FIRE Healthcare Bridge Calculator — the 2026 ACA Subsidy Cliff
Every FIRE calculator models your portfolio. None of them prices health insurance between your last day of work and Medicare at 65 — where, from 2026, one dollar of income can cost you the entire subsidy.
Quick answer: The ACA subsidy cliff returned on 1 January 2026 when the American Rescue Plan and Inflation Reduction Act premium-tax-credit enhancements expired. For 2026 coverage there is no premium tax credit at all above 400% of the federal poverty level — one dollar over removes the entire credit rather than tapering it. Eligibility for 2026 coverage is tested against the 2025 poverty guidelines: $15,650 for one person in the 48 contiguous states and DC plus $5,500 per additional person, so the cliff falls at $62,600 for one person and $128,600 for a household of four. Below the cliff you pay a capped share of income toward the benchmark (second-lowest-cost silver) plan under the 2026 applicable percentage table in Rev. Proc. 2025-25: 2.10% under 133% of FPL, rising through 4.19% at 150%, 6.60% at 200%, 8.44% at 250% and 9.96% from 300% to 400%, with the premium tax credit covering the remainder. Unsubsidized benchmark premiums rose about 26% for 2026, the largest increase in eight years; the national average benchmark for a 60-year-old is roughly $15,914 a year, and for a couple in their early sixties the full unsubsidized benchmark can exceed $22,600. For early retirees the decisive point is that ACA MAGI includes Roth conversions and realized capital gains in full — a long-term gain taxed at 0% federally still counts — so the cliff is controllable but easy to trip. Advance credits are reconciled on Form 8962, and above 400% of FPL the entire advance credit is repayable with no repayment cap. Sources: IRS Rev. Proc. 2025-25; HHS 2025 poverty guidelines; KFF 2026 marketplace premium analysis.
Last reviewed 2 August 2026 by the Richify AI editorial team.
Include Roth conversions and realized capital gains — both count in full.
Leave blank to use a national-average estimate from the federal age curve. For a precise answer, enter your actual second-lowest-cost silver premium from healthcare.gov.
Under the cliff — $14,600 of headroom
Household MAGI of $70,000 is 331.0% of the federal poverty level for a household of 2 ($21,150). The cliff is at $84,600. Your expected contribution is 9.96% of MAGI, or $6,972, and the premium tax credit covers the remaining $18,139.
Your net premium
$6,972/yr
$581/mo · 10.0% of MAGI
Unsubsidized
$25,111/yr
Benchmark silver, two adults
Bridge to Medicare
$69,720
10 years to 65 · $251,106 unsubsidized
What the cliff is worth
At $84,599 of MAGI — one dollar under 400% of FPL — the premium tax credit is about $16,685 a year. At $84,600 it is zero. That single dollar is the most expensive dollar of income in the US tax code for a household on marketplace coverage, and it is the reason a Roth conversion or a harvested capital gain needs to be sized against the cliff and not just against your tax bracket.
Advance credits are reconciled on Form 8962 when you file. Above 400% of FPL the entire advance credit is repayable and the repayment caps that apply at lower incomes do not. A December income review is worth more than any other single planning step here.
Why does the FIRE healthcare bridge matter more from 2026?
Because the shape of the subsidy changed, not just the amount. From 2021 through 2025 the American Rescue Plan and Inflation Reduction Act capped benchmark premiums at 8.5% of household income with no upper income limit, so an early retiree who took a large Roth conversion saw their subsidy taper rather than vanish. Those enhancements expired on 31 December 2025 and the pre-2021 structure returned: above 400% of the federal poverty level there is no credit at all. At the same time unsubsidized benchmark premiums rose roughly 26% for 2026, the largest increase in eight years. The combination means the gap between a well-planned income year and a careless one is now measured in five figures for a couple in their late fifties or early sixties — and it recurs every year until Medicare.
What income counts, and which levers do you actually control?
ACA MAGI is adjusted gross income plus tax-exempt interest, the untaxed portion of Social Security and excluded foreign earned income. For someone still working, almost none of that is adjustable. For an early retiree, most of it is. Roth conversions are ordinary income and count dollar for dollar. Realized capital gains count in full — including long-term gains that are taxed at 0% federally, which is the detail that surprises people harvesting gains in a low-income year. Interest, dividends and rental income count. Withdrawals from a taxable brokerage account contribute only the gain portion, not the whole sale, because return of basis is not income; withdrawals of Roth contributions are not income at all. That asymmetry is the planning surface: which account you draw from in a given year changes your MAGI far more than how much you spend does.
How the 2026 credit is actually calculated
The marketplace works out your expected contribution as a percentage of household MAGI, then pays the difference between that and the benchmark premium. The 2026 applicable percentage table from Rev. Proc. 2025-25 runs from 2.10% below 133% of the poverty level, through 3.14–4.19% between 133% and 150%, 4.19–6.60% to 200%, 6.60–8.44% to 250%, 8.44–9.96% to 300%, and a flat 9.96% from 300% to 400%. Two things about the benchmark are widely misunderstood. It is the second-lowest-cost silver plan available to you, and it is used only to size the credit — you can apply the credit to any metal level, so a bronze plan may cost very little after it. And the credit is calculated on the benchmark whether or not you buy the benchmark, which is why this calculator asks for that figure separately from what you intend to spend.
Assumptions and limits of this calculator
Labelled so you can judge the output. (1) Poverty guidelines are the 2025 figures for the 48 contiguous states and DC, which are the ones that govern 2026 coverage; Alaska and Hawaii use higher guidelines and are not modelled, so their cliffs sit above the numbers shown here. (2) The default benchmark premium is a national-average estimate built from the federal default age curve anchored on a 2026 average of about $15,914 a year at age 60 — real premiums vary enormously by state, rating area and plan year, so enter your own figure for anything decision-grade. (3) The bridge total multiplies this year’s net premium by the years to 65 with no inflation or premium-trend applied; given premiums rose about 26% for 2026 alone, treat it as a floor rather than a forecast. (4) It does not model deductibles, out-of-pocket maximums, cost-sharing reductions below 250% of FPL, employer or COBRA coverage, Medicaid eligibility below 138% of FPL in expansion states, or state-level subsidy programs that some states run on top of the federal credit. (5) It assumes everyone in the household is enrolled in the same marketplace plan. This is general educational information, not tax or financial advice — confirm your figures with healthcare.gov or your state exchange and a tax professional before making conversion or realization decisions.
Sources
- IRS Revenue Procedure 2025-25 — the 2026 applicable percentage table and the 9.96% required contribution percentage.
- HHS 2025 poverty guidelines — $15,650 for one person plus $5,500 per additional person (48 contiguous states and DC); these govern 2026 marketplace eligibility.
- KFF — analysis of 2026 marketplace premiums and the expiration of the enhanced premium tax credits, including the ~26% average benchmark increase and the ~$15,914 average annual benchmark at age 60.
- 45 CFR 147.102 — fair health insurance premiums; the 3:1 age-rating limit and the federal default age curve.
- IRS Form 8962 instructions — reconciliation of advance premium tax credits and the absence of repayment caps above 400% of FPL.
Last updated: 2 August 2026.
General educational information only — not tax, legal, insurance or financial advice, and it does not consider your circumstances. Premiums, poverty guidelines and the applicable percentage table change annually. Verify against healthcare.gov or your state marketplace before acting.
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The premium tax credit enhancements from the American Rescue Plan and Inflation Reduction Act expired on 31 December 2025, so the pre-2021 structure governs 2026 coverage:
- The cliff is back at 400% of FPL — above it there is no credit at all, not a reduced one. The enhancements had capped benchmark premiums at 8.5% of income with no upper income limit; that cap is gone.
- 2026 coverage is tested against the 2025 poverty guidelines — $15,650 for one person plus $5,500 per additional person, so the cliff is $62,600 single and $128,600 for a household of four.
- Below the cliff you pay a capped share of income — the 2026 applicable percentage runs from 2.10% under 133% of FPL up to 9.96% between 300% and 400%, and the credit covers the rest of the benchmark premium.
- Roth conversions and realized capital gains count in full — which is what makes the cliff an early-retiree problem specifically. These are the levers you control, and mistiming them is how a Roth ladder quietly costs a year of subsidies.
Sources: IRS Rev. Proc. 2025-25 (2026 applicable percentage table); HHS 2025 poverty guidelines; KFF analysis of 2026 marketplace premiums; 45 CFR 147.102 (age rating).
How to use this calculator
- Enter the age of the older adult on the plan — premiums are age-rated, and the older adult drives the cost.
- Set your household size. This is everyone on your tax return, not only the people enrolled in the marketplace plan.
- Enter the household MAGI you are planning for: AGI plus tax-exempt interest and untaxed Social Security. Include Roth conversions and realized capital gains — both count in full.
- Adjust the benchmark premium if you know it. The default is a national-average estimate from the federal age curve; your actual second-lowest-cost silver premium from healthcare.gov gives a precise answer.
- Read the cliff panel. It shows how much MAGI headroom you have before 400% of FPL and exactly what crossing that line would cost you.
❓ Frequently Asked Questions
What is the ACA subsidy cliff in 2026?
The subsidy cliff is the point where premium tax credits stop entirely rather than phasing out. For 2026 it sits at 400% of the federal poverty level: one dollar of household MAGI above that line removes every dollar of credit. It existed before 2021, was suspended by the American Rescue Plan and Inflation Reduction Act — which capped benchmark premiums at 8.5% of income with no upper income limit — and returned on 1 January 2026 when those enhancements expired. For a household near the line the practical effect is a marginal cost of many thousand percent on the last dollar of income.
How much income can I have before losing ACA subsidies in 2026?
For 2026 coverage in the 48 contiguous states and DC, 400% of the federal poverty level is $62,600 for one person and $128,600 for a household of four. The underlying guidelines are $15,650 for one person plus $5,500 for each additional person. Alaska and Hawaii use higher guidelines, so their thresholds are higher than the figures this calculator uses.
Why does 2026 coverage use the 2025 poverty guidelines?
Marketplace eligibility for a coverage year is tested against the poverty guidelines published in the previous year, because those are the figures available when open enrollment runs. So your projected 2026 household income is compared with the 2025 FPL numbers, not the 2026 ones. This catches people out every year and it moves the cliff by a few hundred dollars, which matters a great deal when you are managing income to land just underneath it.
Do Roth conversions count toward the ACA subsidy cliff?
Yes, dollar for dollar. A Roth conversion is ordinary income and flows straight into AGI and therefore into ACA MAGI. This is the single most common way early retirees accidentally lose a full year of premium tax credits: the conversion looks free because the household is in a low bracket, and the true cost turns out to be the entire subsidy. Converting up to — but not past — the 400% line is the standard way to run a Roth ladder while keeping coverage affordable.
Do capital gains count toward the subsidy cliff?
Yes. Realized capital gains, long-term and short-term alike, are part of AGI and therefore part of ACA MAGI. A long-term gain taxed at 0% federally still counts in full for subsidy purposes, which is why 'tax-free' gain harvesting can be expensive for an early retiree on marketplace coverage. Unrealized gains do not count, so the timing of sales is a lever. Selling from taxable accounts returns only the gain portion to MAGI, not the whole withdrawal — the basis is not income.
What counts as MAGI for ACA purposes?
ACA MAGI is your adjusted gross income plus any tax-exempt interest, the untaxed portion of Social Security benefits, and excluded foreign earned income. For an early retiree the components that usually matter are Roth conversions, realized capital gains, part-time or consulting earnings, interest and dividends, and rental income. Note it is household MAGI for everyone on the tax return, not only the people enrolled in the marketplace plan.
How much does the healthcare bridge cost between early retirement and Medicare?
It depends almost entirely on which side of the cliff you land. The 2026 national average benchmark premium for a 60-year-old is about $15,914 a year unsubsidized; for a couple in their early sixties the full unsubsidized benchmark can exceed $22,600. Under the cliff, your cost is capped at the applicable percentage of income — at most 9.96% between 300% and 400% of FPL. Above it you pay the entire premium. The total bridge is that annual figure multiplied by the years between your retirement age and 65, and this calculator computes both sides so you can see what the difference is worth.
Is the benchmark premium the plan I have to buy?
No. The benchmark is the second-lowest-cost silver plan available to you, and it is used only to size the credit. You may apply the credit to any metal level — a cheaper bronze plan can end up costing very little after the credit, and a gold plan costs the difference. This is why the calculator asks for the benchmark premium separately from what you actually intend to spend: the credit is calculated on the benchmark whether or not you buy it.
What happens if I underestimate my income and go over the cliff?
Advance premium tax credits are reconciled on Form 8962 when you file. If your actual MAGI ends up above 400% of FPL, the pre-2021 rules apply again and the entire advance credit is repayable — the repayment caps that limit clawbacks at lower incomes do not apply above 400%. That is why a December income check matters: a late capital gain, a year-end bonus or an unplanned distribution can convert a manageable year into a five-figure tax bill.
Does the cliff still apply once I turn 65?
The bridge ends at Medicare eligibility, normally age 65, and marketplace premium tax credits stop being the relevant question at that point. Medicare has its own income test with a different shape: the IRMAA surcharges on Part B and Part D are based on MAGI from two years earlier and step up in brackets rather than falling off a cliff. Planning that ignores the two-year lookback can produce a surprise at 65 from conversions done at 63.
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Further Reading
Plan the Bridge, Not Just the Number
Your MAGI is the lever that decides what healthcare costs you each year until 65. Richify tracks your accounts, gains and income in one place so you can see the cliff coming in November, not in April. Free, no ads.
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