If you’ve been shopping the ACA Marketplace for the last few years and feeling like premiums were finally manageable, here’s the news you may have missed: the law that made them manageable expired on December 31, 2025.
The American Rescue Plan and the Inflation Reduction Act temporarily expanded the ACA premium tax credit from 2021 through 2025. Those enhanced subsidies are now gone. For plan year 2026, the subsidy math reverts to what it was before 2021 — and that brings back something called the 400% FPL cliff.
If your income lands a dollar over the cliff, you don’t get a smaller subsidy. You get no subsidy at all. Most people don’t know this, because the Marketplace doesn’t put it in flashing letters on the screen.
What the cliff actually is
The Federal Poverty Level is a household income number the government uses to size subsidies. For 2026 coverage, the relevant FPL lines (based on 2025 numbers) are:
- Single household: $62,600 = 400% FPL
- Family of four: $128,600 = 400% FPL
Under the enhanced subsidies, people above 400% FPL still got help — capped at paying no more than 8.5% of household income toward a benchmark Silver plan. That cap is gone for 2026. Now, if your modified adjusted gross income comes in at $62,601 single or $128,601 family-of-four, you pay 100% of the unsubsidized premium.
What it costs in real dollars
Take a healthy 55-year-old self-employed person in a typical mid-cost ACA market, household of one:
- At $62,000 of income (just under 400% FPL): the subsidy brings a benchmark Silver plan down to roughly $430/month.
- At $63,000 of income (just over the line): same person, same plan, $840/month unsubsidized.
A $1,000 raise just cost that person about $4,920 a year in premium. That’s the cliff. KFF data already shows the impact: a 44% drop in plan sign-ups for the income bracket just above 400% FPL during the most recent Open Enrollment window.
The cliff is steeper for older shoppers and in higher-cost markets. Mid-50s couples can see unsubsidized premiums in the $1,500–$2,200/month range. Sixty-somethings approaching but not yet at Medicare? Worse.
Who this hits hardest
The cliff lands on a specific group: self-employed earners, 1099 contractors, small business owners, pre-Medicare couples in their late 50s and early 60s, snowbirds with rental income, and families where one earner got a bonus that pushed them over.
The pain is concentrated in the band right above the cliff: people earning roughly $62,600 to about $90,000 single, or $128,600 to about $180,000 family of four. That’s where unsubsidized ACA premium suddenly competes with — or loses to — the private market.
What to do if you’re above the cliff
Short-Term Medical (STM). Major medical coverage that’s underwritten — meaning healthy people pay less. Typical STM premiums run 40–60% below an unsubsidized ACA plan for the same person. The trade: it doesn’t cover pre-existing conditions, and it isn’t available in every state. It can be a multi-year solution in many states, not just a stopgap.
Fixed Benefit / Indemnity coverage. Pays a set cash amount when specific medical events happen. Good for healthy people in states where STM isn’t available, or stacked on top of a high-deductible ACA Bronze plan.
Group health (if you can get it). If you’re self-employed and your spouse has access to employer coverage, the math on adding you to their plan may now beat unsubsidized ACA.
Bronze ACA plus a Fixed Benefit stack. Guaranteed-issue coverage paired with cash-payout protection often gives broader functional coverage for less total premium.
A note on what’s next
Congress could extend the enhanced subsidies, and there has been ongoing discussion about doing so. As of now, the enhanced credits have not been renewed, and 2026 coverage is being priced under the pre-2021 rules. Plan around what’s true today, not what might be true later.
What this means for you
If you’re shopping the Marketplace for 2026 and your income is anywhere near 400% FPL, the difference between getting it right and getting it wrong is measured in thousands of dollars a year. The Marketplace tool won’t tell you what to look at outside the Marketplace. We will.
A 30-minute Healthcare Review walks through your actual situation — income, health, household, state — and compares ACA, STM, Fixed Benefit, and group options side by side. No pressure. If ACA is still your best path, we say that.
Book a Healthcare Review: https://calendar.app.google/SLAptEH3ZSyY5k2r9
Craig Gruenbaum, COO, Insured American Family
