Do You Qualify for ACA Subsidies? How Premium Tax Credits Work in 2026

What Are ACA Premium Tax Credits?

The Affordable Care Act created premium tax credits to make health insurance purchased through the marketplace more affordable. A premium tax credit is a federal subsidy that directly reduces the amount you pay each month for your health insurance premium. Unlike a tax deduction, which lowers your taxable income, a tax credit reduces your tax bill dollar for dollar — and in the case of the ACA, it can be applied in advance so you see the savings immediately.

Premium tax credits are only available for plans purchased through the Health Insurance Marketplace — either HealthCare.gov or your state's exchange. You cannot receive the credit for off-marketplace plans, employer-sponsored coverage, or non-ACA-compliant plans such as short-term health insurance or health sharing ministries.

For the 2026 plan year, enhanced subsidies originally introduced by the American Rescue Plan Act of 2021 and extended through the Inflation Reduction Act remain in effect. These enhanced credits have been responsible for record-breaking enrollment, with more than 23 million Americans selecting marketplace plans during the most recent open enrollment period.

Who Qualifies for Premium Tax Credits in 2026?

To qualify for premium tax credits, you must meet all of the following criteria:

• Purchase your health insurance through the marketplace (HealthCare.gov or a state-based exchange)
• Have a household income between 100% and 400% of the federal poverty level (FPL), or above 400% FPL if your benchmark plan premium exceeds 8.5% of household income under the enhanced subsidies
• Not be eligible for affordable employer-sponsored coverage that meets the ACA's minimum value standard
• Not be eligible for government coverage such as Medicare, Medicaid, or CHIP
• File a federal tax return (married couples must file jointly)
• Not be claimed as a dependent on someone else's tax return

Lawfully present immigrants with incomes below 100% FPL can also qualify for premium tax credits even though they do not qualify for Medicaid in most states.

Income Eligibility: Federal Poverty Level Thresholds by Family Size

Your eligibility for subsidies is determined by your household income as a percentage of the federal poverty level. The FPL is updated annually by the Department of Health and Human Services. Below are the approximate 2026 FPL thresholds for the 48 contiguous states and Washington, D.C. (Alaska and Hawaii have higher thresholds):

Individual (household of 1):

• 100% FPL: approximately $15,060
• 150% FPL: approximately $22,590
• 200% FPL: approximately $30,120
• 250% FPL: approximately $37,650
• 400% FPL: approximately $60,240

Family of 2:

• 100% FPL: approximately $20,440
• 400% FPL: approximately $81,760

Family of 4:

• 100% FPL: approximately $31,200
• 400% FPL: approximately $124,800

Family of 6:

• 100% FPL: approximately $41,960
• 400% FPL: approximately $167,840

Under the enhanced subsidies, households above 400% FPL also qualify if the benchmark Silver plan premium would exceed 8.5% of their income. This means there is effectively no hard income ceiling — even households earning $80,000, $100,000, or more may receive some level of assistance depending on local premiums and household size.

How Premium Tax Credits Are Calculated

Your premium tax credit is based on two key factors: your expected contribution toward premiums (expressed as a percentage of household income) and the cost of the benchmark plan in your area.

The benchmark plan is the second-lowest-cost Silver plan available in your local marketplace. You do not have to enroll in this specific plan — it is simply the reference point used to calculate your credit.

The formula works like this:

1. The ACA assigns a maximum percentage of income you are expected to pay toward the benchmark plan, based on your income relative to the FPL
2. That percentage is multiplied by your household income to determine your expected annual contribution
3. The credit equals the difference between the benchmark plan premium and your expected contribution

Under the enhanced 2026 subsidy structure, the income-based contribution percentages are approximately:

• 100% to 150% FPL: 0% of income (effectively free benchmark coverage)
• 150% to 200% FPL: 0% to 2.0% of income
• 200% to 250% FPL: 2.0% to 4.0% of income
• 250% to 300% FPL: 4.0% to 6.0% of income
• 300% to 400% FPL: 6.0% to 8.5% of income
• Above 400% FPL: Capped at 8.5% of income

Example: A single individual earning $30,000 per year (approximately 200% FPL) would be expected to contribute about 2% of income, or $600 per year ($50 per month). If the benchmark Silver plan in their area costs $500 per month, the premium tax credit would be $450 per month. They could apply that $450 credit to any marketplace plan — not just the benchmark Silver plan.

The Enhanced Subsidies: What the Inflation Reduction Act Changed

Before the American Rescue Plan Act (ARPA) of 2021, premium tax credits were available only to households between 100% and 400% FPL, and the expected premium contribution could reach as high as 9.83% of income at the 400% threshold. The ARPA made two critical changes that the Inflation Reduction Act subsequently extended through 2025, and Congress has continued for the 2026 plan year:

• Eliminated the 400% FPL cliff: Previously, earning even one dollar above 400% FPL disqualified you entirely. Now, no one pays more than 8.5% of household income toward the benchmark plan regardless of income level.
• Lowered contribution percentages across the board: Consumers at every income level pay a smaller share of their income toward premiums than they did under the original ACA schedule. People at or below 150% FPL now pay nothing for the benchmark plan.

Important: These enhanced subsidies are not permanent. If Congress does not extend them again, the original ACA subsidy schedule would return for the 2027 plan year. That would mean the loss of credits for everyone above 400% FPL and significantly higher premiums for millions of enrollees across all income levels. Advocacy organizations and industry groups estimate that 7 to 8 million people could lose coverage if the enhanced subsidies expire.

Advance Premium Tax Credit vs. Reconciliation at Tax Time

You have two options for how to receive your premium tax credit:

Option 1: Take the advance premium tax credit (APTC)

Most enrollees choose this option. The marketplace estimates your annual income and sends a portion of your credit directly to your insurance company each month. You pay only the difference between the full premium and the credit amount. This makes coverage affordable month to month without waiting until you file your tax return.

Option 2: Claim the full credit at tax time

You can choose to pay the full premium each month and then claim the entire credit as a lump sum when you file your federal tax return using IRS Form 8962. This approach avoids the risk of owing money back if your income ends up higher than projected, but it requires paying more out of pocket throughout the year.

Reconciliation: Regardless of which option you choose, you must file IRS Form 8962 with your tax return to reconcile the credit. The IRS compares the advance credits you received with the actual credit you are entitled to based on your final income for the year.

• If you received too much in advance credits, you will owe some or all of it back when you file
• If you received too little, you will get a larger refund
• Repayment caps apply for households under 400% FPL, ranging from $350 to $3,000 depending on income and filing status
• There is no repayment cap for households above 400% FPL — you may owe back the full excess amount

Tip: If your income is variable or difficult to predict, consider taking a slightly smaller advance credit than you qualify for. This builds a buffer and reduces the likelihood of a repayment surprise.

Cost-Sharing Reductions: Extra Savings on Silver Plans

In addition to premium tax credits, the ACA provides cost-sharing reductions (CSRs) that lower your deductibles, copays, coinsurance, and out-of-pocket maximums. CSRs are a separate form of financial assistance and are only available if you meet two conditions:

• You enroll in a Silver tier plan through the marketplace
• Your household income is between 100% and 250% of the federal poverty level

CSRs increase the actuarial value of your Silver plan, meaning the plan covers a larger share of your healthcare costs. The level of enhancement depends on your income:

• 100% to 150% FPL: Silver plan enhanced to approximately 94% actuarial value. Deductibles often drop to $0-$75, and the out-of-pocket maximum may be as low as $1,300. This is better coverage than most Platinum plans at a fraction of the cost.
• 150% to 200% FPL: Silver plan enhanced to approximately 87% actuarial value. Deductibles and out-of-pocket maximums are significantly reduced, typically comparable to Gold plan coverage.
• 200% to 250% FPL: Silver plan enhanced to approximately 73% actuarial value. Reductions are more modest but still meaningful, lowering your deductible and maximum out-of-pocket costs compared to a standard Silver plan.

Critical: CSRs are only available on Silver plans. If you qualify for cost-sharing reductions and choose a Bronze, Gold, or Platinum plan instead, you will not receive CSR benefits. For most people with incomes between 100% and 250% FPL, a CSR-enhanced Silver plan is the best value in the marketplace.

How to Estimate Your Subsidy

You do not need to calculate your premium tax credit by hand. Several tools can give you a reliable estimate before you apply:

• HealthCare.gov's "See Plans and Prices" tool: Enter your zip code, household size, income, and ages to see estimated premiums after subsidies are applied. No account required for browsing.
• KFF Health Insurance Marketplace Calculator: An independent tool from the Kaiser Family Foundation that estimates your premium tax credit, expected premium contribution, and CSR eligibility based on your income, household size, and location.
• Your state exchange website: If your state runs its own marketplace, it typically provides a calculator or plan preview tool on its website.

To get the most accurate estimate, you will need:

• Your projected annual household income for the coverage year (not last year's income)
• The number of people in your tax household
• Ages of all household members who need coverage
• Your zip code (plan availability and pricing vary by location)

Remember that "household income" for ACA purposes means your modified adjusted gross income (MAGI), which includes wages, self-employment income, Social Security benefits, investment income, and certain other sources. It does not include non-taxable Social Security benefits, child support, or gifts.

What Happens If Your Income Changes During the Year?

Life does not always go according to plan, and your income may end up higher or lower than the estimate you provided when you enrolled. The marketplace expects this and requires you to report changes as they happen.

If your income increases:

• Your monthly advance credit may decrease, meaning you will pay a higher premium for the rest of the year
• If you do not report the increase and continue receiving the larger credit, you will likely owe money when you reconcile on your tax return
• If your income rises above the subsidy threshold, you could owe back the full amount of excess advance credits received

If your income decreases:

• You may qualify for a larger credit, lowering your monthly premium
• You may become newly eligible for cost-sharing reductions if your income drops below 250% FPL
• If your income drops below 100% FPL in a Medicaid expansion state, you may become eligible for Medicaid instead

You should also report other household changes that affect eligibility, including getting married or divorced, having a baby, gaining or losing other health coverage, or moving to a different zip code. Each of these events can change your subsidy amount, your plan options, or both.

The Medicaid Gap in Non-Expansion States

The ACA was designed with the assumption that every state would expand Medicaid to cover adults with incomes up to 138% of the federal poverty level. The Supreme Court's 2012 ruling in NFIB v. Sebelius made Medicaid expansion optional for states, and as of 2026, ten states have not expanded their programs.

This creates what is known as the Medicaid coverage gap. In non-expansion states, adults without dependent children often do not qualify for Medicaid regardless of how low their income is. At the same time, premium tax credits on the marketplace are available only to people with incomes at or above 100% FPL. The result is a population that falls between the two programs — earning too much for their state's Medicaid but too little for marketplace subsidies.

The states that have not expanded Medicaid as of 2026 include:

• Texas
• Florida
• Georgia
• Tennessee
• Mississippi
• Alabama
• South Carolina
• Kansas
• Wisconsin (partial expansion — covers adults up to 100% FPL but has not adopted full expansion)
• Wyoming

An estimated 1.5 million adults fall into this coverage gap nationwide. If you live in a non-expansion state and your income is below 100% FPL, your options are limited. Community health centers provide primary care on a sliding-fee scale, some states offer limited benefit programs, and hospitals are required to provide emergency care regardless of ability to pay. However, none of these options provide the comprehensive, continuous coverage that Medicaid expansion or marketplace plans offer.

The Bottom Line

Premium tax credits and cost-sharing reductions are the primary tools that make ACA marketplace coverage affordable for millions of Americans. In 2026, enhanced subsidies continue to extend financial assistance beyond the original ACA income limits, meaning a broader range of households can access reduced premiums — and in some cases, $0-premium benchmark plans.

The most important steps you can take are:

• Estimate your income accurately to avoid tax-time surprises
• Choose a Silver plan if you qualify for CSRs — the savings on deductibles and copays can be substantial
• Report income and household changes promptly to keep your subsidy aligned with your actual situation
• File your taxes and include Form 8962 to reconcile your advance credits and avoid issues with future enrollment

If you are unsure whether you qualify, use the KFF Marketplace Calculator or browse plans on HealthCare.gov. A licensed agent or marketplace Navigator can also help you understand your options at no cost. Financial assistance is available — the first step is simply applying.