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

(Up to date on July 5, 2025, with adjustments from the 2025 Trump tax legislation.)

The ACA medical insurance subsidy, aka the premium tax credit score, is about up such that, for essentially 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 might 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 earnings 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 earnings qualifies for, you pay again the distinction in your tax return.

Reimbursement Cap

There’s a cap on how a lot you must pay again. The cap varies relying in your Modified Adjusted Gross Earnings (MAGI) relative to the Federal Poverty Stage (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 reimbursement cap, efficient in 2026, no matter earnings. 2025 is the final yr {that a} reimbursement cap nonetheless applies.

No Cap Above 400% of FPL

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

There is no such thing as a reimbursement cap in 2026 or past.

Giant Change in Earnings

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

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

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

Simpler for Singles

Nonetheless, a late earnings change can occur, and the change will be giant sufficient to make the distinction within the medical insurance subsidy increased than the reimbursement cap. That is true particularly once you’re single with a decrease reimbursement cap.

For instance, suppose you’re single and also you estimated your earnings can be $30,000 in 2025 once you enrolled. Suppose in December 2025 you determine to transform $20,000 from a Conventional IRA to a Roth IRA. This pushes your earnings to $50,000. The additional $20,000 earnings lowers your medical insurance subsidy by $2,809, however as a result of your reimbursement 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 reimbursement cap.

Backside line: You need to attempt to estimate your earnings conservatively and qualify for as a lot subsidy as you possibly can upfront once you enroll for 2025. Perhaps it received’t assist. Perhaps it is going to. 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.