The ACA Subsidy Cliff Is Back in 2026: What It Means for Your Health Insurance
If you buy health insurance through the ACA marketplace and earn more than 400% of the federal poverty level, you may have noticed a dramatic increase in your premiums for 2026. That is because the enhanced subsidies from the American Rescue Plan Act (ARPA) expired at the end of 2025, and the so-called "subsidy cliff" is back.
For the past few years, these enhanced subsidies meant that no one had to pay more than 8.5% of their income for a benchmark Silver plan, regardless of income. That protection is now gone. Here is what changed, who is affected, and what you can do about it.
What Is the ACA Subsidy Cliff?
Under the original Affordable Care Act, premium tax credits are available to help people with incomes between 100% and 400% of the federal poverty level (FPL) afford marketplace insurance. But at 400% FPL, the subsidies stop completely. You go from receiving financial help to receiving nothing at all.
This abrupt cutoff is what people call the "subsidy cliff." If you earn $1 more than the 400% FPL threshold, you lose your entire subsidy and are responsible for the full cost of your premium. For many people, this means their health insurance costs jump by hundreds of dollars per month overnight.
The 2026 FPL thresholds (400%): approximately $62,160 for an individual, $83,880 for a family of 2, $105,600 for a family of 3, and $127,320 for a family of 4. Earn above these amounts and you receive zero premium assistance.
What Changed: The ARPA Enhanced Subsidies
In 2021, the American Rescue Plan Act temporarily eliminated the subsidy cliff. Under ARPA, everyone purchasing marketplace insurance was guaranteed that their benchmark Silver plan would cost no more than 8.5% of their household income. This applied regardless of whether they earned $50,000 or $150,000. The Inflation Reduction Act extended these enhanced subsidies through 2025.
As of January 1, 2026, those enhanced subsidies have expired. Congress did not renew them. The ACA has reverted to its original subsidy structure, which means:
- People above 400% FPL no longer receive any premium tax credit.
- People below 400% FPL still receive subsidies, but the amounts are calculated using the original, less generous formula.
- The 8.5% income cap is gone. Some households may now pay 10%, 15%, or more of their income for coverage.
Who Is Affected the Most?
The impact is most severe for people in two groups:
1. Middle-income earners just above 400% FPL
A 60-year-old individual earning $65,000 per year is now above the cliff. Under ARPA, their benchmark Silver plan cost was capped at about $5,525 per year (8.5% of income). Without the enhanced subsidies, they may face a full premium of $15,000 to $20,000 per year depending on their state and age, with no financial assistance whatsoever.
2. Older adults with moderate incomes
ACA premiums are age-rated. Insurers can charge older enrollees up to 3 times more than younger ones. A 64-year-old couple earning $90,000 could see their annual premiums exceed $30,000 for a Silver plan. Under ARPA, they would have paid no more than $7,650.
Real Numbers: Before and After the Cliff
Here is what the subsidy cliff looks like in practice for a benchmark Silver plan in 2026:
| Scenario | With ARPA (2025) | Without ARPA (2026) |
|---|---|---|
| 40-year-old, $55,000 income | $4,675/yr (8.5%) | ~$4,200/yr (subsidy applies) |
| 40-year-old, $65,000 income | $5,525/yr (8.5%) | ~$7,200/yr (no subsidy) |
| 60-year-old, $55,000 income | $4,675/yr (8.5%) | ~$5,100/yr (small subsidy) |
| 60-year-old, $65,000 income | $5,525/yr (8.5%) | ~$17,400/yr (no subsidy) |
| Couple, both 60, $90,000 | $7,650/yr (8.5%) | ~$34,800/yr (no subsidy) |
The jump from $5,525 to $17,400 for a 60-year-old earning just above the cliff illustrates exactly why this policy change is so disruptive. A difference of a few thousand dollars in income can mean paying three times more for the same coverage.
What Can You Do?
If you are affected by the returning subsidy cliff, here are several strategies to consider:
Reduce your modified adjusted gross income (MAGI)
Your subsidy eligibility is based on your projected MAGI for the year. Strategies to lower your MAGI include:
- Maximize retirement contributions. Traditional IRA and 401(k) contributions reduce your MAGI. In 2026, you can contribute up to $23,500 to a 401(k) and $7,000 to a traditional IRA (with catch-up contributions for those 50+).
- Contribute to an HSA. If you have a high-deductible health plan, HSA contributions ($4,300 individual / $8,550 family in 2026) reduce your MAGI.
- Time your income. If you have control over when you receive bonuses, capital gains, or freelance income, try to stay below the 400% FPL threshold.
Consider a different plan tier
If you no longer qualify for subsidies, a Bronze plan with lower premiums paired with an HSA may be more affordable than a full-price Silver or Gold plan. You will pay more out of pocket when you use care, but your monthly costs will be significantly lower.
Explore other coverage options
- Spouse's employer plan: If your spouse has access to employer-sponsored insurance, compare the total cost against an unsubsidized marketplace plan.
- Professional or trade associations: Some organizations offer group health plans to members.
- Health care sharing ministries: Not insurance, but an alternative that some people use to manage costs (research carefully before enrolling).
Use a subsidy calculator
The most important step is knowing exactly where you stand. Your subsidy amount depends on your income, age, household size, and location. Even small changes can make a big difference in your eligibility.
Find Out What You Qualify For
Enter your income, age, and household size to see your estimated ACA premium tax credit for 2026. See exactly how the subsidy cliff affects your bottom line.
Check Your Subsidy →Will Congress Fix the Cliff?
There is ongoing debate about whether to reinstate the enhanced subsidies. Several bills have been introduced to make the ARPA subsidy structure permanent, but as of early 2026, none have passed. The Congressional Budget Office estimated that roughly 3 to 4 million people could lose coverage or face unaffordable premiums without the enhanced subsidies.
For now, the subsidy cliff is the law. If you are buying marketplace insurance for 2026, plan based on the current rules and adjust if the law changes mid-year. Open enrollment has passed, but qualifying life events (job loss, marriage, moving, having a child) can trigger a special enrollment period at any time.
The Bottom Line
The return of the ACA subsidy cliff in 2026 is a significant financial event for millions of Americans who buy their own health insurance. If your income is near or above 400% of the federal poverty level, your premiums may have jumped substantially compared to last year. The best thing you can do is run the numbers for your specific situation, explore strategies to manage your income, and consider all your coverage options.