The ACA Subsidy Cliff Is Back. Here's What You Can Do To Avoid It

Core Insights - The expiration of enhanced premium tax credits for the Affordable Care Act (ACA) has led to increased health insurance premiums for many individuals, particularly those earning just above the federal poverty level threshold [1][8] - Individuals with a modified adjusted gross income (MAGI) exceeding 400% of the federal poverty level face a "subsidy cliff," where even a slight increase in income can result in the complete loss of tax credits [3][8] Premium Tax Credits - Enhanced premium tax credits, which were introduced in 2021, provided subsidies to individuals earning above 400% of the federal poverty level, approximately $62,600 for individuals in 2025 [2] - For example, an individual earning $64,000 would incur total premiums of $14,931, while someone earning $62,000 would only pay $6,175 due to eligibility for the premium tax credit [4] Financial Planning Strategies - Financial experts recommend monitoring income levels closely, especially in 2026, to avoid surpassing the 400% threshold and losing tax credits [7] - Strategies such as contributing to health savings accounts or traditional 401(k)s can help reduce taxable income, thereby maintaining eligibility for premium tax credits [10] - Tax-loss harvesting is another strategy suggested, allowing individuals to deduct investment losses from their income, which can help in managing MAGI [11]