The ACA Subsidy Cliff Is Back for 2027: What It Costs and How to Stay Under It
Open enrollment for 2027 health coverage starts on 1 November 2026 — and it arrives with a change that can cost some households thousands of dollars: the subsidy cliff is back. For the past few years, extra pandemic-era help meant premium tax credits reached well up the income scale. That help has expired. For 2027 coverage, the original Affordable Care Act (ACA) rules apply again, and they include a hard cutoff. Earn one dollar more than the limit for your household size, and your premium tax credit drops to zero — not by a little, but all of it. This guide explains where that line falls for 2027 coverage, what it costs to cross it, and how to stay on the right side of it. All figures in this guide are for 2027 coverage.
Open enrollment dates for 2027 coverage
On HealthCare.gov, open enrollment for 2027 coverage runs from 1 November 2026 to 15 January 2027. When your coverage starts depends on when you enroll:
| Enroll by | Coverage starts |
|---|---|
| 15 December 2026 | 1 January 2027 |
| 16 December 2026 – 15 January 2027 | 1 February 2027 (generally) |
Put the 15 December date in your calendar if you want coverage from 1 January. Enrolling later still gets you covered, but generally from 1 February instead. State-run marketplaces may differ — if your state runs its own marketplace, check its dates and deadlines rather than assuming the HealthCare.gov calendar applies.
Why the subsidy cliff is back
The enhanced premium tax credits — the extra help Congress added during the pandemic that removed the income cap on credits — expired on 31 December 2025, and no extension had become law as of late October 2026. That means the original ACA rules apply again for 2027 coverage: premium tax credits are available only up to 400% of the federal poverty level (FPL).
That 400% line is the subsidy cliff. Below it, you can receive a credit that lowers your monthly premium. At one dollar over it, you receive no credit at all. There is no gradual taper at the top of the scale. A household a single dollar over the line pays the full premium, while a household a dollar under it can receive a credit worth thousands of dollars a year.
The 2027 cliff figures
The cliff amounts below come from the 2026 HHS poverty guidelines — the guidelines that set the income limits for 2027 coverage — for the 48 contiguous states and the District of Columbia:
| Household size | Federal poverty level | Subsidy cliff (400% of FPL) |
|---|---|---|
| 1 person | $15,960 | $63,840 |
| 2 people | $21,640 | $86,560 |
| 3 people | $27,320 | $109,280 |
| 4 people | $33,000 | $132,000 |
Alaska and Hawaii have higher poverty guidelines, so their cliff amounts are higher than the figures above. A separate kind of help ends lower down the scale: cost-sharing reductions, which lower deductibles and copays on Silver plans, end at 250% of the poverty level — $39,900 for a single person and $82,500 for a family of four. Run your own household size and income through our ACA Subsidy Cliff Calculator 2027 to see your percentage of the poverty level and your own cliff amount.
How the premium tax credit is worked out
The credit is the difference between two numbers: the benchmark premium, minus your expected contribution. The benchmark premium is the second-lowest-cost Silver plan available in your area. Your expected contribution is a percentage of your household income, set each year by the IRS. So the formula is: credit = benchmark premium − expected contribution.
For 2027 coverage, the IRS percentages in Revenue Procedure 2026-26 rise as income rises, reaching 10.22% of income for households at 300–400% of the poverty level — up from 9.96% for 2026 coverage. That means households near the cliff are expected to contribute a slightly larger share of their income toward the benchmark premium than they were the year before, which shrinks the credit even before the cliff itself is reached.
Worked example 1: a single person at the cliff
Take a single person with household income of exactly $63,840 — the cliff amount for a one-person household — and an illustrative benchmark premium of $1,100 a month, or $13,200 a year. The $1,100 premium is an illustrative example, not a quote; your benchmark premium depends on where you live and your age.
Step 1 — expected contribution: 10.22% × $63,840 = $6,524.45 a year. Step 2 — credit: $13,200 − $6,524.45 = $6,675.55 a year, or $556.30 a month. So at exactly the cliff, this person still receives a credit of about $556 a month toward the premium.
Now add one dollar of income: $63,841. The credit is $0. The whole $6,675.55 a year disappears because of a single extra dollar of income. That is the cliff in action, and it is why estimating income accurately matters so much for 2027.
Worked example 2: a family of four at the cliff
Take a family of four with household income of exactly $132,000 — the cliff amount for a four-person household — and an illustrative benchmark premium of $2,000 a month, or $24,000 a year. Again, the $2,000 premium is an illustrative example, not a quote.
Expected contribution: 10.22% × $132,000 = $13,490.40 a year. Credit: $24,000 − $13,490.40 = $10,509.60 a year, or about $875.80 a month. One dollar over $132,000, and the credit is $0 — the family pays the full $2,000 a month instead of about $1,124. The difference is more than $10,000 over the year, decided by a single dollar.
Why 2027 bills look bigger
The cliff is returning in a year when premiums themselves are rising sharply. KFF's analysis of finalized rates, published 30 October 2026, found benchmark Silver premiums up 13% on average for 2027 — 11% in HealthCare.gov states and 16% in state-run marketplaces — after a 26% rise for 2026. Over 2025–2027, that is a 42% increase in the benchmark premium. This is the finalized average increase. It is distinct from the earlier median proposed increase of 15% that was reported before rates were finalized; the finalized figure is the one that sets actual 2027 premiums.
At the same time, CMS's Plan Year 2027 fact sheet, also dated 30 October 2026, says more than 75% of HealthCare.gov shoppers will still have access to premiums at or below $50 a month after tax credits. Read that sentence carefully: it is after credits. It describes what shoppers who qualify for credits will pay. It does not help households above the cliff, who receive no credit and pay the full price — the full, higher 2027 premium. If your income puts you over the cliff, budget for the full premium, not the $50 figure. If the full-price premium squeezes your month, work through The 50/30/20 Budget Rule to see where the money can come from, and fold the enrollment decision into The Yearly Personal Finance Checklist so it is reviewed calmly, once a year, rather than under deadline pressure.
The repayment warning: estimate income carefully
There is a second sting for 2027, and it applies if you underestimate your income. When you enroll, the marketplace pays advance premium tax credits based on the income you estimate. At tax time, the advance payments are reconciled against your actual income. If you received more than you were entitled to, you repay the excess.
Until now, the amount you had to repay was capped. The One Big Beautiful Bill Act removed those repayment caps for tax years after 31 December 2025. For 2027 coverage, underestimating your income can now mean repaying the full excess — with no cap to limit the bill. Estimate your income carefully when you apply, and update the marketplace promptly if your income changes during the year, so your advance credits can be adjusted before a large repayment builds up.
The 2027 out-of-pocket maximum also rose
Premiums are not the only 2027 number that moved. The out-of-pocket maximum — the most you pay in a year for covered services in your plan, after which the plan pays 100% — rises to $12,000 for an individual and $24,000 for a family in 2027, up from $10,600 and $21,200, per CMS guidance. A higher maximum means a bad year can cost more before the plan takes over in full, which is one more reason a cash cushion matters: if you do not yet have one, start with How to Build an Emergency Fund before open enrollment closes.
Before you enroll: a practical checklist
- Estimate your MAGI honestly. The marketplace uses modified adjusted gross income: adjusted gross income plus tax-exempt interest and untaxed Social Security. That means a Roth conversion, a capital gain, or a year-end bonus can push you over the cliff even if your salary alone would not — count all of it before you apply.
- Compare the benchmark plan. Find the second-lowest-cost Silver plan in your area and note its premium; that is the figure your credit is calculated from, and the starting point for comparing every other plan.
- Check your doctors and prescriptions. A cheaper premium is no bargain if your doctors are out of network or your prescriptions are not covered. Check the plan's provider directory and drug list before you enroll.
- Confirm the first premium is paid. Coverage does not start until the first premium payment is made, so pay it and keep the confirmation. Missing that payment is the most avoidable way to lose coverage you thought you had.
This guide is education, not personalized financial, tax, or health insurance advice. Your income, household, and health needs are your own — if the cliff line is close, or your income is hard to predict, consider talking with a qualified tax professional or a marketplace assister before you enroll.
Frequently asked questions
What is the ACA subsidy cliff?
The point at which premium tax credits stop completely. For 2027 coverage, credits are available only up to 400% of the federal poverty level. One dollar over that line means zero credit — the full credit disappears at once, rather than tapering away gradually.
What is the 2027 subsidy cliff income limit for a single person / family of four?
For 2027 coverage, the cliff is $63,840 for a single person and $132,000 for a family of four, from the 2026 HHS poverty guidelines for the 48 contiguous states and DC. Alaska and Hawaii have higher guidelines and higher cliff amounts.
Do ACA subsidies still exist in 2027?
Yes, but only under the original ACA rules. The enhanced premium tax credits expired on 31 December 2025 and no extension had become law as of late October 2026, so credits are capped at 400% of the federal poverty level for 2027 coverage.
What happens if my income goes over the cliff mid-year?
Your eligibility is based on your annual household income, reconciled at tax time. If your actual income ends up over the cliff, you may have to repay advance credits you received — and the One Big Beautiful Bill Act removed the caps on repaying excess advance credits for tax years after 31 December 2025, so the repayment can be the full excess. Update the marketplace if your income changes during the year.
How do I estimate my income for the marketplace?
Estimate your modified adjusted gross income (MAGI) for the coverage year: adjusted gross income plus tax-exempt interest and untaxed Social Security. Include income that is easy to forget, such as a Roth conversion, a capital gain, or a bonus, because any of them can push you over the cliff.
When is ACA open enrollment for 2027 coverage?
On HealthCare.gov, 1 November 2026 to 15 January 2027. Enroll by 15 December 2026 for coverage starting 1 January 2027; enrollments from 16 December to 15 January generally start 1 February 2027. State-run marketplaces may have different dates.
Sources: HealthCare.gov (open enrollment dates and deadlines); HHS ASPE 2026 Poverty Guidelines; Internal Revenue Service, Revenue Procedure 2026-26 (expected-contribution percentages for 2027 coverage); Centers for Medicare & Medicaid Services, Plan Year 2027 Marketplace Plans and Prices Fact Sheet (30 October 2026); KFF, “9 Things to Watch for the 2027 ACA Open Enrollment Period” (30 October 2026).
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This article is educational and is not financial, tax, or legal advice. See our disclaimer.