Can people with incomes above 400% of the Federal Poverty Level qualify for ACA premium tax credits after the American Rescue Plan and subsequent extensions?
Executive summary
The American Rescue Plan Act (ARPA) eliminated the ACA’s 400%‑of‑FPL cutoff for premium tax credit (PTC) eligibility beginning in 2021 and those enhancements were extended through the end of the 2025 coverage year by later legislation, meaning through 2025 people with incomes above 400% of the Federal Poverty Level can qualify for subsidized marketplace coverage [1] [2]. Unless Congress acts again, the temporary ARPA/IRA expansions that removed the 400% cap and increased subsidies are set to expire after 2025 and the pre‑ARPA 100–400% rule and prior applicable percentages would return [3] [4].
1. What changed under ARPA and the follow‑on extensions
The American Rescue Plan Act removed the strict 400%‑of‑FPL eligibility cliff that had applied under the original ACA and increased subsidy amounts, making marketplace coverage more affordable for many people above 400% FPL; those enhancements were extended through 2025 by subsequent congressional action [1] [2]. Analysts and policy groups note the combined effect was both to expand who could receive advance premium tax credits and to lower required premium contributions for a broad swath of enrollees [1] [5].
2. What the law says about 2026 and beyond
Congressional analyses and summaries explain the enhanced provisions are temporary: the authorization for the PTC itself continues, but the specific ARPA enhancements — elimination of the 400% cutoff and the lower “applicable percentages” that produced larger subsidies — were extended only through 2025. If no new law extends them, the 400% maximum and the pre‑ARPA percentage schedule would resume in 2026 [3] [6].
3. Official tax guidance and government materials
The IRS explains that for tax years other than 2021 and 2022 the statutory rule historically limited PTC eligibility to incomes at or below 400% of FPL, and other government materials reflect that the ARPA change removed that cap temporarily and that the IRA extended the enhancements through 2025; government parameter guidance for 2025 incorporates the enhanced percentages [4] [6] [3].
4. Who would be affected if enhancements expire
Nonpartisan and policy research groups estimate that hundreds of thousands of people between 400% and 500% of FPL (and many older adults near the cutoff) benefited from the expansion and would lose eligibility or see large premium increases if the enhancements lapse after 2025. One brief estimates roughly 725,000 people in the 400–500% range would lose PTC eligibility and face much higher premiums, especially older adults and people in higher‑cost areas [5] [7].
5. Practical implications for individuals considering coverage
Under current law through 2025, people above 400% FPL can qualify for enhanced PTCs and should evaluate marketplace options using current subsidy rules; consumer guidance sites and explainer pages reflect 2025 as the last guaranteed year for eligibility above 400% absent new legislation [2] [8] [9]. If Congress does not extend the ARPA/IRA provisions, a hard cutoff would return in 2026 and many higher‑income households that currently receive credits would no longer qualify [8] [3].
6. Politics, prospects, and contested views
Policy writers report active debate: some lawmakers and analysts argue to renew or modify the enhanced credits (possibly with different income caps), while many opponents seek to reinstate the ACA’s original income limits or repeal broader ACA elements; forecasts of what will happen in 2026 vary and depend entirely on Congress and the Administration [1]. Health Affairs and other outlets describe negotiations and competing proposals that could either restore a 400% cap, move to a higher cap (e.g., 600%), or continue the ARPA approach — underscoring that outcomes are political, not automatic [1].
7. Limitations and what reporting does not say
Available sources clearly document the temporary extension through 2025 and the mechanics of reverting to pre‑ARPA rules, but they do not provide a finalized law or administrative action that definitively establishes rules for 2026; in other words, future eligibility beyond 2025 depends on yet‑to‑be‑enacted congressional or executive action and that outcome is not specified in these sources [3] [1]. Sources do not mention any specific enacted legislation after the IRA that permanently removes the 400% cap (not found in current reporting).
Bottom line: Yes — people with incomes above 400% of FPL can qualify for ACA premium tax credits under the ARPA/IRA enhancements through the 2025 coverage year [1] [2]. Without new congressional action, those expanded rules expire and the prior 100–400% eligibility limit and earlier percentage schedule would return in 2026 [3] [4].