Health Insurance Subsidies 2027: How They Work, Who Qualifies & How Much You Pay

Updated October 2026 for the 2027 plan year. Figures reflect federal HealthCare.gov rules; a few state exchanges add their own extra subsidies.

What are health insurance subsidies?

Health insurance subsidies are financial help from the federal government that lowers the cost of a plan bought through the Health Insurance Marketplace. They come in two forms. The premium tax credit reduces your monthly premium. Cost-sharing reductions lower your deductible and copays.

Both are tied to your income and household size. Both apply only to Marketplace plans, not to job-based coverage. In most states you apply at HealthCare.gov; about 20 states and DC run their own exchange, and the same federal subsidies are applied there.

The point of subsidies is to keep coverage affordable for people who buy their own insurance. You never pay a subsidy back to an insurer. The credit flows from the government to your plan, and you owe only the discounted balance.

You can claim the premium tax credit two ways: in advance, which lowers each month’s bill, or as a lump sum when you file your taxes. Most people take it in advance. The amount is based on the income you estimate for the year. For 2027 coverage, that is your 2027 income, reconciled on the 2027 tax return you file in 2028. To see how coverage and costs fit together before you shop, start with how health insurance works.

How does the premium tax credit work?

The premium tax credit (PTC) caps what you pay for a benchmark plan at a set share of your income, and the government pays the rest. The benchmark is the second-lowest-cost Silver plan in your area. You can apply the credit to any metal tier, but it is always calculated against that benchmark.

The lower your income, the smaller the share you pay and the larger the credit. The higher your income, the bigger your share and the smaller the credit. Above 400% of the federal poverty level (FPL), the credit is zero.

Because the credit grows when the benchmark premium rises, a higher sticker price does not always mean a higher bill for subsidized shoppers. Insurers proposed a median increase of about 15% for 2027, according to KFF’s review of 276 insurers’ filings. If your income keeps you under 400% FPL, much of that increase is absorbed by a larger credit.

The credit is a fixed dollar amount once it is calculated. Choosing a plan cheaper than the benchmark lowers your premium the most. Choosing a richer plan means you pay the difference. The official rules and worksheets live at IRS.gov (Premium Tax Credit), and you can preview your estimated credit any time at HealthCare.gov.

What percentage of income will I pay in 2027?

For 2027 coverage, the IRS sets your expected contribution for the benchmark Silver plan between 2.15% and 10.22% of household income. The percentage depends on where your income falls relative to the federal poverty level. It is published each year in a revenue procedure; for 2027 it is Rev. Proc. 2026-26.

Within each band the percentage rises gradually with income. For comparison, the 2026 range was 2.10% to 9.96%, so the 2027 table asks most households for a slightly larger share. The same IRS document sets the 2027 employer-coverage affordability test at 10.22% of household income.

Health insurance subsidies calculator table by income

This table works like a quick subsidy calculator. Find your household size, see which income band you fall in, and read across to the share of income you would pay for the benchmark plan in 2027. Income limits use the 2026 HHS poverty guidelines for the 48 contiguous states and DC.

Two households at the same percentage of FPL pay the same share of income, but their credits differ. That is because the benchmark premium depends on age, ZIP code and household members. An older applicant in a high-cost area gets a much larger credit than a young applicant in a low-cost area at the same income.

Alaska and Hawaii use higher poverty guidelines. Your exact numbers depend on your 2027 MAGI and your county’s plans, so treat this as a guide, not a quote.

How do I estimate my health insurance subsidy?

You can estimate your premium tax credit in three steps: find your income as a percentage of FPL, multiply your income by the matching percentage, and subtract that from the benchmark premium. What is left is your credit. The Marketplace does this math for you when you apply.

1. Find your percentage of FPL. Divide your estimated 2027 household MAGI by the poverty guideline for your household size (for example, $15,960 for one person or $33,000 for four).
2. Find your expected contribution. Use the 2027 table above to get your percentage, then multiply it by your annual income. That is the most you are expected to pay per year for the benchmark plan.
3. Subtract from the benchmark. Take the annual premium of the second-lowest-cost Silver plan for your household and subtract your expected contribution. The difference is your annual premium tax credit, usually split into 12 monthly advance payments.

Then apply the credit to the plan you actually want. A Bronze plan priced below the benchmark costs you less than your expected contribution. A Gold plan costs more. If the credit is larger than a plan’s premium, the extra is not paid to you.

What are cost-sharing reductions?

Cost-sharing reductions (CSRs) are a second health insurance subsidy that lowers your deductible, copays and out-of-pocket maximum. They apply only if you choose a Silver plan and your income falls between about 100% and 250% of the federal poverty level. The premium tax credit trims your monthly bill; CSRs cut what you pay when you actually use care.

The savings are automatic and built into special Silver plans the Marketplace shows you when you qualify. A standard Silver plan covers roughly 70% of your medical costs. With strong cost-sharing reductions, that same plan can effectively cover 87% or even 94%, giving you Gold- or Platinum-level protection at a Silver price.

That matters more for 2027, when the standard out-of-pocket maximum rises to $12,000 for an individual ($24,000 for a family), per HealthCare.gov. For lower-income shoppers, Silver is often the smartest tier even when a Bronze premium looks cheaper. See how the two limits interact in deductible vs out-of-pocket maximum.

The trade-off is simple: CSRs vanish the moment you pick Bronze, Gold or Platinum. If your income lands in the eligible range, compare the real cost of a cost-sharing Silver plan against a low-premium Bronze plan before deciding. Need help weighing tiers? See how to choose a health plan.

Do I qualify for health insurance subsidies in 2027?

You qualify for health insurance subsidies for 2027 coverage if your household income is between 100% and 400% FPL, you lack affordable job-based or government coverage, and you buy through the Marketplace. Subsidy income limits for 2027 coverage use the 2026 HHS poverty guidelines.

Read it this way. If your income is at or below about 138% FPL, you likely qualify for Medicaid instead of a subsidy in the 40 states plus DC that expanded it. Between roughly 100% and 250%, you can get both a premium tax credit and cost-sharing reductions on Silver. From 250% up to 400%, you still get a credit but no CSRs. Cross 400% and the credit disappears.

In states that did not expand Medicaid, the credit starts at 100% FPL, and adults below that line can fall into a coverage gap. Job-based coverage also matters: if your employer’s cheapest self-only plan costs no more than 10.22% of household income in 2027, you generally can’t get a credit. Explore lower-cost options in our guide to affordable health insurance.

Can immigrants get health insurance subsidies in 2027?

Starting January 1, 2027, fewer immigrants can get health insurance subsidies. Under the 2025 federal budget law (H.R. 1), the premium tax credit for 2027 coverage is limited to U.S. citizens and nationals, lawful permanent residents (green card holders), Cuban and Haitian entrants, and Compact of Free Association (COFA) migrants from the Marshall Islands, Micronesia and Palau. HealthCare.gov’s guidance for lawfully present immigrants lists the same groups.

Many other lawfully present immigrants, such as some people with work-authorized or humanitarian status, can still buy a Marketplace plan for 2027. They no longer qualify for a premium tax credit or cost-sharing reductions, so they would pay the full price. Since 2026, lawfully present immigrants with income under 100% FPL who can’t get Medicaid because of their status also no longer qualify for a credit.

What is the subsidy cliff?

The subsidy cliff means that earning even one dollar over 400% of the federal poverty level costs you your entire premium tax credit. For 2027 coverage the line is $63,840 for one person and $132,000 for a family of four. Below it, your share is capped at 10.22% of income; above it, you pay full price.

For an older enrollee, crossing the cliff can mean the difference between a manageable bill and one that takes a large share of income, because unsubsidized premiums rise with age. That makes your income estimate one of the most important numbers on your application.

There are legitimate ways to stay under the line. Contributing to a traditional IRA, a Health Savings Account or a solo 401(k) lowers your MAGI, and self-employed filers can deduct business expenses. If you are close to the edge, plan those moves for 2027 and re-shop during Open Enrollment for 2027 rather than auto-renew.

Will I have to pay my subsidy back?

You may, if your actual 2027 income ends up higher than you estimated. Every advance credit is reconciled on IRS Form 8962 with your tax return. If you received more than you were entitled to, the difference is added to your tax bill or subtracted from your refund.

The rules got stricter. Beginning with tax year 2026, the IRS says repayment caps no longer apply, so you must repay the full amount of any excess advance credit. If your income crosses 400% FPL during the year, that can mean repaying the entire year’s credit.

The fix is to report changes quickly. Update your Marketplace application when you get a raise, a new job, a bonus or a change in household size, and your advance credit will be recalculated for the rest of the year. If your income falls instead, you may get extra credit back when you file.

Why premiums went up

Most of the jump in what subsidized enrollees paid in 2026 came from the expiration of the enhanced premium tax credits on December 31, 2025. Before they expired, KFF estimated that subsidized enrollees’ annual premium payments would more than double, about a 114% increase. Insurers then proposed a median increase of about 15% for 2027.

For the full story of what changed, who was hit hardest and how the 400% cliff came back, read our explainer on ACA subsidies in 2027 and what changed after the enhanced credits expired. This page focuses on how the subsidy itself works.

What to do now if you lose your subsidy

If your subsidy shrank or disappeared, you still have real options, and the worst move is dropping coverage. Work through these steps before Open Enrollment closes on January 15, 2027 (December 15, 2026 for a January 1 start).

1. Compare every plan, not just your renewal. Premiums, networks and the benchmark change yearly, so the cheapest plan for your doctors may now be a different carrier or tier.
2. Verify your income and MAGI. Re-estimate your 2027 income carefully; lowering countable income with IRA, HSA or business deductions can restore a credit or keep you under the 400% cliff.
3. Check cost-sharing Silver plans. If your income is between roughly 100% and 250% of poverty, a CSR Silver plan can cut deductibles and copays far below a cheap Bronze plan.
4. See if you qualify for Medicaid. At or below about 138% of poverty in the 40 expansion states plus DC, Medicaid may cover you at little or no cost.
5. Weigh total cost, not just premium. A low premium with a huge deductible can cost more overall than a slightly pricier plan with better coverage.

Prices on the Marketplace are set by law and identical whether you shop alone or with a licensed, unbiased assistant, so free help never costs you more. See how Honesty.AI works to run a fresh, pressure-free comparison, or review affordable health insurance options if a subsidy is out of reach.

If your income is at or below 250% of the federal poverty level, read how cost-sharing reductions lower your deductible and out-of-pocket maximum on a Silver plan.

Retirement withdrawals, capital gains and Social Security all count toward MAGI; see health insurance for early retirees for how they affect a 2027 tax credit.

Married couples generally must file jointly to get a premium tax credit, and both incomes count; see health insurance for married couples for the exceptions.

Part-timers who aren’t offered an affordable job-based plan often qualify; see our guide to health insurance for part-time workers for how to estimate income when your hours change.

Frequently asked questions

To see exactly where your household lands, check the 2026 federal poverty level chart with 100% to 400% income limits, which sets subsidy eligibility for 2027 coverage.

At tax time you reconcile your credit using the Marketplace’s statement; our Form 1095-A and Form 8962 guide walks through columns A, B and C line by line.

If a spouse or child is offered job-based coverage, our family health insurance guide explains how the family glitch fix can still open a tax credit for them.

The premium tax credit lowers your monthly premium, not your deductible or copays.

If your income is below 138% of the poverty level in an expansion state, check our Medicaid eligibility guide for 2027 before you shop for a subsidized plan.

Children often qualify for CHIP or Medicaid at higher incomes than adults; see our health insurance for kids guide for your state’s program name.

Keep learning: What changed in ACA subsidies for 2027 · How the Health Insurance Marketplace works · Affordable health insurance options · Open Enrollment 2027 dates & deadlines · How health insurance works · How to choose a health plan