Before Medicare starts at 65, you buy your own health insurance. In 2026, earning a single dollar too much can add $10,000 to $20,000 a year to what you pay.
The good news: what you pay comes down to one number you control, your MAGI.
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Cliff at 400% FPL Cross the line and you pay full price
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The ACA cliff can cost you tens of thousands a year. The right plan avoids it.
One dollar over the line and your whole subsidy is gone. For a couple in their early 60s, premiums jump from ~$7,000 to ~$28,000 a year.
Roth conversions, capital gains, and Traditional IRA withdrawals all raise your MAGI. Which accounts you draw from decides whether you stay under the cliff.
The right withdrawal order can save you $10,000 to $20,000 a year. It's not about earning less, it's about where your income comes from.
We'll send a PDF with your 2026 cliff numbers plus our full “How to Control Your MAGI” guide — which accounts raise your MAGI, which don't, and the real example that saved $135,000 over 8 years. Or read the guide online →
See how your withdrawal choices change what you pay.
Join the August waitlist →The most common questions early retirees ask about ACA subsidies and the 2026 cliff.
It's the income point where your premium tax credit drops to zero. Below the cliff, your subsidy phases out gradually as income rises. At the cliff, one extra dollar of income can cost a couple in their early 60s tens of thousands of dollars per year in lost subsidies. From 2021 through 2025, the cliff was temporarily suspended, so subsidies kept phasing out smoothly. Those enhanced subsidies expired after 2025, so in 2026 the cliff is back in effect.
A conversion that pushes you past the cliff can wipe out $10,000 to $20,000 a year in subsidies. A Roth conversion is added to your Modified Adjusted Gross Income (MAGI), which is what the ACA uses to size your subsidy. For a couple in their early 60s buying insurance on the exchange, that loss can run even higher in high-premium states. Many people do better converting smaller amounts each year while staying under the cliff.
Stay under 400% of the Federal Poverty Level, roughly the mid-$80,000s in MAGI for a household of two. The exact threshold depends on your state and that year's FPL update. Above that line, you pay the full unsubsidized premium with no help. The calculator on this page shows the exact threshold for your household size and what crossing it costs.
Yes, all of it, even the part that isn't taxed federally. This trips up a lot of early retirees. A couple drawing $40,000 of Social Security has the full $40,000 counted toward ACA MAGI, even if only half ends up in their taxable income. This matters most for people deciding whether to claim Social Security before age 65.
You pay back the excess subsidies at tax time, and from 2026 on there's no cap if you cross the cliff. You apply for subsidies based on projected income for the coming year. Below the 400% FPL line, the payback is capped based on your income level. Above it, the repayment is uncapped. This is why people in early retirement track every dollar of MAGI, since a late-year Roth conversion or capital gain can trigger a full repayment.
Yes. The ACA has no asset test, only an income (MAGI) test. Eligibility is based on income, not net worth. Someone with $2 million in retirement accounts who lives off Roth withdrawals plus a small brokerage drawdown can qualify for substantial subsidies, because Roth withdrawals don't count toward MAGI and capital gains can be managed carefully. This is one reason the order in which you draw from accounts matters so much before age 65.
Related: Roth Conversion Calculator
