 8962. If the subsidy you receive during the year is too high, you'll pay back the excess APTC when you file taxes. If it was too low – or if you didn't receive an advance subsidy at all during the year – you'll get the balance of the tax credit when your return is processed.17
Learn more about how the premium tax credit is reconciled on tax returns.
As discussed above, premium subsidies are available to exchange enrollees based on their ACA-specific MAGI. People enrolled in off-exchange plans are not eligible for subsidies, regardless of income, and cannot receive any premium tax credits when they file their tax returns. This is true even if an identical version of their plan is also sold on-exchange. So it's essential to enroll via the exchange in your state if you want to take advantage of the available tax credits.
In states that have expanded Medicaid under the ACA, Medicaid is available to enrollees with incomes up to 138% of the poverty level, and subsidies are not available below that threshold. (In Minnesota, Washington DC, and Oregon, Basic Health Program coverage is available up to 200% FPL. And in New York, Essential Plan coverage – similar to a Basic Health Program – is available up to 250% FPL. So your income has to be above those levels in those states to qualify for premium tax credits in the Marketplace.)
Note that it’s possible for someone with MAGI under 400% of the poverty level to be ineligible for subsidies simply because the unsubsidized cost of coverage in their area is under the threshold established by the ACA. Subsidies are tied to the cost of the second-least expensive Silver plan in your area (ie, the benchmark plan). Learn more about the benchmark plan and how its cost dictates subsidy amounts.
The cost of the benchmark plan is specific to each person's circumstances. It depends on your zip code and the age of any family members who are applying for coverage, so the cost of the benchmark for your household will not be the same as the cost of the benchmark for another household. This is generally true even if you live next door to each other, since the ages of each household's members are likely to be different.
As the cost of the benchmark plan changes each year, the size of the premium subsidy changes too, to keep pace with the benchmark plan cost. But as described above, the expiration of federal subsidy enhancements at the end of 2025 meant that subsidies began covering a smaller share of premium costs in 2026, relative to 2025.
The Marketplace will automatically calculate your subsidy, but many enrollees are curious about how the subsidy amount is determined, so here are the details:
How to estimate your ACA subsidy in five easy steps
The size of your subsidy is based on how your household's income (ACA-specific MAGI) compares with the prior year's federal poverty level, and the price of the benchmark Silver plan in your region for the year your coverage will be in force.
To calculate the size of your subsidy for 2026:
1) Determine your household's ACA-specific Modified Adjusted Gross Income. If you need help with this, you can use our calculator. (This calculator is for educational and illustrative purposes only and should not be construed as financial or tax advice. It uses the income and other information you provide. We included categories of income and expenses that the Marketplace commonly –but not always – uses. You should contact a tax advisor or other professional about any specific requirements or concerns.):
Calculate Yearly Income
Use this to calculate your household’s estimated yearly income. Consider including your income, your spouse’s income, and that of any tax dependents, all of which are usually counted by the Marketplace. After that, provide information about expenses that may be deducted.This calculator is for educational and illustrative purposes only and should not be construed as financial or tax advice. It uses the income and other information you provide. We included categories of income and expenses that the Marketplace commonly (but not always) uses. You should contact a tax advisor or other professional about any specific requirements or concerns.
Click calculate to see updated yearly income
2) Use the table below to find out where your income falls in relation to the federal poverty level. For 2026 coverage, you'll be looking at your projected 2026 income, but you'll be comparing it to the 2025 federal poverty numbers which are shown in the table below. As noted above, the numbers are higher in Alaska and Hawaii.
In most states, if your income doesn't exceed 138% of the poverty level, you'll be eligible for Medicaid. If it’s above that amount (or at least 100% of FPL in a state that hasn’t expanded Medicaid), your subsidy eligibility will depend on your income as a percentage of the poverty level, as described in the next step.
| 2025 Federal Poverty Guidelines | |||
|---|---|---|---|
| Persons in family / household | 48 contiguous states and DC | Alaska | Hawaii |
| 1 | $15,650 | $19,550 | $17,990 |
| 2 | $21,150 | $26,430 | $24,320 |
| 3 | $26,650 | $33,310 | $30,650 |
| 4 | $32,150 | $40,190 | $36,980 |
| 5 | $37,650 | $47,070 | $43,310 |
| 6 | $43,150 | $53,950 | $49,640 |
| 7 | $48,650 | $60,830 | $55,970 |
| 8 | $54,150 | $67,710 | $62,300 |
| 9+ | If more than 8 in household / family, add $5,500 per additional person. | If more than 8 in household / family, add $6,880 per additional person. | If more than 8 in household / family, add $6,330 per additional person. |
3) Find out how much the Affordable Care Act expects you to contribute to the cost of your insurance (for the benchmark Silver plan) by consulting Table 2. The expected contribution is adjusted slightly each year. The percentages listed below are for 2026.18
| If you earn | Your expected contribution is |
|---|---|
| Less than 133% of FPL | 2.1% of your income |
| 133%-150% of FPL | 3.14%-4.19% of your income |
| 150%-200% of FPL | 4.19%-6.6% of your income |
| 200%-250% of FPL | 6.6%-8.44% of your income |
| 250%-300% of FPL | 8.44%-9.96% of your income |
| 300%-400% of FPL | 9.96% of your income |
| 400% of FPL or higher | Full cost (no federal subsidies available) |
The subsidy will make up the difference between the amount an individual is expected to contribute (based on income) and the actual cost of the area's second-lowest-cost Silver plan.
4) Determine how much a benchmark Silver plan costs in the area where you live. You can scroll through the available quotes in your state's exchange and see what the second-lowest-cost Silver plan's premium would be for you and your family, or you can call the exchange. In most states, these numbers start to become available by mid-late October, in advance of the November 1 start to open enrollment.
It's important to note that the benchmark plan changes from one year to another: Carrier A might have the second-lowest-cost Silver plan one year, but due to premium fluctuations, Carrier B might take over that spot the following year. Here's an example of how this works.
5) See Table 2. Subtract the amount that you are expected to contribute (based on your income) from the cost of your benchmark Silver plan. For instance, let’s say your Silver plan costs $6,000 a year, and you are expected to contribute $1,000. You will receive a subsidy of $5,000.
Sample subsidy calculations for 2026
Let's work through a specific example for 2026, so that you can see exactly how it works (we're rounding numbers here to make it easy to follow; the exact dollar amounts would be slightly different):
Rick is 27 and lives in Birmingham, Alabama (zip code 35213). According to HealthCare.gov, the benchmark plan for Rick has a full-price premium of about $535 per month in 2026.19
If Rick earns $31,300 (that's 200% of FPL, based on the 2025 FPL numbers) he would be expected to kick in 6.6% of his income, or about $2,066 in 2026, towards the cost of the benchmark plan (0.066 x $31,300 = roughly $2,066), with a subsidy covering the rest of the premium. That amounts to about $172 per month in premiums that Rick would have to pay himself if he buys the benchmark plan. A subsidy of about $363/month will cover the rest of the cost.
(Note: If the ARP subsidy enhancements had been extended, Rick would only have been expected to pay 2% of his income for the benchmark plan, instead of 6.6%. He would only have had to pay about $626 in 2026, or about $52/month, for the benchmark plan if the subsidy enhancements had been extended.)
To calculate his subsidy, Rick just needs to subtract $2,066 (the amount he kicks in over the course of 2026) from $6,420 (the total cost of the benchmark plan over the course of 2026). His subsidy will be about $4,354 for the year. That means the exchange will send about $363/month to his insurer, and Rick will have to pay the other $172/month (again, these amounts are rounded and thus not exact).
Of course, that's assuming he picks the benchmark plan; if he buys a less-expensive plan, he'll pay less, and if he buys a more expensive plan, he'll pay more. The $363/month subsidy will stay the same regardless of what plan he buys – unless he enrolls in the one available plan that has a full-price premium of less than $363/month. In that case, the subsidy will cover the full price and his monthly premium will be $0, but he won't be able to claim the excess subsidy.
(Note that you can also calculate your expected contribution percentage if your income is somewhere in the middle of one of the ranges shown in Table 2. Here's how it works.)
Rick's 27-year-old cousin Alice, earns the same amount as Rick, but lives in Little Rock, Arkansas (zip code 72201), where the pre-subsidy cost of the benchmark plan is higher. After her subsidy, she'll pay the same amount as Rick for the benchmark plan (because they earn the same income), but her subsidy will need to be larger to get the after-subsidy amount down to the same $172/month. The benchmark plan for Alice has a full-price premium of $635 per month in 2026, according to HealthCare.gov's plan comparison tool.19
If Alice also earns $31,300 in 2026 (200% of the 2025 FPL) the government would expect her to spend 6.6% of her income on the benchmark plan, just like her cousin in Alabama. (Remember, the expected contribution is tied to income (MAGI), not the underlying cost of the plan.) So she, too, would have to pay about $2,066 of her own money (about $172/month) to buy the benchmark plan in her area. But because the full price of the benchmark plan for Alice would be about $7,620 over the course of 2026, her subsidy will need to be about $5,556 (roughly $463/month).
Since Rick and Alice earn the same amount, they pay the same in after-subsidy costs for the benchmark plan: Around $2,066 for the year in 2026, which is 6.6% of their incomes. This is based on their MAGI – not their age, health status, or location. But Alice's subsidy has to be larger than Rick's, because the unsubsidized cost of her plan is higher, due to her location.
If Rick and Alice were younger, the Silver plan would be less expensive and their subsidies would be smaller. If they were older, the Silver plan would be more expensive, and their subsidies would be higher.20
The idea behind the subsidies is to level the playing field and bring average premiums to a middle ground for everyone who has the same general level of income (MAGI). So at the same income level, an older person will receive a higher subsidy than a younger person, but they'll both ultimately pay the same price for the benchmark plan.
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written hundreds of opinions and educational pieces about the Affordable Care Act for healthinsurance.org.
Footnotes
- “The Premium Tax Credit – The basics” Internal Revenue Service. Accessed Jan. 6, 2026 ⤶ ⤶ ⤶ ⤶ ⤶ ⤶
- “Are you eligible to use the Marketplace?” HealthCare.gov. Accessed Jan. 5, 2026 ⤶
- “Health subsidies expire, launching millions of Americans into 2026 with steep insurance hikes” PBS. Jan. 1, 2026 ⤶
- “2025 Poverty Guidelines” U.S. Department of Health & Human Services. Accessed Jan. 6, 2026 ⤶
- “2025 Marketplace Open Enrollment Period Public Use Files” Centers for Medicare & Medicaid Services. Accessed Jan. 6, 2026 ⤶
- ”Health Insurance Premium Tax Credit and Cost-Sharing Reductions” Congress.gov. Accessed Jan. 22, 2026 ⤶
- “ACA marketplace 2026: The silver loading mitigation” Xpostfactoid. Nov. 7, 2025 ⤶
- “2025 Marketplace Open Enrollment Period Public Use Files” CMS.gov, Accessed July 15, 2025 ⤶ ⤶
- “Medicaid, Children's Health Insurance Program, & Basic Health Program Eligibility Levels” IMedicaid.gov. Accessed July 15, 2025 ⤶
- “Medicare and the Marketplace” Centers for Medicare & Medicaid Services. Accessed Jan. 6, 2026 ⤶
- “A Guide to the Supreme Court’s Decision on the ACA’s Medicaid Expansion” KFF.org. Aug. 1, 2012 ⤶
- “Medicaid, Children's Health Insurance Program, & Basic Health Program Eligibility Levels” Medicaid.gov. Accessed Jan. 22, 2026 ⤶
- “How Many Uninsured Are in the Coverage Gap and How Many Could be Eligible if All States Adopted the Medicaid Expansion?” KFF.org. Feb. 25, 2025 ⤶
- “ACA Section 1401(c)(1)(B) — page 113 of the text of the ACA” Office of the Legislative Counsel. Enacted Mar. 23, 2010 ⤶
- “H.R.1 - One Big Beautiful Bill Act” (Section 71302). Congress.gov. Enacted July 4, 2025 ⤶
- “H.R.1 - One Big Beautiful Bill Act” (Section 71307). Congress.gov. Enacted July 4, 2025 ⤶
- “Premium Tax Credit: Claiming the credit and reconciling advance credit payments” Internal Revenue Service. Accessed Jan. 6, 2026 ⤶
- “Revenue Procedure 2025-25” Internal Revenue Service. Accessed Jan. 6, 2026 ⤶
- “See Plans & Prices” HealthCare.gov. Accessed Jan. 6, 2026 ⤶ ⤶
- “How insurance companies set health premiums” HealthCare.gov. Accessed Jan. 6, 2026 ⤶
