If you’re planning to retire early or rely on the ACA Marketplace for health insurance, there’s likely a big change coming in 2026, you’ll want to be ready for. 

Starting in 2026, the enhanced health insurance subsidies we’ve had for the last few years are set to expire — and a key income limit will return. Once your income goes just over a certain threshold (about $83,000 for a couple in 2026), you could lose all federal health insurance subsidies. This is sometimes called the “subsidy cliff” — and it’s as steep as it sounds. Just a small bump in income could cost you thousands more in premiums. 

Plus, a second change makes this even more important: The recently passed One Big Beautiful Bill Act (OBBBA) also removes the cap on how much you may have to repay if you get too much subsidy and earn more than expected. That means if your income is higher than you projected, you could owe back all the subsidies — even if you only went a little over. 

 

So what can you do? 

A little planning can go a long way. Especially if you’re: 

  • Retiring early and using ACA plans before Medicare kicks in.
  • Self-employed or have variable income.
  • Living off a mix of investments, savings, or business income.

 

Here are a few smart strategies to prepare for upcoming changes.

1. Know your number

Check where your income falls compared to the 400% federal poverty level (FPL). In 2026, that’s around $83,000 for a couple. Stay under that, and you may qualify for significant subsidies.

2. Mix your income sources

Having a balance of taxable and non-taxable income gives you more flexibility. Here are examples of what that might look like.

  • Withdraw from Roth IRAs (tax-free) 
  • Use savings or brokerage accounts instead of tapping all pre-tax retirement funds 
  • Delay Social Security if it helps keep your income lower

3. Use tax-advantaged accounts

Lower your “Modified Adjusted Gross Income” (MAGI) by contributing to: 

  • Traditional IRAs or 401(k)s 
  • Health Savings Accounts (HSAs) 
  • SEP or Solo 401(k)s if you’re self-employed

4. Be mindful of lump-sum income

Selling a property, converting an IRA, or a big business year? These things could push you over the cliff for the year — even if they’re one-time events. 

5. Update your Marketplace estimate

If your income changes midyear, update it ASAP to avoid getting too much subsidy that you might have to repay at tax time. 

The rules are changing — and the financial impact could be significant. With the right planning, you can avoid unpleasant surprises and potentially save thousands in health insurance costs. Every family’s situation is unique, and the above strategies should be assessed in conjunction with your overall plan. If you’re unsure how these changes might affect you, or how to estimate your income for ACA subsidies, let’s talk. 

The Flagstaff financial advisors at Babb are here to help you build a smart, proactive plan that keeps your coverage — and your finances — on track.