This ACA subsidy calculator for early retirees estimates the premium tax credit on a Marketplace plan for the years after your last paycheck, when you use the health insurance marketplace to bridge the gap to Medicare. Enter household size, expected MAGI for the coverage year, and two prices: the benchmark Silver plan and the plan you picked. It returns the subsidy amount, your monthly bill, your distance from the 400% cliff, and what a Roth conversion would cost.
The defaults describe a married couple, both 62, in one of the 48 contiguous states, planning $60,000 of 2027 income with a $1,900 benchmark monthly premium (illustrative; yours depends on ages and county). That is 277% of the poverty line, so they’re expected to pay 9.50% of it, $5,700 a year. The credit is $17,100, or $1,425 a month, leaving $475 a month for the benchmark plan.
ACA Subsidy Calculator for Early Retirees
Estimate the premium tax credit on a Marketplace plan before Medicare: MAGI as a share of the poverty line, the 2026 or 2027 applicable percentage, your expected share of the benchmark Silver premium, the 400% cliff, and what a Roth conversion or capital gain costs in lost credit.
Uses the IRC 36B rules as they stand for 2026 and 2027: the 2021 to 2025 enhanced credits were not extended, applicable percentages come from Rev. Proc. 2025-25 and 2026-26, poverty guidelines are the prior year's HHS figures, and excess advance credit is repaid in full (P.L. 119-21). Cost-sharing reductions and state subsidies are not modeled. Educational only, not tax, legal, or insurance advice.
ACA Subsidies After the Enhanced Credits Expired
From 2021 through 2025, Congress enhanced the credit, removing the income ceiling. That lapsed. The Senate failed to advance an extension in December 2025 (51 to 48), and as of late September 2026 none has become law. The IRS Q&A now says households “may be eligible for the Premium Tax Credit if their household income for the year is at least 100 percent but no more than 400 percent of the federal poverty line.”
So the original ACA rules from the 2010 health reform law, the Affordable Care Act, govern ACA subsidies for 2026 and 2027 coverage:
- The 400% ceiling is back. Premium subsidies are available only inside the 100% to 400% income range; a dollar over and the subsidy is zero.
- Required shares are higher: up to 9.96% of MAGI for 2026 plans and 10.22% for 2027.
- No repayment cap. P.L. 119-21, section 71305 ended the caps for tax years after 2025.
I checked each figure against the IRS and HHS originals; many pages still cite the old no-cliff rules.
How the Premium Tax Credit Is Figured, Line by Line
- Add up your ACA MAGI: modified adjusted gross income, AGI plus nontaxable Social Security, tax-exempt interest, and excluded foreign income.
- Divide by the poverty guideline for your household size from the year before coverage. Form 8962 drops decimals, so 277.26% enters as 277.
- Find the applicable percentage. Inside each band it climbs in a straight line.
- Multiply to get your expected contribution for the year.
- Subtract it from the benchmark, the second-lowest-cost Silver plan (SLCSP). The credit is that gap, capped at the premium of the plan you buy.
That’s how subsidies are calculated at every metal level. With the defaults, a $1,200 Bronze plan caps the credit at $14,400 a year, so it costs $0. Silver matters at lower incomes, since cost-sharing reductions come only with a Silver health plan.
The Applicable Percentage Tables and 400% Lines
The IRS indexes the table each summer: Rev. Proc. 2025-25 for 2026 plans and Rev. Proc. 2026-26 for 2027.
| MAGI as a share of poverty line | 2026 plans | 2027 plans |
|---|---|---|
| Under 133% | 2.10% | 2.15% |
| 133% to under 150% | 3.14% to 4.19% | 3.23% to 4.30% |
| 150% to under 200% | 4.19% to 6.60% | 4.30% to 6.78% |
| 200% to under 250% | 6.60% to 8.44% | 6.78% to 8.66% |
| 250% to under 300% | 8.44% to 9.96% | 8.66% to 10.22% |
| 300% to 400% | 9.96% | 10.22% |
| Over 400% | No credit | No credit |
For contrast, the Congressional Research Service notes that at 200% of the federal poverty level, the share was 2% under the enhanced rules versus 6.6% now.
The income levels come from HHS poverty guidelines, always last year’s set; Alaska and Hawaii run higher.
| Household | Guideline for 2026 plans | Guideline for 2027 plans | 400% line, 2027 |
|---|---|---|---|
| 1 | $15,650 | $15,960 | $63,840 |
| 2 | $21,150 | $21,640 | $86,560 |
| 3 | $26,650 | $27,320 | $109,280 |
| 4 | $32,150 | $33,000 | $132,000 |
Retirement Income That Can Count Towards Your MAGI
The HealthCare.gov income list asks for “most IRA and 401k withdrawals” and Social Security, “both taxable and non-taxable.” Income sources count differently than on a 1040:
- Counts: IRA and 401(k) withdrawals, Roth conversions, each realized capital gain (the gain, not the sale price), dividends, interest, pensions, part-time wages, and all Social Security.
- Doesn’t count: qualified Roth distributions, Roth contributions you take back, savings, loans, gifts, and supplemental security income.
- Lowers it: deductible traditional IRA contributions and other adjustments.
Assets aren’t tested. A couple with $2 million in a brokerage account and $60,000 of MAGI can qualify for a subsidy, the same subsidy as a couple with no savings, because eligibility for marketplace subsidies is based on income. Retiring early doesn’t stop you from being able to qualify for ACA help: spending cash isn’t income. Social Security counts in full, which surprises people who claim at 62.
Income Planning for an Early Retiree Near the Subsidy Cliff
Add a $10,000 Roth conversion for the default couple: MAGI reaches $70,000, or 323%, the share hits 10.22%, and the credit falls to $15,646. That $1,454 of lost subsidy is 14.54% of the conversion, on top of income tax.
The subsidy cliff is harsher. At $86,560, exactly 400% for a couple in 2027, the credit is $13,954. At $87,000 it’s $0, so $440 of higher income costs $13,954.
- Size conversions to the line. Our Roth conversion ladder planner shows each rung’s tax; add the lost credit before choosing an amount.
- Pick the tax lots you sell. High-basis shares create less taxable income per dollar raised.
- Plan withdrawals still count. Money taken under the rule of 55 skips the 10% charge but raises MAGI.
- Leave a margin. Year-end fund distributions arrive late.
Below 138%: Expanded Medicaid Eligibility
Going too low has its own subsidy rule. In states with expanded Medicaid, HealthCare.gov says adults qualify on income alone below 133% of the poverty line, which “turns out to be 138%.” If you’re eligible for Medicaid, you aren’t eligible for marketplace savings, so the tool flags it: a single person with $20,000 in 2027 sits at 125%.
Note that Medicaid checks current monthly income, not a yearly estimate. And under a CMS rule issued in June, states must generally require expansion adults 19 to 64 to show 80 hours a month of work, school, or service (or matching earnings) by January 1, 2027, unless exempt. In a state that hasn’t expanded, income under 100% qualifies for neither program, so plan at least that much MAGI.
Health Insurance Options If You Retire Before Age 65: COBRA vs the ACA Marketplace
Early retirement health insurance usually means COBRA or a new Marketplace plan. COBRA keeps your employer-sponsored health plan, usually up to 18 months, but the Labor Department notes “You usually pay the full premium amount.” No credit applies to it, so the Marketplace often wins.
- Timing: losing job-based health coverage opens a special enrollment period. The retirees page lets you apply for subsidies from 60 days before to 60 days after your separation date.
- The COBRA trap: past those first 60 days, you qualify for marketplace coverage mid-year only if COBRA is running out or your employer stops paying its share. Dropping it on your own means waiting for Open Enrollment, November 1 to January 15.
- Retiree health benefits: enrolled in a former employer’s retiree insurance, you can’t get the credit. Eligible but not enrolled, you may.
Price the whole early retiree health bill to Medicare at age 65: retire at 62 and that’s three years of health insurance expenses. Our retirement healthcare cost estimator adds it to later Medicare costs, and the Coast FIRE planner helps if you’re still choosing the year to stop.
Reconciling Advance Credits at Tax Time
Most enrollees take marketplace premium tax credits in advance, paid monthly to the insurance company from the estimate in their Marketplace application. Form 8962 compares that with what actual MAGI allows. If the default couple received $1,425 a month and a December conversion lifted MAGI to $70,000, they would owe back $1,454. Cross 400% and all $17,100 comes back.
Frequently Asked Questions
Can an early retiree with a large portfolio qualify for subsidies?
Yes. You can qualify for premium tax credits at 100% to 400% of the poverty line, based on your income alone and no affordable job coverage, until you’re eligible for Medicare. A marketplace subsidy, like other health insurance subsidies, ignores savings.
What is the most I can earn and still get help in 2027?
400% of the prior-year guideline: $63,840 for one person and $86,560 for two. Every dollar of annual income used in the test counts.
Does the tool look up my benchmark plan?
No. The calculator estimates your credit from the price you enter, since premiums vary by county and age; search plans to find it before you buy insurance. The calculator provides estimates, not an eligibility notice.
What if I turn 65 mid-year?
Enter the months you’ll hold the plan. It can carry you until Medicare starts; cancel it then, and your health insurance cost for the year falls with it.
Could Congress bring back the enhanced credits?
It could, and a new law would change these tables and the subsidy eligibility rules.
Last reviewed September 2026 against both Rev. Procs. above, the Instructions for Form 8962, HHS poverty guidelines, P.L. 119-21, and HealthCare.gov. This page and the tool are for general educational purposes, not tax, legal, or insurance advice. Confirm whether you qualify for a premium tax credit on your state’s exchange before you enroll.