For several years, there was no income ceiling for marketplace tax credits. That temporary rule has ended, meaning one good year could now wipe out your entire credit. Let me explain how the cliff works and how to find out where you fall.
Hi, I'm Sam Jaber, and I'm licensed as a health insurance broker. I help plenty of self-employed people, and during open enrollment, I hear the same question all the time: "My year turned out better than I expected. Does that mean I've lost my subsidy?" Sometimes it does, and the amount you lose comes down to which side of one income limit you land on.
I'm licensed in 36 states and help clients over the phone, wherever they happen to live. Let me explain how the cliff works and show you a simple way to check where your income stands.
Marketplace premium tax credits depend on how your household income compares with the federal poverty line for your household size. The federal tax code allows the credit when household income falls between 100% and 400% of that line. Go over 400%, and the credit drops to zero.
There's a reason we call it a cliff instead of a slope. With a slope, your credit gradually gets smaller as your income increases. With a cliff, you lose the entire credit when you cross the limit. Below that point, you pay part of your income toward a benchmark silver plan, and the credit pays the balance. Go just over the limit, and that help disappears.
For 2026, the IRS sets the highest applicable percentage at 9.96% of income for households between 300% and 400% of the poverty line. Right up to the limit, your share is capped at a percentage of income. Go just over it, and that calculation no longer matters. Your entire credit disappears, leaving you responsible for the full premium.
From 2021 through 2025, temporary federal rules did away with the 400% income limit and reduced the percentages people were expected to pay. These provisions only covered taxable years before 2026. They are no longer in effect for 2026 or 2027. Since the statute no longer includes those provisions, the 400% limit is back.
What you earn in 2026 also affects the savings available to you in 2027. HealthCare.gov says Marketplace savings for a given year are calculated using the previous year's income. So what you make this year helps determine how much assistance you receive next year. That's why the income estimate you give the marketplace can make a bigger difference than you might think.
This cliff can be especially important when your income changes from one year to the next. Someone earning a salary usually has a regular paycheck that's fairly easy to predict. When you're self-employed, a busy season, a big one-time payment or a slower period can change your yearly income in ways that are hard to anticipate. Any of those changes could put your household on either side of the limit.
There's also the issue of paying credits back. Beginning with the 2026 tax year, the federal limit on how much a lower-income household had to repay when it received too much in advance credits has been eliminated. If your income estimate is too low, you could now owe the entire difference when you file your taxes. That's why I'd rather review your estimate before the year gets away from you instead of waiting until after you file.
Enter your household size, state and expected yearly income. The check compares your income with the 400% line using the same poverty-line figures as the price check. No premium is displayed.
Use this as a planning tool, not a quote. The result depends on your estimated income, so changing that estimate can change the outcome. Talk to Sam before using it to make a decision.
As long as your household income for the year remains below 400% of the poverty line, you can still qualify for a credit. That's generally where I'd look first. If you qualify for assistance, I'd start with marketplace coverage because the credit is only available on marketplace plans. The important part is getting your income estimate right. If it's too low, you could end up with a tax bill later.
Next step: Give me a call before you enroll. We'll work out a realistic income estimate and look at marketplace plans that include the doctors you already use.
This is the point where the cliff really matters. Once you're above 400%, you pay the full marketplace price without any credit. If you're healthy and paying the full premium, it may make sense to compare that price with a private, medically underwritten PPO. Medical underwriting means the plan looks at your health history before deciding whether to accept you. I'll explain how that works before we submit any application.
Next step: Call me and share your income estimate and your household's health situation. I'll put the marketplace price next to a private PPO option so you can compare them.
Not seeing a PPO on your state's marketplace doesn't mean you have no other options. I can help you apply for a nationwide PPO across all 36 states where I'm licensed. Marketplace availability is one reason to talk, but the right choice depends on your income, household and health history.
You can use the 30-second check above whenever you like. Think of the result as a planning figure. I use it to begin a proper comparison, not as a quote.
Straight answers, no sales pitch.
Yes. The 400% limit is absolute. If your household income goes above it, your credit becomes zero. Even a small amount over the limit can mean losing the entire credit. That's why I'd rather review your estimate before the year gets away from you than wait until afterward.
The 400% threshold is federal, so the percentage doesn't change from state to state. What does change is the poverty-line dollar amount based on household size, with higher amounts in Alaska and Hawaii. The check above uses the state you enter to identify the correct limit.
Your household income for credit purposes is estimated when you apply and then reconciled when you file your tax return. Your CPA determines the final amount using your books. I can help you come up with a reasonable marketplace estimate, but your CPA handles the tax determination.
Yes. I can help you get a nationwide PPO in any state where I'm licensed. Whether a medically underwritten plan is suitable comes down to your health history, so let's review that together on a call rather than make assumptions.
Give me your state, household size and a reasonable estimate of your income for the year. I can tell you if you qualify for a credit and what your options are if you are near the limit.
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