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By Your Best Editorial Team · Updated October 28, 2026 · How we rank

Calculator · IRS & HHS figures

ACA Subsidy Cliff Calculator: Lower Your MAGI, Keep the Credit

With the enhanced subsidies gone, one dollar of income over 400% of the poverty line can cost you the whole premium tax credit. A pre-tax 401(k), HSA or traditional IRA contribution lowers the income the Marketplace counts. See how much it would take to get under the line, and what each contribution is worth in tax credit and lower deductibles.

400%of the poverty line: above it, no tax credit in 2027

$9,0002027 HSA limit for family coverage ($4,500 self-only)

250%of the poverty line: at or below it, silver plans come with lower deductibles

What a contribution is worth

Coverage year

People in your tax householdYou, your spouse and anyone you claim as a dependent

Where you live

Expected household income before new contributionsModified adjusted gross income for the coverage year, without the contributions below

Benchmark silver plan, per monthSecond-lowest-cost silver plan for your household; look it up in the subsidy calculator or on HealthCare.gov

Extra pre-tax 401(k), 403(b) or 457 contributionsFor the year, through payroll; Roth contributions don’t count

Deductible traditional IRA contributionsOnly the part you can deduct lowers your income

HSA contributionsNeeds an HSA-eligible plan; Marketplace bronze plans count from 2026

HSA coverageSets the HSA limit check

HSA owners aged 55 or olderEach gets a $1,000 catch-up in their own HSA

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—Income as a share of the poverty line, before → after

—The 400% line for your household

—Contributions needed to get under the line

—Tax credit gained per $1 contributed

	Income (% of poverty line)	Yearly credit	Silver pays

Uses the IRS applicable percentage table (Rev. Proc. 2026-26 for 2027, Rev. Proc. 2025-25 for 2026), the HHS poverty guidelines from the year before coverage, the cost-sharing reduction bands in federal law and the IRS HSA limits. “Silver pays” is the share of costs a silver plan covers at that income, after any cost-sharing reductions. It counts the tax credit only; the same contributions usually lower your income tax too. Nothing you type leaves your browser.

Why the 400% line matters again

The premium tax credit fills the gap between the benchmark silver plan and a set share of your income. From 2021 through 2025, households above 400% of the poverty line still got a credit if the benchmark cost more than 8.5% of income. Those rules expired after 2025. For 2027 coverage, the credit stops at 400% of the poverty line. Just under the line you’re expected to pay 10.22% of income for the benchmark plan. Just over it you pay the full premium, which for a couple in their early 60s can be far more.

The Marketplace counts modified adjusted gross income (MAGI): your adjusted gross income plus tax-exempt interest, non-taxable Social Security benefits and untaxed foreign income. Anything that lowers adjusted gross income lowers MAGI by the same amount.

Contributions that lower MAGI

Pre-tax 401(k), 403(b) and 457 contributions. They come out of your pay before income tax, so they never reach your adjusted gross income. Roth contributions don’t lower it. If you’re self-employed, a solo 401(k) or SEP contribution works the same way.
HSA contributions. Payroll contributions are left out of your wages, and contributions you make yourself are deducted on your return. You need an HSA-eligible plan. From 2026, Marketplace bronze and catastrophic plans count as HSA-eligible (Notice 2026-05), though catastrophic plans can’t be bought with the tax credit. Our HDHP vs. PPO calculator covers the limits.
Deductible traditional IRA contributions. If you or your spouse has a retirement plan at work, the deduction can phase out at higher incomes; only the part you can deduct lowers MAGI.

Contributions count for the tax year, not the month you enroll. You estimate your income when you apply, take the credit in advance, and settle it on your tax return. If your income ends up over the line, you repay all the advance credit for that year; for tax years after 2025 there is no repayment cap.

Cost-sharing reductions: the second cliff

Below 250% of the poverty line, silver plans come with cost-sharing reductions that raise the share of costs the plan pays from 70% to 73%, 87% or 94%. Those bands have edges too. A contribution that takes you from just over 200% to just under it can cut a silver plan’s deductible by more than the tax credit changes.

Questions

Is the ACA subsidy cliff back for 2027?

Yes. The enhanced credits ended after 2025. For 2027 coverage, households above 400% of the poverty line get no premium tax credit.

Do 401(k) contributions lower my income for the ACA subsidy?

Pre-tax (traditional) contributions do, because they lower your adjusted gross income. Roth contributions don’t.

Can I open an HSA with a Marketplace plan?

From 2026, yes with a bronze or catastrophic plan offered through the Marketplace, under IRS Notice 2026-05. Other plans qualify only if they meet the usual high-deductible plan rules.

What if I land over the line anyway?

You repay the advance credit you took for the year when you file. If you see it coming, you can still make a deductible IRA or HSA contribution for the year up to the tax filing deadline.

Sources

IRS, Rev. Proc. 2026-26 (2027 applicable percentage table) — irs.gov PDF; Rev. Proc. 2025-25 (2026) — irs.gov PDF.
HHS poverty guidelines used for 2027 coverage — Federal Register.
HealthCare.gov, “How to estimate your expected income” (MAGI, IRA deductions, pre-tax payroll deductions) — healthcare.gov.
IRS, HSA limits for 2027 — irs.gov PDF; Publication 969 (HSA contributions, excess contributions) — irs.gov.
IRS, guidance on bronze and catastrophic plans as HSA-compatible (Notice 2026-05) — irs.gov, checked October 28, 2026.

Educational estimate, not tax advice. The Marketplace determines your actual credit, and your tax return settles it. · Advertiser disclosure