The Obamacare Subsidy Cliff Is Back. As a CPA, Here’s How Early Retirees Can Avoid It

Health insurance costs could jump sharply for some early retirees.

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The ACA marketplace sign-up period for coverage has opened, and for people who retired before 65 and buy insurance on their own, the rules can bite hard.

Open enrollment runs until mid-January, and the deadline for coverage that begins at the start of the year comes in mid-December, according to HealthCare.gov (1).

KFF says benchmark silver premiums are climbing by 13% on average, and households with income above 400% of the federal poverty level are likely to be hit especially hard (2).

The reason is simple: Congress did not extend the enhanced subsidies that ended previously. As a result, premium tax credits stop for households above four times the poverty level, KFF Health News reports (3).

For this enrollment period, that threshold is $63,840 for one person and $86,560 for a couple (3).

Those numbers are based on the 2026 federal poverty guidelines of $15,960 for a single person and $21,640 for a two-person household in the 48 contiguous states and Washington, D.C. Alaska and Hawaii use higher figures (4).

The Trump administration has also added new hurdles, and it has pointed to anti-fraud efforts as a reason for lower enrollment (3).

Some higher-risk consumers who work with an agent, including first-time applicants and people changing agents, must confirm their identity through a CMS-approved third party (3). In addition, agents who were not registered with the federal marketplace in 2026 cannot assist with enrollments for the new coverage year until February at the earliest (3).

I have been a CPA since 1981, and this is a real cliff. Here is how steep it can be.

I used KFF’s marketplace calculator for a 60-year-old couple, both nonsmokers, buying a benchmark silver plan at the national average price for the coverage year (6).

• At $86,560 of income, they would pay about $737 a month, or $8,846 a year, for coverage (6).
• At $87,000, they would receive no subsidy at all and would pay the full $2,991 a month, or $35,891 a year (6).

That is only $440 more in income, but roughly $27,000 more for the same health insurance. Your own numbers will vary depending on age and location, but in most states the income cutoff does not move.

Here are five ways to stay on the correct side of that line.

1. Know what income the marketplace counts

Marketplace income is not calculated the way many people assume. HealthCare.gov says to include both taxable and non-taxable Social Security income (5).

It also counts tax-exempt interest, capital gains and most IRA and 401(k) withdrawals, the site says (5).

That municipal bond fund you bought for tax savings? Its interest still counts here.

What generally does not count includes gifts, Supplemental Security Income and qualified distributions from a designated Roth account, among other items (5).

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2. Estimate next year's income now, not at tax time

HealthCare.gov tells applicants to include expected interest and dividends, which means you are projecting ahead rather than reporting what already happened (5).

Before applying, add up the income you expect: Social Security for both spouses, any pension, interest and dividends, and any IRA withdrawals you plan to take.

If the total comes close to $86,560 for a couple or $63,840 for a single person, you need to make decisions before selecting a plan (3).

3. Decide which account the money should come from

Suppose you and your spouse need an extra $20,000 for a roof replacement.

If that money comes from a traditional IRA, it counts toward the income limit (5). If it comes from a designated Roth account as a qualified distribution, it does not (5).

If you pay for it from cash already sitting in a savings account, you are not taking an IRA withdrawal at all. Only the interest earned on that account appears on HealthCare.gov’s list (5).

The same roof can lead to a very different health insurance bill.

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4. Plan for a higher bill even if you still qualify for assistance

Staying under the cutoff does not mean you are free and clear. Most people will still get some subsidy, but it may be less generous than before the enhanced help expired, KFF Health News reports (3). At the same time, benchmark premiums are up 13% on average (2).

That extra cost has to come from somewhere, so it is worth reviewing your budget.

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5. Do not wait until the deadline approaches

If you use an agent, new identity checks apply to first-time applicants, people changing states, people switching agents and some people paying $30 a month or less, among others (3). If that applies to you, leave extra time.

The same is true if you depend on an agent. Agents who were not registered with the federal marketplace in 2026 cannot help with enrollments for the new coverage year until February at the earliest (3).

Give yourself room before the mid-December cutoff for coverage that begins on Jan. 1 (1). If your state runs its own marketplace, check its own dates as well.

My honest take

Early retirement is a great milestone. But if you are between your last paycheck and Medicare, your income is no longer just a tax number. It can determine the cost of your health insurance.

The good news is that you may have more control over that number than you realize. Make the choice deliberately.