Texas ACA Subsidies 2027: The 400% Cliff Is Back

Picture a married couple in Frisco, both in their late 50s, earning $85,000 a year. Under the 2027 rules, a mid-priced Silver plan could cost them about $724 a month. Then one of them gets a $2,000 raise. Same plan, same insurer, same doctors. The bill jumps to roughly $3,000 a month. (These are illustrative numbers. The math is shown below.)

That drop-off is the 400% cliff, and it is back. If this year's renewal notice already made your stomach drop, you're not alone. Self-employed workers, gig workers, early retirees, and anyone without affordable job-based coverage feel it most. Below, you'll find your income line by household size, the IRS percentages for 2027, the key enrollment dates, and a few ways to avoid a surprise bill at tax time.

Quick Answer: Texas ACA Subsidies in 2027

For 2027, Texans with household income from 100% to 400% of the federal poverty level generally can get ACA premium tax credits. Above 400%, the credit drops to zero. Pick a plan by December 15 for January 1 coverage.

2027 at a Glance Answer
Income window for credits 100% to 400% of poverty, if other rules are met
The cliff: 1 person $63,840
The cliff: family of 4 $132,000
What you pay for the benchmark plan 2.15% to 10.22% of income
Open enrollment (HealthCare.gov) November 1, 2026 to January 15, 2027 (open now)
Repaying excess credits No cap, starting with tax year 2026
Texas average benchmark premium (age 40) $737 a month in 2027, up from $661 in 2026
Insurers leaving Texas for 2027 Cigna and Baylor Scott & White

What Is the 400% Cliff? (And Why It Returned in 2027)

The ACA gives eligible people a federal tax credit to help pay for Marketplace insurance. It's called the Premium Tax Credit, or PTC. Before 2021, the credit was limited to households between 100% and 400% of the federal poverty level. From 2021 through 2025, Congress boosted it. The boost removed the income ceiling and capped what anyone paid for a benchmark plan at 8.5% of income.

That boost was temporary. It expired on December 31, 2025. No extension has become law as of this writing, so the older formula applies for 2027, including the hard stop at 400%.

Why It's Called a Cliff, Not a Phase-Out

Think of a coupon with a cutoff at an exact dollar amount. A two-person household at $86,560 gets the discount. At $86,561, the discount is gone. There's no gentle slope at the top, only an edge.

Two households can look almost identical on paper. One earns a little under the line. The other earns a little over. The first may get thousands of dollars in help. The second gets none.

"Subsidies Ended" vs. "Subsidies Remain": What's Actually True

Headlines tend to pick a side. Some say the subsidies ended. Others say they never went away. Both miss the point. The regular Premium Tax Credit is still part of federal law. What ended was the 2021-2025 boost to who qualifies and how much they get.

Rule 2021-2025 (Enhanced Credits) 2027 (Current Law)
Income ceiling for credits None 400% of poverty, hard stop
Highest share of income for the benchmark plan 8.5% 10.22%
Lowest-income households $0 benchmark premium up to 150% of poverty 2.15% of income below 133% of poverty
Repaying excess advance credits Capped by income level No cap (tax year 2026 and later)
Monthly special enrollment for incomes up to 150% of poverty Available Gone. Credits don't apply to plans chosen this way.
Credits for lawfully present immigrants Broader groups eligible Limited to green card holders, certain Cuban and Haitian entrants, and COFA migrants (starts January 1, 2027)

Who Feels the 400% Cliff Most in Texas

Texas has more Marketplace shoppers than almost any other state. Texans signed up for a record 4.17 million plans for 2026, according to the Baker Institute. Nearly 92% of them got advance credits, which averaged $667 a month, according to healthinsurance.org. The state never built its own exchange, so everyone shops on HealthCare.gov. Texas also has not expanded Medicaid for most adults, which leaves the Marketplace as the main option for many working people.

Income that moves around makes the cliff harder to dodge.

Who Why Income Can Jump What to Check
Self-employed and gig workers Profit swings from month to month Use net profit for the full year, not revenue
Early retirees Withdrawals and capital gains Taxable distributions and gains count toward income
Small business owners One strong quarter can lift the whole year Re-estimate after any big contract
Two-earner couples Raises and bonuses stack together Household income is combined on a joint return

Your 400% Line by Household Size (2027 Coverage)

The line depends on how many people are in your tax household. Find your row below. Income above the right-hand column means no credit. Income below the left-hand column generally means no credit either.

Household Size Floor (100% of Poverty) Cliff (400% of Poverty) Cliff, Per Month
1 $15,960 $63,840 $5,320
2 $21,640 $86,560 $7,213
3 $27,320 $109,280 $9,107
4 $33,000 $132,000 $11,000
5 $38,680 $154,720 $12,893
6 $44,360 $177,440 $14,787
7 $50,040 $200,160 $16,680
8 $55,720 $222,880 $18,573

For households larger than eight, add $5,680 to the 100% figure for each extra person, then multiply by four to find the cliff.

Here's a spot where Texas households often misjudge their numbers. The 400% line follows the 2026 poverty guidelines, not a 2027 chart. The Marketplace uses the figures in effect when open enrollment begins, and for 2027 coverage that means the ones HHS published in January 2026. An older chart built on 2025 numbers, or a future chart built on 2027 numbers, will give you the wrong answer. Check the year on any chart before you trust it.

💡 EasySmart Tip for Texas Residents: Sitting just under your line? Household size matters as much as income. A baby born mid-year, a spouse who moves out, or an adult child who starts filing alone can change who counts. Going from two people to three moves the cliff from $86,560 to $109,280, a jump of more than $20,000.

What Counts as Income? MAGI Explained

The Marketplace doesn't use your paycheck or your business revenue. It uses modified adjusted gross income, or MAGI. That's a tax-based number. It starts with adjusted gross income, then adds back a few items such as nontaxable Social Security benefits and tax-exempt interest.

Income Source Counts Toward MAGI? Note
Wages and salaries Yes Before taxes, not take-home pay
Self-employment income Yes Net profit, not total revenue
Taxable interest and dividends Yes Included in adjusted gross income
Taxable capital gains Yes A big sale can push you over the line
Taxable retirement distributions Yes Withdrawals count in the year you take them
Rental income Yes The amount that flows into adjusted gross income
Nontaxable Social Security Yes Added back, even though it isn't taxed
Tax-exempt interest Yes Added back, same as above

Your tax household generally includes you, a spouse if you file jointly, and anyone you claim as a dependent. Everyone living at your address isn't automatically in it. Tax filing arrangements decide.

2027 Premium Tax Credit Rates: What You'll Pay Below the Cliff

Below the cliff, the credit shrinks as your income rises. The IRS published the 2027 percentages in Revenue Procedure 2026-26. Each percentage is the share of your yearly income you're expected to put toward the benchmark plan, which is the second-lowest-cost Silver plan in your area. The credit covers the rest. You can apply it to a different plan, but the math always starts from the benchmark.

Income (% of Poverty) 2027 Share of Income 2026 Share 1 Person Family of 4
Under 133% 2.15% 2.10% $15,960 to $21,226 $33,000 to $43,889
133% to under 150% 3.23% to 4.30% 3.14% to 4.19% $21,227 to $23,939 $43,890 to $49,499
150% to under 200% 4.30% to 6.78% 4.19% to 6.60% $23,940 to $31,919 $49,500 to $65,999
200% to under 250% 6.78% to 8.66% 6.60% to 8.44% $31,920 to $39,899 $66,000 to $82,499
250% to under 300% 8.66% to 10.22% 8.44% to 9.96% $39,900 to $47,879 $82,500 to $98,999
300% to 400% 10.22% 9.96% $47,880 to $63,840 $99,000 to $132,000
Over 400% No credit No credit $63,841 and up $132,001 and up

Here's what that looks like in dollars. A single adult at $55,000 sits in the top band. At 10.22%, the expected contribution is about $5,621 a year, or roughly $468 a month. If the benchmark plan costs less than that, the credit is zero. Every band rose a little from 2026 to 2027, so the same paycheck buys slightly less help.

These percentages don't make anyone eligible. They only calculate the credit for a household already under the ceiling. Two households with the same income can also get different credits because local benchmark prices and ages differ. Households up to 250% of poverty can get extra cost-sharing help too, but only on Silver plans.

Final 2027 prices are now out. KFF reports that the average Texas benchmark premium for a 40-year-old is $737 a month, up from $661 in 2026. Nationally, benchmark premiums rose 13% on average, and 11% in states that use HealthCare.gov.

Year Texas Average Benchmark Premium (Age 40) Change From Prior Year
2025 $489 a month Not shown
2026 $661 a month About +35%
2027 $737 a month About +11.5%

Insurers are shifting too. Cigna and Baylor Scott & White are leaving the Texas Marketplace at the end of 2026. If you have one of those plans, you must pick a new one during open enrollment. A plan that renews on its own may not exist.

CMS says more than 75% of HealthCare.gov shoppers will find a plan at $50 a month or less after tax credits. That's a national claim, not a promise for your county or your income. The only number that counts is the one HealthCare.gov shows for your ZIP code.

See the 400% Cliff in Dollars: $85,000 vs. $87,000

Take a hypothetical couple, ages 58 and 60, living in Frisco. Assume the benchmark plan for the two of them costs $3,000 a month ($36,000 a year). That's a round, illustrative number. KFF puts the average Texas benchmark for a 40-year-old at $737 a month, and insurers can charge older adults up to three times as much as the youngest adults. Your real benchmark depends on your ages and your county.

Item Household Income: $85,000 Household Income: $87,000
400% line for two people $86,560 $86,560
Under the line? Yes, by $1,560 No, over by $440
Expected contribution (10.22%) $8,687 a year Not applicable
Premium tax credit About $27,313 a year ($2,276 a month) $0
What the couple pays About $724 a month $3,000 a month

The extra $2,000 of income costs this couple about $27,300 in lost credits. They end up far worse off than before the raise. Some households close to the line lower their MAGI with pre-tax contributions to a traditional IRA or a Health Savings Account. Contribution limits and tax rules vary, so run it past a tax preparer first.

⚠️ Important Note: Starting with tax year 2026, there is no cap on repaying advance credits. If you take credits all year and your final income lands above 400%, you may owe back the full amount when you file. Use a reasonable estimate, keep your records, and update the Marketplace when your income changes. Never enter a number you know is off just to qualify.

Income Close to 400%? A Five-Step Check Before You Pick a Plan

Step 1: Build a Full-Year 2027 Income Estimate

Add up expected wages, net business profit, taxable investment income, and any other amount from the MAGI table above. If your earnings swing, use a full-year figure. Don't multiply one great month by twelve. Write down your assumptions so you can update them later.

Step 2: Confirm Who Counts in Your Household

Match your household to how you'll file your 2027 taxes. A new marriage, a divorce, or a new dependent changes both your household size and your income line.

Step 3: Compare Real Prices on HealthCare.gov

Texas residents apply at HealthCare.gov. Plans and prices for 2027 were released ahead of November 1, so you can compare them now. Enter your ZIP code, household details, and expected income. Look at the deductible and out-of-pocket maximum, not just the premium. 

Texas regulators have required extra cost to be built into Silver premiums since 2026. That has made Bronze or Gold plans cheaper after credits in some counties. Check every metal level.

Step 4: Report Income Changes as They Happen

A raise, a second job, or a spouse going back to work all count. Report changes online, by phone, or in person, not by mail. If you're renewing from 2026, log in and update your application. Don't let an old income estimate renew on its own.

Step 5: Plan for Form 8962 at Tax Time

If you received advance credits, you must file a federal return and reconcile them on IRS Form 8962. That form compares what was paid during the year with the credit you were actually allowed. With the repayment cap gone, a bad estimate can get expensive.

Documents and Details That Cause First-Try Rejections

Marketplace applications get stuck on the same few items. Have these ready before you start:

  • Social Security numbers, or immigration document numbers, for everyone applying for coverage
  • Recent pay stubs, a W-2, or a profit estimate if you're self-employed
  • Your most recent tax return, so your income estimate can be compared with what the IRS has on file
  • Details on any job-based coverage offered to you or a family member, including the employee-only price
  • Form 1095-A from your 2026 Marketplace plan, if you had one
  • Household members that match how you will file your 2027 taxes

Immigration status matters more in 2027. Starting January 1, premium tax credits are limited to U.S. citizens and certain lawfully present immigrants: green card holders, certain Cuban and Haitian entrants, and Compact of Free Association migrants. Other lawfully present immigrants can still buy a plan, but without credits. CMS posted official guidance on this change, linked at the end of this article.

Over 400%? Your Options Before the Cliff Costs You

Crossing the line doesn't leave you with nothing. It does mean shopping differently. Each route below has a trade-off.

Option How It Works Trade-Off
Lower your MAGI Pre-tax retirement or HSA contributions, plus self-employment deductions, can reduce the income figure used for credits. Limits and eligibility rules vary. Talk to a tax preparer first.
Price job-based coverage An employer plan or a spouse's plan can cost less than a full-price Marketplace plan. For 2027, employee-only coverage counts as affordable at 10.22% of household income or less. Adding a spouse or kids can cost much more. Compare total yearly cost.
Choose Bronze with an HSA Under a 2025 federal law, Marketplace Bronze plans can now pair with a Health Savings Account, starting in 2026. CMS reports that HealthCare.gov shoppers will see about 35 HSA-eligible plans on average in 2027. Lower premiums, but higher deductibles before the plan pays much.
Compare unsubsidized plans Look at premium, deductible, copays, prescription coverage, and out-of-pocket maximum side by side. The lowest premium isn't always the lowest total cost when you need care.
Check coverage for the kids Children may qualify for Medicaid or CHIP even when the adults in the home don't. Separate application and income rules. See our Texas CHIP guide below.

Under 100% of Poverty? The Texas Coverage Gap

Marketplace credits generally start at 100% of poverty. Texas has not expanded Medicaid for most adults. So some adults under that line fall into a gap with limited options. Don't assume you qualify for Medicaid just because your income is low. Texas has specific eligibility categories, and your household situation matters.

2027 Open Enrollment in Texas: Key Dates

The calendar has been confusing this year. A 2025 federal rule would have ended HealthCare.gov enrollment on December 15. A federal court threw that change out in June 2026, and CMS restored the traditional window. Its October 30 plan-year fact sheet lists January 15 as the end date. The government has appealed the ruling, so recheck HealthCare.gov before you rely on the later dates. Treat December 15 as your real deadline.

Date What Happens
November 1, 2026 Open enrollment began. 2027 plans and prices are available.
December 15, 2026 Last day to pick a plan that starts January 1, 2027.
January 1, 2027 Coverage begins for plans chosen by December 15. Your first premium payment must be made for coverage to start.
January 15, 2027 Open enrollment ends on HealthCare.gov. Plans chosen December 16 to January 15 start February 1.
After January 15 Special enrollment period only. Life events such as losing other coverage, moving, or getting married may qualify.

Need a person instead of a website? The Marketplace Call Center is 1-800-318-2596 (TTY 1-855-889-4325).

Could Congress Bring Back the Bigger ACA Subsidies?

Lawmakers can change the rules at any time. The House passed a three-year extension of the enhanced credits on January 8, 2026, by a vote of 230 to 196. The Senate has not acted on it. As of this writing, no extension has become law.

A bill that passes one chamber doesn't change your eligibility. Plan around the rules in force today, then adjust if that changes. Check IRS and HealthCare.gov updates before you make a final decision.

Texas ACA Subsidies 2027: Questions People Keep Asking

Q: Are ACA subsidies ending in Texas in 2027?

A: No. The regular Premium Tax Credit is still available to eligible households. What expired after 2025 was the temporary boost that removed the 400% ceiling and increased help. Under current law, the standard income limit applies again.

Q: What is the 400% federal poverty level limit for a family of four in 2027?

A: It's $132,000, based on the 2026 poverty guidelines that apply to 2027 coverage. For one person it's $63,840, and for two it's $86,560. Above those amounts, households generally don't qualify for credits.

Q: Does the 400% limit use gross income or take-home pay?

A: Neither. The Marketplace uses modified adjusted gross income, or MAGI. Gross business revenue, take-home pay, and MAGI can all be different numbers.

Q: What happens if my income rises after I enroll?

A: Update your Marketplace application. Your advance credit may need to change. When you file taxes, you reconcile advance payments on Form 8962. Starting with tax year 2026, there's no cap on repayment, so you may owe back the full excess.

Q: Can self-employed Texans qualify for ACA subsidies?

A: Yes, if they meet the Premium Tax Credit rules. The calculation uses household MAGI, which counts net business profit, not total revenue. Accurate estimates matter most when earnings swing.

Q: Does living in Collin County or Denton County change the 400% limit?

A: No. The federal income rules are the same across Texas. But the benchmark plan price and the insurers you can choose from vary by location. That can change the size of the credit for an eligible household.

Q: When does ACA open enrollment end in Texas for 2027?

A: On HealthCare.gov, enrollment runs November 1, 2026 through January 15, 2027. Pick a plan by December 15 for coverage that starts January 1. Plans chosen later start February 1. A court ruling restored this longer window, and CMS listed it in its October 30 fact sheet. The ruling is under appeal, so recheck HealthCare.gov.

Q: What happens if my income is below 100% of poverty in Texas?

A: Marketplace credits generally start at 100% of poverty. Texas has not expanded Medicaid for most adults, so some adults under that line have limited options. Children and parents have separate Medicaid and CHIP rules, so check those first. For local help, call 2-1-1.

Q: Can I get an ACA subsidy if my job offers health insurance?

A: Generally not if the offer is affordable. For 2027, the IRS sets that line at 10.22% of household income for employee-only coverage. If your employer's plan costs more than that, you may qualify for credits on the Marketplace. The offer itself counts, even if you turn it down.

Q: How does the Marketplace count income compared with SNAP or Medicaid?

A: The Marketplace uses MAGI for your tax household over the full calendar year. SNAP and Medicaid have their own household definitions and rules, and they look at monthly income. You can be over the limit for one program and under it for another.

Bottom Line: Plan Around Your Income, Not Just Your Premium

The 400% cliff turns a rough income guess into a high-stakes number. A small raise can cost far more than it pays. Run your best 2027 estimate against the household table, compare real prices on HealthCare.gov, and update your application whenever your income moves. If you land near the line, a tax preparer can be worth the fee.

Source: Internal Revenue Service Official Website (.gov) and U.S. Department of Health and Human Services (ASPE) Official Website (.gov)

Key Takeaways

  • For 2027, ACA premium tax credits generally stop above 400% of poverty: $63,840 for one person and $132,000 for four.
  • Below the cliff, you're expected to pay 2.15% to 10.22% of income toward the benchmark Silver plan.
  • The Marketplace uses MAGI and the 2026 poverty guidelines for 2027 coverage.
  • Final 2027 prices are out. The average Texas benchmark for a 40-year-old is $737 a month, up from $661. Cigna and Baylor Scott & White are leaving Texas.
  • There's no cap on repaying excess advance credits, so keep your income estimate current.
  • On HealthCare.gov, pick a plan by December 15 for January 1 coverage. Enrollment is open now and runs through January 15, but the ruling behind that date is under appeal.
  • Near or over the line? Compare job-based coverage, Bronze with an HSA, and ask a tax preparer about lowering MAGI.

Editorial Note

EasySmartHub is an independent informational resource. We are not affiliated with the IRS, CMS, HealthCare.gov, the Texas Department of Insurance, or any government agency or insurance company. The dollar example in this article is hypothetical and uses round numbers for illustration. Your actual credit depends on your ages, county, plan prices, and final income. This article is for general information only and is not medical, legal, tax, or financial advice. Confirm details with official sources or a qualified professional.

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