Quick answer
A health insurance subsidy is government help that lowers what you pay for coverage. On the ACA marketplace, there are two kinds: premium tax credits, which cut your monthly premium, and cost-sharing reductions, which lower deductibles and copays on silver plans. For 2026 coverage, tax credits go to households earning between 100% and 400% of the federal poverty level, which is $15,650 to $62,600 for one person. For 2027 coverage, it’s $15,960 to $63,840.
Key takeaways
- The premium tax credit caps what you pay for the benchmark silver plan at 2.10% to 9.96% of income in 2026, and 2.15% to 10.22% in 2027.
- Cost-sharing reductions come automatically with silver plans if your income is under 250% of the poverty level.
- The larger credits that ran from 2021 through 2025 expired, so households above 400% of the poverty level get no credit.
- You can take the credit in advance or at tax time. Starting with 2026 coverage, there’s no cap on paying back extra credit.
- Affordable job-based coverage, Medicaid eligibility or Medicare usually rules out a marketplace subsidy.
On this page
Premium tax credits
The premium tax credit is based on two things: your household income and the price of the second-lowest-cost silver plan where you live, called the benchmark plan. The government sets how much of your income you’re expected to pay for that benchmark plan, and the credit covers the rest. You can use the credit on any bronze, silver, gold or platinum marketplace plan.
| Income, share of poverty level | You pay for the benchmark plan, 2026 | 2027 |
|---|---|---|
| Under 133% | 2.10% of income | 2.15% |
| 133% to 150% | 3.14% to 4.19% | 3.23% to 4.30% |
| 150% to 200% | 4.19% to 6.60% | 4.30% to 6.78% |
| 200% to 250% | 6.60% to 8.44% | 6.78% to 8.66% |
| 250% to 300% | 8.44% to 9.96% | 8.66% to 10.22% |
| 300% to 400% | 9.96% | 10.22% |
| Over 400% | No credit | No credit |
What that looks like
Take a single 40-year-old buying a plan for 2026 where the benchmark silver plan costs $625 a month, the national average:
| Yearly income | Expected share | You pay for the benchmark plan | Your tax credit |
|---|---|---|---|
| $30,000 | About 6.2% | About $155 a month | About $470 a month |
| $50,000 | 9.96% | About $415 a month | About $210 a month |
| $65,000 | No credit (over 400%) | $625 a month | $0 |
Age changes the math. A 60-year-old’s benchmark premium is more than twice a 40-year-old’s, so at the same $50,000 income, their credit would be about $900 a month. Older buyers with incomes just above 400% of the poverty level feel the loss of the larger credits the most.
Cost-sharing reductions
If your income is under 250% of the poverty level and you pick a silver plan, you also get cost-sharing reductions. They lower your deductible, copays and out-of-pocket maximum automatically. Under 150% of the poverty level, a silver plan can cover about 94% of costs; between 150% and 200%, about 87%; between 200% and 250%, about 73%. You only get them on silver plans. See health insurance for low-income families.
Who qualifies
To get a premium tax credit, you generally need to:
- Buy a plan through HealthCare.gov or your state’s marketplace
- Have household income between 100% and 400% of the poverty level
- Not be eligible for Medicaid, CHIP, Medicare or affordable job-based coverage
- File a joint return if you’re married, with limited exceptions
- Meet citizenship or immigration rules. Starting in 2027, most people on temporary visas won’t qualify.
Job-based coverage counts as affordable if your share for self-only coverage is under 9.96% of household income in 2026 (10.22% in 2027). Family members are judged on the cost of family coverage, so they may qualify even when you don’t. See can I get health insurance through the marketplace if my employer offers it.
Taking the credit in advance and settling up
Most people have the credit paid to their insurer every month, which lowers the bill right away. At tax time, you file Form 8962 to compare the credit you received with the credit you qualify for based on your actual income. If you got too little, you get the difference back. If you got too much, you repay it, and starting with 2026 coverage there’s no cap on the repayment. Update your income on the marketplace when it changes. See what happens if you under-report your income.
Why subsidies got smaller in 2026
From 2021 through 2025, enhanced credits limited premiums to 8.5% of income for everyone, with no upper income limit, and many low-income people paid $0. Those extra credits expired at the end of 2025. The House passed a three-year extension in January 2026, but it hasn’t passed the Senate. The original rules are back: a 400% income cap and higher required payments at every income level.
Related guides: 2027 Obamacare income limits, what’s changing for 2027 and 2027 premium increases by state.
See your price after subsidies: compare plans in your ZIP code.
Frequently asked questions
Do I have to pay back my subsidy?
Only if you received more in advance than you qualified for based on your final income. Starting with 2026 coverage, you repay the full difference. See how premium tax credit repayment works.
Can I get a subsidy if I buy directly from an insurer?
No. Premium tax credits and cost-sharing reductions are only available on plans bought through HealthCare.gov or your state’s marketplace. See how to buy health insurance outside the ACA exchanges.
What counts as income?
Modified adjusted gross income: wages, self-employment profit, unemployment benefits, Social Security benefits and most other taxable income, plus tax-exempt interest. For the self-employed, see health insurance for the self-employed.
Is there help if I earn over 400% of the poverty level?
Not through the tax credit. You can still lower costs with a bronze plan and an HSA, a catastrophic plan if you qualify, or coverage through a job. For 2026, people over 400% of the poverty level can qualify for a hardship exemption to buy a catastrophic plan; see catastrophic health insurance.
Sources
- IRS: Questions and answers on the premium tax credit
- IRS: Rev. Proc. 2025-25, 2026 applicable percentages
- HealthCare.gov: Lower costs on health insurance
- HealthCare.gov: Cost-sharing reductions
- Congressional Research Service: Enhanced premium tax credit and 2026 exchange premiums
- KFF: Marketplace average benchmark premiums by state
This article is general information, not tax or insurance advice. Your credit depends on your income, household and local prices, so use HealthCare.gov or your state’s marketplace for an exact estimate, and a tax professional for tax questions. Last reviewed September 2026.