How is 400% FPL calculated for ACA subsidy eligibility?
Executive summary
The 400% FPL benchmark is a simple multiplier of the federal poverty guideline for a given household size: a household whose modified adjusted gross income (MAGI) is at or below four times the applicable poverty line generally qualifies for standard ACA premium tax credits (PTCs) in 2026 under current law (i.e., 100%–400% of FPL) [1] [2]. The calculation uses the Department of Health and Human Services’ annual poverty guidelines, compares household MAGI to the guideline for that household size, and expresses that ratio as a percentage—400% is simply 4.00 × the guideline [3] [4].
1. What “400% of FPL” actually means and how it’s computed
The federal poverty level (FPL) is a dollar amount issued by HHS each year for different household sizes and geographies; to compute a household’s percent of FPL, divide the household’s MAGI by the FPL amount for that household size and multiply by 100—so the 400% threshold equals MAGI ÷ FPL = 4.0 (or MAGI = 4 × FPL) [3] [4]. For concrete scale, many consumer guides and analyses use the 2025 guidelines for 2026 coverage calculations: for example, 400% of FPL for an individual is commonly cited as roughly $62,600 and for a family of four about $128,600 for 2026 coverage determinations [5] [6].
2. Which income is compared to the FPL: MAGI, not raw paychecks
Eligibility uses ACA-specific MAGI, not simple gross wages; MAGI starts with your tax filing adjusted gross income (AGI) and then adds back certain items such as untaxed Social Security and other items specified for ACA purposes, so the income figure used for the percent-of-FPL test can differ from take‑home pay or nominal salary [7] [8]. Marketplace calculators and the IRS reconcile advance payments of the PTC against your eventual MAGI at tax time, which is why accurate MAGI reporting matters [9] [8].
3. Practical application to subsidy eligibility and the policy context
Under the ACA as written, households with MAGI between 100% and 400% of FPL are the primary universe for premium tax credits, with cost‑sharing reductions available to those at lower percentages (generally up to 250% of FPL for CSR) [1] [10]. The American Rescue Plan removed the strict 400% cutoff for 2021–2022 and the Inflation Reduction Act extended enhanced rules through 2025, creating a “no‑cliff” period; absent Congressional action, the traditional 400% cap and corresponding applicable percentage schedule are set to return for 2026 coverage [9] [11] [12] [13].
4. What the 400% cutoff means in practice—required contribution and clawback risk
The law ties your expected premium contribution to your percent of FPL via applicable percentages; for example, under standard rules the required contribution at or above 400% FPL has been treated as roughly 8.5% of household income in recent federal guidance, and households at or above 400% would generally be ineligible for PTCs (or subject to full repayment rules), making the 400% threshold economically meaningful [14] [9]. During the enhanced-subsidy years taxpayers with incomes above 400% could still receive credits without the “cliff,” but if advance credits exceed the amount allowed by final MAGI reconciliation, some households must repay excess credits—repayment rules differ by income level and tax year [9] [2].
5. Nuts-and-bolts: how to calculate for a real household and where to get authoritative numbers
Take the HHS poverty guideline for the correct year and household size (published annually and used by Marketplaces); divide the household’s projected MAGI by that guideline and multiply by 100 to get percent of FPL—if that percentage is 400 or less, the household falls within the usual PTC eligibility band [3] [4]. For plan-year calculations consumers and brokers are advised to use Marketplace or reputable calculator tools that apply the current guideline year and local benchmark premiums to estimate subsidies, because exact subsidy amounts also depend on the benchmark (second‑lowest‑cost Silver) plan premium in the enrollee’s area [12] [8].