How to Properly Calculate ACA Subsidies for Marketplace Health Insurance

Overview

Calculating your Affordable Care Act (ACA) subsidy can feel confusing, but getting it right matters. Your subsidy amount (also called a premium tax credit) determines how much you pay each month for Marketplace health insurance. Even small income or household-size mistakes can change your eligibility or require repayment at tax time.

In this guide, you’ll learn how ACA subsidies work, what information you need, how to run the math step-by-step, and how tools like our ACA Subsidy Calculator can simplify the process.

Why Understanding ACA Subsidies Matters

ACA subsidies lower the monthly cost of Marketplace (Obamacare) health insurance. 

But because subsidies are based on your estimated income for the upcoming tax year, your actual eligibility can shift. A raise, job loss, or new dependent can all change your subsidy amount. Learning the subsidy formula helps you make informed decisions, choose the right plan, and minimize surprises at tax time.

Who Is Eligible for ACA Subsidies in 2026?

To qualify for the monthly ACA premium tax credit (PTC) in 2026, your estimated household income must fall within a defined range.

You must earn “enough” but not “too much.”

• If your income is too low, you may qualify instead for Medicaid, which typically means you are not eligible for ACA subsidies in expansion states.
• If your income is too high, you may lose eligibility for Marketplace subsidies.
  

General 2026 Eligibility Rule

For most people in the 48 states and D.C., subsidies apply when your household income is between 100% and 400% of the Federal Poverty Level (FPL) for your household size.

• Below 100% FPL → typically Medicaid (eligibility varies by state).
• Between 100%–400% FPL → generally eligible for premium tax credits.
• Above 400% FPL → subsidies may phase out unless extended legislation keeps enhanced subsidies in place.

These income thresholds are based on the 2025 Federal Poverty Guidelines, which the Marketplace uses for 2026 coverage eligibility.

What Determines Your ACA Subsidy Amount?

ACA subsidies depend on four primary factors:

1. Modified Adjusted Gross Income (MAGI)

According to Healthcare.gov, MAGI includes taxable income from:

• Wages
• Self-employment
• Unemployment compensation
• Social Security (taxable portion)
• Rental or investment income
  

It excludes certain family support payments, government assistance, non-taxable benefits, gifts, and loan proceeds.

2. Household Size

Your household includes:

• You (the tax filer)
• Your spouse (if filing jointly)
• Any dependents you claim
  

Even dependents not enrolling in coverage still count.

3. Federal Poverty Level (FPL)

Your income is converted into a percentage of the FPL, which determines:

• Whether you qualify for subsidies
• How much you are expected to contribute toward premiums
  

Here are the 2025 guidelines, used for 2026 ACA subsidy calculations:

2025 Federal Poverty Guidelines (48 States & D.C.)

For households larger than 8, add $5,500 for each additional member.
Source: U.S. HHS, 2025

4. Your Area’s Benchmark Plan Cost

This is the second-lowest-cost Silver plan available in your ZIP code. Your subsidy equals:

Benchmark premium − Your expected contribution = Your subsidy

How to Calculate Your ACA Subsidy (Step-by-Step)

You can calculate manually, using the steps below, or easily estimate your eligibility using our ACA/Obamacare Subsidy Calculator.

Step 1: Estimate Your MAGI

Example:

• Last year: $34,000
• Expected raise: $1,000
• Estimated MAGI: $35,000

Step 2: Confirm Your Household Size

Example: 1 adult → household of one.

Step 3: Find Your FPL Value

For a household of 1: $15,650.

Step 4: Calculate Your Income as a % of FPL

$35,000 ÷ $15,650 ≈ 224% of FPL

Step 5: Determine Estimated Contribution

At 224% FPL, many consumers may owe around 6.3%–8.05% of income toward premiums (see table below).

The ACA uses a sliding-scale formula to determine how much of your income you’re expected to pay toward the benchmark Silver plan. Your required contribution increases as your income rises relative to the Federal Poverty Level (FPL).

If the enhanced subsidies created under temporary federal legislation expire, the 2026 contribution ranges would generally look like this:

ACA Estimated Contribution Scale (2026)

(If ARPA/IRA enhancements are not extended) 

To apply this, multiply your income by the percentage that aligns with your FPL range.
This dollar amount represents your share of the benchmark premium; the subsidy covers the rest.

Example: If you earn $35,000 (≈224% FPL), your estimated contribution would fall in the 6.3%–8.05% range: $35,000 × 0.063 = $2,205/year (about $184/month)

Step 6: Compare With Benchmark Premium

Once you know your expected contribution from Step 5, subtract it from the cost of your area’s benchmark Silver plan (the second-lowest-cost Silver plan).

Example:

• Benchmark premium: $450/month
• Your expected contribution: ~$184/month

Subsidy Calculation

$450 − $184 = $266/month subsidy (estimated)

Step 7: Apply Subsidy to Any Marketplace Plan

Your subsidy applies to most ACA plans (Bronze, Silver, Gold, Platinum) except catastrophic.

Example: Family of Four

• Household income: $60,000
• 2025 FPL for household of 4: $32,150
• Income level: $60,000 ÷ $32,150 ≈ 187% of FPL
  

At 187% of FPL, the family falls within the 150%–200% FPL bracket, where the expected contribution is roughly 4%–6.3% of income under the 2026 scale (if enhancements expire).

Estimated Contribution

Using a midpoint estimate (~5%):
$60,000 × 5% = $3,000/year
≈ $250/month

Subsidy Calculation

• Benchmark premium: $1,200/month
• Expected contribution: $250/month
  

$1,200 − $250 = $950/month subsidy

The family could receive an estimated $950 per month to lower their Marketplace premium.
(Actual subsidy amounts may vary by county, plan pricing, and updated CMS rules.)

Common Mistakes to Avoid

• Underestimating income → possible repayment.
• Forgetting to include dependents in household count.
• Not updating income after job changes.
• Assuming subsidies apply to any plan (they’re tied to the Silver benchmark).
  

How to Use a Subsidy Calculator Correctly

Tips for accuracy:

• Enter realistic, updated income estimates.
• Adjust your income during the year if circumstances change.
• Check eligibility rules for your state.
• Use trusted tools like the HealthCareInsider ACA Subsidy Calculator.
  

Bottom Line

Understanding how ACA subsidies work helps you choose a plan that fits your budget—and prevents surprises at tax time. For 2026 plans, most households earning 100%–400% of the FPL will qualify for some amount of premium tax credit, but the exact subsidy depends on your income, family size, and local benchmark premiums.

To simplify your estimate, plug your information into our Health Insurance Marketplace Calculator before enrolling. Recalculate if your income changes, and revisit your options during open enrollment.