Is the ACA Subsidy Going Away?

If you’re about to retire (or already retired) and relying on the Affordable Care Act for health insurance, you’ve probably seen the headlines: “The ACA subsidy is going away.” In this episode of The Perfect Retirement Plan?, Phillip Smith cuts through the noise and explains what is actually changing in 2026, what is not changing, and why this matters so much for retirement planning between ages 62 and 65.

You’ll learn the difference between the original ACA premium tax credit and the temporary enhanced subsidy created during the pandemic. We break down how the American Rescue Plan and Inflation Reduction Act expanded subsidies through 2025, what happens with those enhancements now expired as of December 31,  2025, and how income planning affects ACA premiums. This episode is especially relevant if you are planning to retire before Medicare, considering Roth conversions, selling a business, or starting Social Security during the pre-65 years.

If you have searched “is the ACA subsidy going away in 2026,” “ACA subsidies and early retirement,” or “how to plan income before Medicare,” this episode gives you clarity without politics or panic.

What you’ll learn
• What the ACA premium tax credit really is
• What changes in 2026 if the enhanced subsidy expires
• How income affects ACA premiums for retirees ages 55 to 64
• Why Roth conversions and capital gains matter more than ever
• How to plan retirement income without relying on headlines

More resources at TidepoolWealth.com and on our YouTube channel @TidepoolWealth.

Thanks for tuning in to The Perfect Retirement Plan?, brought to you by Tidepool Wealth Strategies. 

Tidepool Wealth Strategies website
Phillip Smith, CRPC AIF LinkedIn

Thanks for tuning in to this episode of The Perfect Retirement Plan, and remember: it's not about having the smartest financial advisor, the most money saved, or the highest probability of retirement success. The perfect retirement plan, for you – is the one you act on.

Phillip Smith, CRPC AIF |  Financial Planner
Tidepool Wealth Strategies
450 Country Club Road, Suite 350 | Eugene, OR | 97401

____________________________________________________________________________________________
Additional Disclosures: 
The opinions contained in this material are those of the author, and not a recommendation or solicitation to buy or sell investment products. This information is from sources believed to be reliable, but Cetera Wealth Services, LLC cannot guarantee or represent that it is accurate or complete.
All investing involves risk, including the possible loss of principal. There is no assurance that any investment strategy will be successful. 

Transcript

Episode: Is the ACA Subsidy Really Going Away in 2026?

Outline: Intro • Roadmap • Main Content • Action Steps • Closing • Disclosure • Sources

Script:

"The ACA subsidy is being taken away!" Shocking, right? Might as well toss your retirement plan into the ocean and hope it floats.

[Introduction] 

helping you figure out how to retire with confidence when you’re about to retire – and helping you build a plan that adapts as life changes when you’re already retired. Welcome to The Perfect Retirement Plan?

[Main Content]

Today, we’re wading into a muddied tidepool of half-truths, sidespeak, and a whole lot of Orwellian doublethink. You’re going to hear exactly what’s changing, what’s not changing, and what actually matters for your retirement planning.

We’ll talk about the real rules, the difference between the regular credit and the temporary enhanced version, when those enhancements expire, and how people between 62 and 65 should think about it when planning their income.

No politics. No drama. Just clarity.

[Main Content]

Here’s the simple truth: The ACA premium tax credit itself is not going away. It’s not being repealed. It’s not being shut down.

What is scheduled to change is something different: the temporary, enhanced version of the credit that was added during the pandemic. That enhancement made the subsidy more generous and expanded who qualifies. It was never permanent. It always had an end date written into the law.

We’re going to unpack that a little more so you can make clear decisions without getting caught up in the noise.

Let’s talk through the two versions of this credit in plain English.

First, the regular ACA premium tax credit. Think of this as the "base model," like the car trim level no one brags about but everyone ends up buying anyway. Think of this as the “base model” that has been around for years. It’s built on a few key ideas.

One, your eligibility is based on your household income compared to the federal poverty level. Not assets. Not just your salary. It’s your modified adjusted gross income.

Two, the law says you should only have to pay a certain percentage of your income for a benchmark Silver plan. If the real-world premium is higher than that percentage, the tax credit fills the gap.

Three, under the original rules, once your income went much above 400 percent of the federal poverty level, you were basically done. No more subsidy. That was the cliff. 

Go one dollar over a line, lose a lot of help.

Now, the enhanced version. This is where the pandemic changes come in.

The American Rescue Plan lowered the percentage of income that people had to pay for that benchmark plan. So instead of, for example, paying five or six percent of your income, you might pay closer to one or two percent at lower income levels. Your share went down, and the tax credit picked up more of the bill.

It also smoothed out that 400 percent cliff. People above that level could still get help, as long as the benchmark plan would have cost more than a certain share of their income. The goal was to make coverage more affordable for more people.

Then the Inflation Reduction Act came along and extended those more generous rules through 2025.

That is what’s scheduled to change. The enhancement. Not the basic idea of the credit.

Now let’s bring this down to what can be a real situation for someone close to retirement.

Oh – and if you listened to my recent episode on retiring before 65, you already know this: healthcare strategy is the entire ballgame. That episode walked through the moving parts of bridging those pre-Medicare years, and this ACA subsidy question is one of the biggest pieces of that puzzle.

Imagine you’re 63 and thinking about leaving full-time work. Your knees are filing formal complaints, and your patience for meetings that should’ve been emails expired sometime last decade. You need to bridge health coverage until Medicare at 65. You go to the marketplace, look at plans, and see a premium that makes your eyes water. 

The premium tax credit is what makes that number more reasonable.

Under the enhanced rules, if you keep your taxable income in a certain range, that credit can be quite large. It might make the difference between paying, say, six hundred dollars a month versus two hundred dollars a month. The exact numbers depend on your state, your age, and the plans, but the gap is often real money.

In 2026, if nothing changes in DC, the formula reverts to the older, less generous one. Your income might be the same, but your required share of the premium is higher, and the credit shrinks. For some people, especially in their early sixties, that will feel like a price jump.

So when you hear, “The ACA subsidy is being taken away,” what many people are really likely reacting to is this: the extra help that’s been in place since 2021 is scheduled to go away. The core subsidy is still there, doing what it was originally designed to do.

From a planning perspective, that means a few things.

If you’re planning to retire before 65, your income strategy for those bridge years matters. Large Roth conversions, big capital gains, or starting Social Security early can all push your income up. That can reduce your tax credit and raise your premiums.

On the other hand, if you’re flexible, you might structure those years with lower taxable income. Maybe you draw more from already-taxed savings for a few years, or delay certain moves, to keep your income in a range that works with the current rules.

You don’t have to guess. This isn’t like trying to interpret the directions on flat‑pack IKEA furniture. This is math we can actually work with, math that could be run in planning software, with a tax projection, with a professional. The point is to be intentional, not surprised.

It’s also worth saying this clearly: there’s always a chance that Congress extends the enhanced credits again. Or changes them. Or replaces them with something else. 

But nothing in your retirement plan should be built on wishful thinking, and your retirement aspirations shouldn’t hinge on the legislative body in Washington – that’s consistently going to lead you to a trough of disappointment. 

You start with the law as written, build a plan that works under those rules, and then adjust if the rules change.

Alright, let’s start to land this. Put your tray tables up and lock your seatbacks, we’re bringing it home.

Let’s take some action on this. First, if you’re between 55 and 64 and thinking seriously about retirement timing, get a basic projection of your income and health insurance costs for the years before Medicare. Don’t just estimate. Put numbers to it.

Second, if you’re already on an ACA plan and using the enhanced credit, look at what your premiums might be under the older rules. Many online tools and some planning software can model this. It’ll at least give you a sense of the range.

Third, if you’re considering big financial moves in those bridge years, like Roth conversions, business sales, or turning on Social Security, factor the potential change in subsidies into the decision. Sometimes paying a little more tax on purpose can still be worth it. Sometimes it’s better to spread things out.

And finally, don’t let internet noise drive your retirement date. A headline or a scary quote should never be the thing that keeps you at a job you’re ready to leave. Look at the actual rules. Get clarity. Then make a decision you can live with.

(Conclusion)

If you found this conversation helpful and you want more clear, practical guidance for people close to retirement, make sure to subscribe to the podcast so you don’t miss future episodes.

Remember, it’s not about having the smartest financial advisor, the most money saved, or the highest probability of retirement success. The perfect retirement plan for you is the one you act on!

[Disclosure clip]

It’s disclosure time! This podcast is intended for educational purposes only and should not be used for any other purpose. The views depicted in this material should not be considered specific advice or recommendations for any individual, are not intended to be financial, tax, or legal advice and are not representative of Tidepool Wealth Strategies or Cetera Wealth Services LLC. The opinions contained in this material are those of Phillip Smith, and not a recommendation or solicitation to buy or sell investment products. This information is from sources believed to be reliable, but Cetera Wealth Services, LLC cannot guarantee or represent that it is accurate or complete.  For a comprehensive review of your personal situation, always consult with a financial, tax or legal advisor. Neither Cetera nor any of its representatives may give legal or tax advice. 

Our office address is 450 Country Club Road Suite 350 Eugene Oregon 97401. Securities offered through Cetera Wealth Services, LLC, member FINRA/S I P C. Advisory Services offered through Cetera Investment Advisers LLC, a registered investment adviser. Cetera is under separate ownership from any other named entity.

Sources:

·         American Rescue Plan Act of 2021: https://www.congress.gov/bill/117th-congress/house-bill/1319 

·         CMS Fact Sheet on ARPA Marketplace Enhancements: https://www.cms.gov/newsroom/fact-sheets/american-rescue-plan-and-marketplace 

·         Inflation Reduction Act of 2022: https://www.congress.gov/bill/117th-congress/house-bill/5376 

·         KFF Analysis of Enhanced PTC Expiration: https://www.kff.org/affordable-care-act/  

·         Commonwealth Fund Explainer on Enhanced PTCs: https://www.commonwealthfund.org 

·         Congressional Research Service: ACA Premium Tax Credits Overview