If you retired before 65 and buy your own health insurance, I’ve got a number for you: 15%.
That’s the median premium increase 276 insurers in all 50 states and D.C. want for 2027 Obamacare plans, according to a KFF analysis updated Aug. 3. Last year they asked for 18% and got 20%. Year two of double-digit hikes, and the first one hasn’t finished hurting.
Because here’s the part that makes 2027 different from every other bad year: The cushion is gone. The enhanced premium tax credits Congress passed in 2021 expired Dec. 31, 2025. KFF figures that alone pushed the average enrollee’s out-of-pocket premium up 58% in 2026.
If you’re 55 to 64 and bridging to Medicare on a marketplace plan, you’re the person this hits hardest. Older enrollees pay the highest premiums by law, so a 15% hike lands on the biggest base.
I’ve been a CPA since 1981, and this is a story about one line on your tax return. Get it right and the government still pays a big chunk of your premium. Miss by a dollar and you pay all of it.
The cliff is back, and it’s steeper than before
For 2027 coverage, the old rules apply. The premium tax credit is available only if household income falls between 100% and 400% of the federal poverty level. In the 300% to 400% band, the IRS caps what you pay for a benchmark plan at 10.22% of income.
Marketplace eligibility for 2027 uses the 2026 poverty guidelines. In the 48 states, those are $15,960 for one person and $21,640 for two. So the cliff sits at $63,840 for a single filer and $86,560 for a couple.
Cross it by a dollar and the credit doesn’t shrink. It vanishes.
KFF ran the numbers for a 60-year-old buying a benchmark plan in 2026. At $62,000 of income, the premium came to $6,175 for the year. At $64,000, it came to $14,931. Two thousand dollars of extra income cost $8,756 in insurance.
Apply a 15% increase to that unsubsidized premium and you’re near $17,170 for 2027. For one person. Before a single deductible.
There’s a second trap that’s new this year. Through 2025, if you underestimated income and got too much credit in advance, repayment was capped for people under 400% of poverty. The IRS says that for tax years after 2025, there’s no cap.
Guess too high on your advance credit — even while staying under the cliff — and you now repay every dollar of the difference.
The income number that matters isn’t the one you think
The marketplace doesn’t care about your salary, and it doesn’t care about your net worth. It cares about modified adjusted gross income — MAGI — for everyone in your household who files a return.
For subsidy purposes, MAGI is your adjusted gross income plus tax-exempt interest plus the nontaxable portion of Social Security. That last one surprises people. If you claimed Social Security at 62, the whole benefit counts here, even the part you don’t pay tax on.
What doesn’t count: withdrawals from a Roth IRA. Money you pull from a regular savings account. Selling investments at a loss. Those are the levers.
An early retiree with a traditional IRA, a Roth and a brokerage account has more control over MAGI than almost any working person. Here’s how to use it.
Move 1: Decide which account pays for groceries
Say you’re a 60-year-old couple who needs $95,000 to live on in 2027. Take it all from a traditional IRA and you’re at $95,000 of MAGI, about $8,400 over the cliff, with zero subsidy.
Instead, take $80,000 from the IRA and $15,000 from the Roth or from cash in the bank. Your MAGI is $80,000, you’re under $86,560, and your benchmark premium is capped at 10.22% of income — about $8,176 for the year. The government picks up the rest.
The flip side: This isn’t the year for big Roth conversions. Every dollar converted is a dollar of MAGI. I walk through the tradeoffs in “Ask Stacy: Should I Do a Roth Conversion?”
The short version: Subsidy years and conversion years usually shouldn’t be the same years. Convert before you retire, or after 65 when the cliff stops mattering.
Watch capital gains and dividends, too. A mutual fund’s big December distribution can push you over the line without your lifting a finger.
One quick note — I’ve won two Emmys for reporting on money, but what I’m proudest of is helping regular people build real wealth. Sign up for the free Money Talks Newsletter and I’ll help you do exactly that. 10 seconds, no fluff, no spam.
Move 2: Buy the bronze plan and fund an HSA
Starting in 2026, every marketplace bronze plan is treated as HSA-eligible. That’s a change from the 2025 tax law, and the IRS has confirmed it.
For 2027, the IRS says you can put $4,500 into a health savings account with self-only coverage or $9,000 with family coverage. Anyone 55 or older adds another $1,000. A couple in their late 50s can shelter $11,000.
HSA contributions reduce your adjusted gross income. Which means they reduce your MAGI. Which means they can pull you back under the cliff.
Go back to that couple at $95,000. An $11,000 HSA contribution takes them to $84,000. They’re under $86,560 and the subsidy is back. And the HSA money is still theirs.
Bronze plans have high deductibles. But if you’re healthy and you were going to be self-insuring the first several thousand dollars anyway, the math often favors bronze plus HSA over silver.
Move 3: Run the COBRA math before you turn it down
If you’re retiring from an employer with 20 or more workers, COBRA lets you keep your group plan for 18 months. You pay the full premium plus 2%. That sounds terrible, and it often is.
But if your income will land above the cliff anyway, you’re comparing full COBRA against a full-price marketplace plan that just went up 15%. Group plans often have lower deductibles and broader networks. At 63½, 18 months of COBRA carries you right to your Medicare card.
You’ve got 60 days after your coverage ends to elect it. Don’t let that window close without pricing both.
Move 4: Part-time work that comes with a badge and a plan
Some big employers still offer health coverage to part-timers at 20 or 30 hours a week. For a 58-year-old, that’s not a job; that’s a $17,000-a-year benefit with a paycheck attached.
One caution: If you’re offered employer coverage that’s considered affordable, you lose marketplace subsidy eligibility. So this is an either-or decision, not a both. Run both numbers.
Move 5: Check your spouse’s plan
If your spouse is still working, getting added to their employer plan is usually the cheapest option on this list. Retirement counts as a qualifying event, so you don’t have to wait for their open enrollment.
I covered these options in more detail in “Ask Stacy: How Do I Handle Health Care Between Retirement and Medicare?” What’s changed since then is the price of getting it wrong.
What to do before Nov. 1
Open enrollment on HealthCare.gov runs Nov. 1 through Jan. 15, and you need to sign up by Dec. 15 for coverage that starts Jan. 1. State insurance departments are approving final 2027 rates right now, so the actual number for your plan should show up in the weeks ahead.
Between now and then, do one thing: Estimate your 2027 MAGI on paper. Add up IRA withdrawals, pensions, Social Security, interest, dividends and expected capital gains. Then compare it to $63,840 or $86,560.
If you’re within $10,000 of the line, you’ve got decisions to make about which accounts to draw from and whether an HSA gets you under. If you’re well over it, price COBRA, a spouse’s plan and part-time work against the full marketplace premium.
Congress could still change this. Plenty of proposals to restore the enhanced credits have surfaced, and none has passed. Plan for the law as written, not the law you’re hoping for.
You spent decades building accounts so you could stop working before 65. Nobody told you the order you emptied them would decide your health insurance bill. Now you know.
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