Retiring before 65 and the 2027 subsidy cliff

For 2027 the premium tax credit stops completely once household income passes 400% of the poverty line: $63,840 for a single person and $86,560 for a couple. Below that line a 60-something couple can get more than $25,000 a year of help. One dollar over it, they get nothing. If you retire before 65, plan your withdrawals around that line.

What a dollar over the line costs

Take a couple aged 62 and 60 in Miami-Dade County. At 2026 prices their benchmark silver plan costs about $2,992 a month, because premiums at those ages run close to three times a young adult’s.

Household income	% of poverty line	2027 credit	They pay for the benchmark silver
$86,000	397%	about $2,259 a month	about $732 a month
$87,000	402%	$0	about $2,992 a month

That $1,000 of extra income costs them about $27,100 a year. At $86,000 the cheapest bronze plan costs them nothing after the credit; at $87,000 it costs about $2,193 a month. These use 2026 premiums because CMS hasn’t published 2027 county prices. Insurers have filed increases for 2027 in most states, so the 2027 cliff will likely be steeper.

The same thing happens to single people. A 63-year-old in Mecklenburg County, North Carolina, at $63,800 gets about $803 a month in credit; at $64,500, nothing.

Income is something you choose in retirement

While you were working, income was your salary. In early retirement much of it is a decision: how much to withdraw from which account, and when to sell. The marketplace counts:

• withdrawals from a traditional IRA, 401(k) or 403(b), and any Roth conversion
• pensions and annuity income
• interest, dividends and realized capital gains, including in a taxable brokerage account
• the untaxed part of Social Security, if you’ve started it
• pay from part-time work, and consulting income after the self-employed health insurance deduction

It does not count money you spend from a savings or checking account, qualified withdrawals from a Roth IRA, or the part of a sale that’s a return of your own cost basis. A couple living partly on cash savings and partly on long-term gains can often keep counted income under the line while spending well above it.

Moves that keep you under 400%

1. Plan the year’s withdrawals around the line. Work out your number with the subsidy calculator and keep counted income a few thousand dollars below it, since the final figure on your tax return is what decides it.
2. Delay Roth conversions until you’re on Medicare, or do them in a year you’d be over the line anyway.
3. Sell in high-basis lots when you need cash from a brokerage account, so less of the sale is gain.
4. Contribute to an HSA if your plan qualifies. Bronze marketplace plans count as HSA-eligible from 2026, and contributions reduce counted income.
5. If you still work part-time, put that pay into a traditional 401(k) or deductible IRA.

If you go over anyway

You pay back every dollar of advance credit at tax time. The caps that used to limit repayment ended starting with 2026 returns. If you see it coming before the year ends, update your income with the marketplace so the advance credit stops, and check whether an IRA or HSA contribution made before the filing deadline would bring the year back under. The repayment calculator shows what you’d owe.

There’s a low edge too. An early retiree living mostly on savings can show very little counted income. In states that expanded Medicaid, that edge is 138% of the poverty line ($22,025 for one person in 2026): below it you’re steered to Medicaid instead of a credit. In the 10 states that didn’t expand, it’s 100%, and below that you get neither. Realizing a little income on purpose can be worth it.

Sources: 26 U.S.C. 36B; IRS Rev. Proc. 2026-26; HHS 2026 poverty guidelines; Pub. L. 119-21, sections 71305 and 71307; CMS individual market plan file on data.healthcare.gov for plan year 2026 and CMS default age curve.