Changes Regarding Tax Subsidies

Currently, there are two types of tax subsidies in effect: the Advance Premium Tax Credit (APTC) and the Enhanced Premium Tax Credit (ePTC). Those with a MAGI between 100% and 400% of the Federal Poverty Level (FPL) are currently receiving the APTC and will continue to receive an APTC for 2026. (Keep in mind that the amount will be changing; see your renewal letter from Connect for Health for specific tax credit and premium amounts.) The ePTC was offered to those whose MAGI was above the 400% FPL but still within a qualifying range. Those tax credits will be expiring at the end of 2025. This means that certain households who received a tax credit in 2025 will not receive a tax credit in 2026.  

Subsidy Cliff

The “Subsidy Cliff” will be returning in 2026. If your MAGI is under 400% of the Federal Poverty Level (FPL), you will receive a subsidy. Subsidies will be incrementally adjusted up to 400% FPL. However, for 2026 enrollments, there will be a subsidy cliff at 400% FPL. This means that if your MAGI increases above that threshold by the end of the year, even by $1, you will be required to pay back the entire subsidy you received in 2026. 

Here’s a breakdown of annual income levels for plan year 2026:

For example, a household with four members would need their MAGI to remain under $128,600. If it increased above that threshold, they would be required to pay back the entire subsidy they received throughout 2026. Make sure you are working with a tax professional to determine an accurate MAGI for 2026 and account for any potential extra income. Will you be receiving a bonus? Investment income? Severance package? Other?

MAGI for 2026

We will need an accurate MAGI to list on your application for 2026. We need this whether or not you are making changes to your plan. Please work with your tax professional during this time to determine your MAGI for 2026; we are unable to advise on this in any way. Also, keep in mind that Connect for Health is frequently requiring income verifications. Many individuals lost their 2025 coverage or their tax subsidy because they did not provide income verification documents to Connect for Health within the required timeframe. Please be prepared to provide this documentation if requested.