ACA Healthcare Subsidies Guide: Who Qualifies and How to Apply

Last updated 5 days ago. Our resources are updated regularly but please keep in mind that links, programs, policies, and contact information do change.

The Patient Protection and Affordable Care Act, passed in 2010, represents one of the most significant reforms of the U.S. health system. Its primary goal is making affordable health insurance available to more people.

A key part of the law is the Health Insurance Marketplace (also known as the exchange), a platform where individuals, families, and small businesses can shop for, compare, and enroll in private health insurance plans.

The ACA provides financial assistance, or “subsidized coverage,” designed to reduce the cost barrier to obtaining and using health insurance. This financial help is given in two main forms: one lowers the monthly insurance bill, and the other reduces costs when receiving medical care.

Two Types of ACA Financial Help

The ACA’s financial assistance is not a single benefit but a two-pronged approach designed to address the distinct financial burdens of health coverage. The system tackles both the fixed, predictable cost of the monthly insurance premium and the variable, unpredictable costs that arise when a person actually needs medical services.

Understanding the difference between these two types of subsidies is the first step to navigating the Marketplace effectively.

Premium Tax Credits: Lowering Your Monthly Bill

The most widely known form of ACA assistance is the Premium Tax Credit, or PTC. This is a refundable tax credit designed to make monthly health insurance premiums more affordable for eligible individuals and families who purchase their coverage through the Health Insurance Marketplace.

The PTC is unique in how it can be received.

First, it can be taken as an Advance Premium Tax Credit (APTC). This is the most common method, providing immediate financial relief. When an applicant fills out a Marketplace application, the system estimates the amount of tax credit they’re eligible for based on their projected household income for the coming year.

The U.S. Treasury then pays this estimated amount directly to the insurance company each month. This payment reduces the enrollee’s share of the premium, lowering their monthly bill.

Second, because the PTC is fundamentally a tax credit, it must be accounted for when filing federal income taxes. This process is called reconciliation. Using IRS Form 8962, enrollees must compare the total amount of APTC they received during the year with the final PTC amount they were actually eligible for based on their actual year-end income.

If the advance payments were less than the final credit amount (for example, if income was lower than estimated), the difference is received as a tax refund or used to lower the amount of taxes owed. Conversely, if the advance payments were more than the final credit amount (if income was higher than estimated), some or all of that excess may need to be repaid.

For many lower- and middle-income households, these repayment amounts are capped to protect them from unexpectedly large tax bills.

The calculation of the PTC is based on a formula that ensures enrollees only have to pay a certain percentage of their income toward a specific “benchmark” health plan. This benchmark is the second-lowest-cost Silver plan available in their local area.

The PTC amount is the difference between the full cost of this benchmark plan and the household’s required contribution. For example, if the benchmark plan costs $15,000 per year and a family’s required contribution is capped at $1,110 based on their income, their PTC would be $13,890.

They can apply this credit to any metal-level plan (Bronze, Silver, Gold, or Platinum), but the credit amount is fixed based on the benchmark plan’s cost.

Cost-Sharing Reductions: Saving on Out-of-Pocket Costs

The second pillar of ACA financial help is Cost-Sharing Reductions, or CSRs. Often referred to as “extra savings,” these subsidies are distinct from the PTC and serve a different but equally important purpose.

While the PTC lowers the fixed monthly premium, CSRs lower the variable costs paid when using health insurance. Specifically, CSRs reduce an enrollee’s deductible, copayments, coinsurance, and the annual out-of-pocket maximum—the most a person would have to pay for covered services in a plan year.

This dual-subsidy structure is a deliberate policy design. It recognizes that a low premium is of little value if the deductible is so high that medical care remains functionally out of reach. The PTC helps people afford to have insurance, while CSRs help them afford to use it.

There’s one critical and non-negotiable rule for receiving these extra savings: an eligible individual must enroll in a Silver-level plan on the Marketplace. An enrollee who qualifies for CSRs but chooses a Bronze, Gold, or Platinum plan will forfeit these powerful benefits.

They can still apply their PTC to lower the premium of a non-Silver plan, but they’ll receive no reduction in their out-of-pocket costs.

This creates a high-stakes decision for low-income consumers. A Bronze plan may appear more attractive due to a lower monthly premium, but for someone eligible for strong CSRs, selecting that Bronze plan means giving up a benefit that could reduce their deductible by thousands of dollars.

For example, a standard Silver plan might have a $6,000 deductible. For an individual with income at 150% of the poverty level, the CSR-enhanced version of that exact same plan could have a deductible of just $700 or even $0. In this scenario, the “cheaper” Bronze plan could become far more expensive over the year if any significant medical care is needed.

Eligibility Requirements

Eligibility for both types of ACA subsidies is determined by a set of core requirements, with household income being the most significant factor. This income is measured against the Federal Poverty Level (FPL), a set of income thresholds issued annually by the U.S. Department of Health and Human Services that varies by household size.

The Federal Poverty Level

The FPL is the primary yardstick for determining eligibility for nearly all ACA benefits. Because eligibility is based on a percentage of the FPL rather than a fixed dollar amount, the system automatically adjusts for different family sizes.

The following table provides the key annual income thresholds for 2025 coverage, based on the 2025 FPL guidelines for the 48 contiguous states and the District of Columbia. Finding where a household’s income falls in relation to these levels is the first step in determining subsidy eligibility.

Source: Based on 2025 HHS Poverty Guidelines.

Eligibility for Premium Tax Credits

To qualify for a Premium Tax Credit, an applicant must meet several criteria:

Income Level

Generally, household income must be between 100% and 400% of the FPL. However, a crucial temporary change is in effect. The American Rescue Plan Act and the Inflation Reduction Act eliminated the 400% FPL income cap for plan years 2021 through 2025.

This means that until the end of 2025, households with income above 400% FPL can still qualify for a PTC if the premium for the benchmark Silver plan would cost more than 8.5% of their income.

Access to Other Coverage

An individual is generally not eligible for a PTC if they have access to other forms of “minimum essential coverage.” This creates a structured pathway where eligibility for one program often precludes eligibility for another.

If a person is eligible for a government program like Medicare, Medicaid, the Children’s Health Insurance Program (CHIP), or TRICARE, they cannot receive a PTC.

Likewise, an offer of affordable, minimum-value health insurance from an employer also disqualifies an individual. The term “affordable” in this context is a specific legal definition, not a subjective measure of comfort. It means the employee’s contribution for self-only coverage is below a certain percentage of household income (9.12% in 2023, for example).

This distinction can be a source of confusion, as a plan may be legally “affordable” but still feel financially burdensome, yet the offer blocks access to Marketplace subsidies.

Tax Filing and Dependent Status

To receive a PTC, an individual cannot be claimed as a dependent on someone else’s tax return. Additionally, married couples must file their federal income taxes jointly. The “Married Filing Separately” status disqualifies them, with a narrow exception for certain victims of domestic abuse and spousal abandonment.

Citizenship and Immigration Status

An applicant must be a U.S. citizen or a lawfully present immigrant to be eligible.

Eligibility for Cost-Sharing Reductions

The requirements for Cost-Sharing Reductions are more targeted:

Income Level

Household income must be between 100% and 250% of the FPL.

Silver Plan Enrollment

As emphasized previously, an enrollee must select a Silver plan to receive CSR benefits.

Tiered Savings

The generosity of the CSRs is tiered based on income, which is reflected in the plan’s “actuarial value” (AV)—the average percentage of costs a plan covers.

• 100% – 150% FPL: This group receives the most substantial CSRs, raising a standard Silver plan’s AV from 70% to 94%. This makes the plan function similarly to a Platinum plan, often with a zero or very low deductible.
• 151% – 200% FPL: This group receives strong CSRs that increase the plan’s AV to 87%.
• 201% – 250% FPL: This group receives more modest CSRs, increasing the plan’s AV to 73%.

Members of federally recognized American Indian tribes or Alaska Natives may qualify for additional CSRs and are not limited to Silver plans to receive them.

Special Circumstances

While the core rules of income and coverage access apply to most people, several significant exceptions and special circumstances create different pathways to—or barriers from—receiving subsidies. These situations often cause the most confusion and highlight how the ACA’s effectiveness can vary based on geography and personal situation.

The “Medicaid Gap”

The ACA originally intended to expand Medicaid in every state to cover nearly all adults with incomes up to 138% of the FPL. However, a 2012 Supreme Court decision, National Federation of Independent Business v. Sebelius, made this expansion optional for states.

As of 2025, 10 states have not adopted the expansion.

This has created the “Medicaid coverage gap.” It affects adults in those 10 states whose income is too high to qualify for their state’s traditional, restrictive Medicaid program but too low to qualify for Marketplace subsidies, which begin at 100% of the FPL.

The ACA was written with the assumption that this population would be covered by Medicaid, so no subsidies were created for them. Their state’s political decision not to expand Medicaid leaves them with no affordable health insurance options.

An estimated 1.4 million to 1.9 million Americans are in this gap. The population is concentrated in the South, with Texas, Florida, and Georgia accounting for the majority. People of color are disproportionately affected, and most are in working families with low-wage jobs that don’t offer health benefits.

This situation demonstrates that access to affordable care in the U.S. is determined as much by an individual’s zip code as by their income.

The “Family Glitch Fix”

For nearly a decade, a regulatory interpretation known as the “family glitch” prevented millions of people from accessing subsidies. Under the old rule, the affordability of an employer’s health plan was judged solely on the cost of coverage for the employee alone.

If the self-only plan was affordable, the entire family was deemed to have an affordable offer and was blocked from Marketplace subsidies, even if the cost to actually add the spouse and children was astronomically high. Families were often forced to pay 16% or more of their income toward premiums.

In 2022, the IRS issued a new rule, effective for 2023 plans, that fixed this problem. The “family glitch fix” fundamentally redefines affordability from an individual-centric to a family-centric perspective. Now, the affordability test for family members is based on the total premium cost to cover the family.

This creates a new “split coverage” option. For example, an employee’s self-only plan may be affordable, making that employee ineligible for a PTC. However, if the cost to add the family is deemed unaffordable under the new calculation, the spouse and children are now free to enroll in a subsidized Marketplace plan.

While this is a major financial lifeline, it can also introduce new administrative complexities for families, who may have to manage two different insurance plans with separate networks, deductibles, and out-of-pocket maximums.

Rules for Immigrants

Immigration status is a critical factor in determining eligibility for ACA benefits. The rules are complex and have been subject to significant recent changes.

The baseline rule is that undocumented immigrants are not eligible to purchase insurance on the Marketplace or receive any federal subsidies. Their access to federally supported care is limited to reimbursement for treatment in emergency situations under programs like Emergency Medicaid.

For lawfully present immigrants, the rules have historically been more aligned with those for U.S. citizens. They’re generally eligible to purchase Marketplace coverage and receive subsidies if their income qualifies.

A special provision was created to prevent a coverage gap for this group: lawfully present immigrants with incomes below 100% FPL could still receive subsidies if they were ineligible for Medicaid due to their immigration status, such as being within the mandatory five-year waiting period for Medicaid coverage.

However, this landscape is in flux. Recent legislation has imposed new restrictions that are set to take effect in 2026 and 2027. These changes will limit eligibility for subsidized Marketplace coverage to a narrower set of immigration categories, such as Lawful Permanent Residents.

This will cause many other lawfully present individuals—including refugees, asylees, and those with Temporary Protected Status—to lose access to subsidies. Furthermore, the provision that provides subsidies to lawfully present immigrants with incomes below 100% FPL is also slated for elimination, which is projected to leave hundreds of thousands of low-income immigrants uninsured.

The eligibility of DACA recipients has also been volatile, with regulatory changes first blocking, then briefly allowing, and now once again blocking their access to the Marketplace.

The Looming Deadline: Enhanced Subsidies Expiration

A critical factor affecting everyone who receives Marketplace subsidies is the scheduled expiration of the enhanced financial assistance that has been in place since 2021. The American Rescue Plan Act, later extended through 2025 by the Inflation Reduction Act, made subsidies significantly more generous than under the original ACA framework.

These enhancements did two key things: first, they increased the amount of the PTC for people with incomes between 100% and 400% FPL, further lowering their monthly premiums. Second, they removed the 400% FPL “subsidy cliff.”

Previously, a person earning just one dollar over 400% FPL would lose their entire subsidy. The enhanced rules made middle- and even some upper-middle-income households eligible for subsidies for the first time by capping their premium contribution at 8.5% of income.

These popular and impactful enhancements are temporary and are set to expire on December 31, 2025. If Congress doesn’t act to extend them, the original, less generous subsidy rules will return for 2026 coverage.

The consequences would be immediate and severe:

• The 400% FPL subsidy cliff will be reinstated, meaning millions of middle-income individuals will lose their subsidies entirely
• Average annual premium payments for those who remain subsidized are projected to more than double, rising from $888 in 2025 to $1,904 in 2026
• The Congressional Budget Office estimates that millions of Americans would become uninsured

This looming expiration date has created a recurring cycle of uncertainty. Insurers, who must set their rates for the following year months in advance, have to price their plans assuming the subsidies will expire, leading to proposals for sharp premium increases.

This, in turn, causes “sticker shock” and anxiety for consumers as they begin to preview their 2026 plan options, highlighting how the lack of long-term legislative stability can itself be a destabilizing force in the insurance market.

How to Apply for Subsidies

Securing and maintaining ACA subsidies requires active participation from the enrollee. It’s not a passive benefit but one that must be managed throughout the year to ensure its accuracy and effectiveness.

Gathering Your Documents

Before starting an application, have the following information ready for everyone in the household:

• Names, dates of birth, and home addresses
• Social Security numbers
• Information about how taxes are filed (filing status, dependents)
• Employer and income information (from pay stubs, W-2 forms, or self-employment records)
• A best estimate of the household’s total expected income for the year of coverage
• Information about any health coverage currently available to the household, including offers of job-based insurance (even if declined)
• Immigration documents, if applicable

Ways to Apply

There are several ways to complete and submit an application:

Online

The fastest method is to apply through the official website, HealthCare.gov, or through a state’s own Marketplace website if it has one.

By Phone

The Marketplace Call Center (1-800-318-2596) offers free, unbiased assistance from trained representatives who can walk an applicant through the entire process.

In-Person Assistance

Free help is available from local, trained, and certified individuals known as Navigators or Assisters.

Agents and Brokers

Licensed health insurance agents and brokers can also provide assistance with applications and plan selection, typically at no direct cost to the consumer as they’re compensated by insurance companies.

Reporting Life Changes

The initial application is based on an estimate of future income and household circumstances. Because the subsidy amount is tied directly to these factors, it’s critical to update the Marketplace application whenever a significant life change occurs.

Changes that must be reported promptly include:

• Increases or decreases in household income
• Changes in household size due to marriage, divorce, birth, adoption, or death
• Moving to a new address, especially a move to a new state, which requires a new application
• Gaining or losing eligibility for other health coverage (e.g., a new job offer or becoming eligible for Medicare)
• Changes in citizenship or immigration status

Reporting these changes is essential for two main reasons. First, if household income increases or a household member is lost, the enrollee may be eligible for a smaller subsidy. Failing to report this could result in receiving too much APTC, which would have to be paid back when filing taxes.

Second, if income decreases or a household member is gained, the enrollee could be eligible for larger subsidies, lower out-of-pocket costs, or even free or low-cost coverage through Medicaid or CHIP. Failing to report these changes means leaving money and better benefits on the table.

Changes can be reported online by logging into a HealthCare.gov account and selecting “Report a Life Change,” or by contacting the Marketplace Call Center or a local assister. This ongoing management is a key responsibility for anyone receiving ACA subsidies, ensuring they maximize their savings and avoid financial penalties.

Our articles make government information more accessible. Please consult a qualified professional for financial, legal, or health advice specific to your circumstances.