Can people above 400% FPL qualify for premium tax credits due to inflation-adjusted caps or the American Rescue Plan/adjustments?

1. What changed: ARPA removed the 400% cliff, and IRA extended it through 2025

The American Rescue Plan Act of 2021 removed the statutory rule that disqualified households above 400% of the federal poverty level (FPL) from premium tax credits; that waiver applied for 2021–2022 and was continued through 2025 by later legislation ^{[1] [2]}. Health policy analyses and marketplace materials explain that this temporary change both expanded eligibility above 400% FPL and reduced the share of income enrollees were expected to pay, producing much larger credits for many households ^{[2] [5]}.

2. What that means today (coverage years through 2025)

For the 2025 coverage year, marketplace rules use the most recently published federal poverty guidelines and, because of ARPA/IRA, there is no upper income limit for receiving the premium tax credit — so people whose incomes exceed 400% FPL can receive subsidies if the formula produces a credit ^{[1] [6]}. Multiple marketplace explainers and policy briefs note this suspension of the “subsidy cliff” through 2025 and that a large share of enrollees received enhanced credits under the policy ^{[7] [5]}.

3. What happens in 2026 if Congress does nothing

Available reporting shows the temporary expansion and enhanced subsidy percentages expire at the end of 2025; the underlying Premium Tax Credit (PTC) remains permanently authorized but the special ARPA/IRA provisions that removed the 400% limit and lowered applicable percentages would end, restoring the pre‑ARPA rules (a hard 400% upper limit and less generous applicable percentages) beginning in 2026 unless Congress extends them ^{[3] [8]}. The Congressional Research Service and tax policy analysts make clear the expiration would reinstate the 400% cutoff and raise required household contribution percentages ^{[3] [8]}.

4. Can inflation‑adjusted FPL numbers implicitly let higher earners qualify?

Federal poverty guideline amounts are adjusted annually for inflation and differ by household size and state (Alaska/Hawaii); eligibility calculations for a coverage year use the most recently published guidelines at open enrollment ^{[9] [1]}. However, inflation‑adjusted increases in the FPL change the dollar thresholds for 100–400% of FPL but do not themselves change the statutory 400% percentage cap — so absent the ARPA/IRA suspension, simply higher FPL dollar figures would not allow people above 400% of the current year’s FPL percentage to qualify ^{[9] [4]}. In plain terms: indexation shifts dollar cutoffs; it does not alter the statutory percentage ceiling (not found in current reporting that indexation alone overrides the 400% rule).

5. Who is most affected by the temporary expansion and its potential end

Analysts highlight that older adults and people in high‑premium or high‑cost states — especially those with incomes slightly above 400% FPL — gained the most from the expansion, and would face steep premium increases if the enhancements lapse ^{[5] [10]}. Estimates cited by policy groups suggest hundreds of thousands of enrollees between 400%–500% FPL benefitted and could lose assistance if the temporary rules end ^[5].

6. Repayment rules and one caveat for those near 400%

The IRS notes repayment caps and reconciliation rules still apply: for tax years other than 2020, households with income at or above 400% of the FPL must generally repay the full excess advance credit payments; ARPA’s removal of the upper limit allowed advance payments for those above 400% during 2021–2025, but repayment rules remain relevant if actual year income differs from projections ^{[1] [4]}. Health insurance guidance underscores that receiving advance payments above 400% in a given year affects potential repayment obligations if incomes end up higher ^{[11] [4]}.

7. Bottom line and what to watch

Right now (through the 2025 coverage year) people above 400% FPL can qualify for premium tax credits because ARPA removed the 400% rule and Congress extended that change through 2025 via the IRA ^{[1] [2]}. The policy is temporary: unless Congress passes new legislation to extend or make permanent the enhanced eligibility and adjusted applicable percentages, the 400% cap and pre‑ARPA contribution schedule will be reinstated for 2026, reducing or eliminating subsidies for higher‑income households ^{[3] [8]}. Watch Congressional action and official IRS/Marketplace guidance for any late extensions or transitional rules as open enrollment and tax years proceed ^{[3] [1]}.