2025 2026 Cap on Paying Again ACA Well being Insurance coverage Subsidy

[Updated on July 5, 2025, with changes from the 2025 Trump tax law.]

The ACA medical insurance subsidy, aka the premium tax credit score, is ready up such that, for probably the most half, it doesn’t matter how a lot subsidy you obtain upfront once you enroll. The upfront subsidy is barely an estimate. The ultimate subsidy will probably be squared up once you file your tax return subsequent yr.

In case you didn’t obtain the subsidy once you enrolled however your precise revenue qualifies, you get the subsidy as a tax credit score once you file your tax return. If the federal government paid extra subsidies than your precise revenue qualifies for, you pay again the distinction in your tax return.

Reimbursement Cap

There’s a cap on how a lot it is advisable pay again. The cap varies relying in your Modified Adjusted Gross Earnings (MAGI) relative to the Federal Poverty Degree (FPL) and your tax submitting standing. It’s additionally adjusted for inflation annually. Listed below are the caps on paying again the subsidy for 2025 and 2026.

Supply: IRS Rev. Proc. 2024-40.

The brand new 2025 Trump tax legislation eradicated the compensation cap, efficient in 2026, no matter revenue. 2025 is the final yr {that a} compensation cap nonetheless applies.

No Cap Above 400% of FPL

The compensation caps in 2025 apply solely when your precise revenue is under 400% of FPL. There’s no compensation cap in case your precise revenue exceeds 400% of FPL — you’ll have to pay again 100% of the distinction between what you obtained and what your precise revenue qualifies for.

There isn’t any compensation cap in 2026 or past.

Giant Change in Earnings

The caps are additionally set sufficiently excessive such that the quantity it is advisable pay again will fall under the cap until there’s a giant distinction between your precise revenue and your estimated revenue on the time of enrollment.

For instance, suppose you’re married submitting collectively and also you estimated your revenue can be $50,000 in 2025 once you enrolled. Suppose by the point you file your tax return, your revenue seems to be $60,000. As a result of your revenue is $10,000 larger than you initially estimated, you qualify for a decrease subsidy now. You may be required to pay again the $1,554 distinction. The cap doesn’t actually aid you as a result of this $1,554 distinction is effectively underneath the $3,150 compensation cap.

As well as, since you’re required to inform the healthcare market of your revenue adjustments throughout the yr in a well timed method in order that they’ll alter your advance subsidy, usually the distinction between the advance subsidy you obtained and the subsidy you lastly qualify for needs to be effectively underneath the cap. The cap helps solely when your revenue will increase near the top of the yr, and it’s too late to regulate your advance subsidy.

Simpler for Singles

Nonetheless, a late revenue change can occur, and the change might be massive sufficient to make the distinction within the medical insurance subsidy larger than the compensation cap. That is true particularly once you’re single with a decrease compensation cap.

For instance, suppose you’re single and also you estimated your revenue can be $30,000 in 2025 once you enrolled. Suppose in December 2025 you resolve to transform $20,000 from a Conventional IRA to a Roth IRA. This pushes your revenue to $50,000. The additional $20,000 revenue lowers your medical insurance subsidy by $2,809, however as a result of your compensation cap is $1,625, you solely have to pay again $1,625. You get to maintain the opposite $1,184. On this case, you’re higher off asking for the subsidy upfront throughout enrollment. In case you solely wait till you file your tax return, you received’t profit from the compensation cap.

Backside line: It is best to attempt to estimate your revenue conservatively and qualify for as a lot subsidy as you’ll be able to upfront once you enroll for 2025. Perhaps it received’t assist. Perhaps it would. There received’t be any distinction beginning in 2026, since you’re required to pay again 100% of the distinction once you do your taxes.