What the premium tax credit is and how much you pay in 2027

What the premium tax credit is

The premium tax credit is money from the federal government that lowers the price of a health plan you buy on the Marketplace. A premium is the monthly price of a plan. The Marketplace is HealthCare.gov or your state's own sign-up site. Many people call this credit a subsidy, which means help paying.

Your credit starts with a benchmark plan, and the IRS says the benchmark is the second-lowest-cost silver plan where you live. Your household is expected to pay a set share of its income toward that plan. The credit covers the rest of the benchmark price, and it can never be more than the price of the plan you pick.

Marketplace plans come in metal levels named bronze, silver, gold and platinum. The credit works on any of those plans. You cannot use it on a catastrophic plan, which has a low monthly price but very high costs when you get care. A plan that costs less than the benchmark still gets you the same credit, so you pay less for that plan.

Taking the credit early is called an advance payment. Each month you can use some, all or none of it, according to HealthCare.gov. Your insurance company gets it straight from the Marketplace. Or you can wait and take all of it when you file your taxes.

For 2021 through 2025, Congress let people earning more than 400 percent of the poverty level get the credit. That change is over, and the IRS table for 2027 applies now. The credit only works on plans you buy through the Marketplace, which is HealthCare.gov or your state's own site.

How much you pay in 2027

The IRS table sets the share of your income that you are expected to pay toward the benchmark plan. The share depends on your income compared with the federal poverty level. The federal poverty level is a yearly income line set by the government, and it grows with the size of your household. The list below shows the shares for 2027.

• If your income is under 133 percent of the poverty level, you are expected to pay 2.15 percent of your income.
• From 133 percent to under 150 percent, the share is 3.23 percent rising to 4.30 percent.
• For incomes from 150 percent to under 200 percent, the share is 4.30 percent rising to 6.78 percent.
• At 200 percent to under 250 percent, the share is 6.78 percent rising to 8.66 percent.
• From 250 percent to under 300 percent, the share is 8.66 percent rising to 10.22 percent.
• Between 300 percent and 400 percent, the share is 10.22 percent.
• Above 400 percent of the poverty level, there is no credit.

The words "rising to" mean the share goes up slowly as your income goes up inside that band. Here are six examples, and all of them are our math. Each example shows only your share of the benchmark plan. Benchmark prices vary by place and by age, so we do not list them. If the benchmark plan costs more than your share, the credit pays the difference.

• One person earning $23,940, which is 150 percent of the poverty level, pays 4.30 percent. That is about $1,029 a year, or about $86 a month, toward the benchmark plan.
• At $39,900, which is 250 percent, one person pays 8.66 percent, about $3,455 a year or about $288 a month.
• Someone earning $63,840, which is 400 percent, pays 10.22 percent. That is about $6,524 a year, or about $544 a month.
• A family of four earning $49,500, which is 150 percent, pays about $2,129 a year, or about $177 a month.
• With $82,500, which is 250 percent, a family of four pays about $7,145 a year, or about $595 a month.
• Earning $132,000 (400 percent), a family of four pays about $13,490 a year, or about $1,124 a month.

The 400 percent limit and income limits

For 2027 plans, the Marketplace uses the 2026 poverty levels to set savings and income limits. The amounts below are for the 48 states and DC. The amounts for Alaska and Hawaii are higher. Each 400 percent amount is our math, which is four times the poverty level.

• For one person, the poverty level is $15,960, and 400 percent of it is $63,840.
• A household of two has a poverty level of $21,640, and 400 percent of it is $86,560.
• A household of three has a poverty level of $27,320, and 400 percent of it is $109,280.
• For a household of four, the poverty level is $33,000, and 400 percent of it is $132,000.

This 400 percent limit is back for 2026 and later, and the IRS table for 2027 stops at 400 percent. The line works like a cliff, and the credit ends if your income is one dollar over it.

Income below 100 percent of the poverty level works differently. HealthCare.gov says you are probably not eligible for Marketplace savings at that income, and Medicaid may cover you depending on your state. Our guide on the Medicaid coverage gap explains what to do.

Who cannot get the credit

Some people cannot get the credit even when their income fits, and the IRS lists these groups.

• People who can get job-based coverage that is affordable and meets minimum value cannot get it. HealthCare.gov says a plan meets minimum value when it is designed to pay at least 60 percent of the total cost of medical care. It must also cover a good share of doctor visits and hospital stays. For the worker, the plan is affordable in 2027 if covering just the worker costs them no more than 10.22 percent of household income. For a spouse or child, the IRS uses the worker's share for family coverage instead.
• Anyone eligible for Medicaid, CHIP, Medicare or TRICARE cannot get it. CHIP is the Children's Health Insurance Program, and TRICARE is the health program for service members and military retirees, along with their families.
• People who can be claimed as a dependent on someone else's tax return cannot get it.
• Most married people who file their taxes separately cannot get it.
• People with income above 400 percent of the poverty level cannot get it.

Starting in 2027, only some immigration statuses qualify for the credit. HealthCare.gov can tell you what applies to you, and we cannot promise an answer either way here.

Paying it back and filing your taxes

When you file your taxes, you compare the credit that was paid for you with the credit you qualify for. You get the rest back at tax time if you got too little. Getting more than you qualify for means you must pay back the extra.

For tax years after 2025, the IRS says you must repay all of the extra advance credit, with no cap. A cap is a top limit on the amount.

As HealthCare.gov advises, report changes in your income and your household as soon as possible, online or by phone at 1-800-318-2596.

If advance credit was paid for you, you must file a federal tax return and IRS Form 8962 for that year. This applies even if you do not usually file. Form 8962 is the form that compares what you got with what you qualify for.

This page is general information and not tax or medical advice. A free tax-help program or a tax preparer can answer questions about your own return.

If you think you are having an emergency, call 911 or go to the nearest emergency room.

How to apply and what to do if it is not enough

You ask for the credit when you apply for a plan on the Marketplace. On HealthCare.gov, open enrollment for 2027 coverage runs from November 1, 2026 to January 15, 2027. Our open enrollment guide lists the dates and each state's deadlines.

If the credit still leaves a price you cannot pay, read our guide on what to do if you cannot afford health insurance.