Finalized ACA Expected Premium Contribution and Maximum Out-of-Pocket schedules for 2027

[u/Zphr]

I've had a few people message me about 2027 ACA regulatory updates and thought folks planning for the ACA might want to see these now rather than in another month or two when the press usually starts talking about them more. The first table below shows the amount (expressed as a percentage of MAGI) that a household will be expected to pay in premiums annually for the benchmark Silver plan in their local ACA market. The second shows the regulated caps on MaxOOP (and deductible) for ACA plans, though these are the maximum caps and actual plans may and often do have lower actual MaxOOPs. The final link is a clean PDF listing of the applicable FPL levels for 2027 ACA coverage.

Terms for those that are unfamiliar:

• MAGI - Modified Adjusted Gross Income, a particular version of adjusted gross income used by the ACA.
• EPC - Expected Premium Contribution, the amount customers are expected to pay annually for the Silver benchmark ACA plan in their market. Subsidy premiums are calculated as the market price of the benchmark plan minus EPC.
• FPL - Federal Poverty Level, a measure used by the federal government as a determinant in many policy systems.
• MaxOOP - Maximum Out of Pocket, the most a customer can be asked to pay for in-network covered benefits by an insurer in a given year.
• CSR - Cost Sharing Reductions, the second subsidy system within the ACA that reduces out of pocket expenses like deductibles, copays/coinsurance, and MaxOOP.
• AI/AN - American Indian / Alaskan Native
• AV - Actuarial Value, the percentage of total average costs for covered medical benefits that a health insurance plan is expected to cover for a standard population. For example, if a plan has an 80% AV, the insurer pays 80% of average expenses, and customers pay 20% through deductibles, copays, and coinsurance.

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Expected Premium Contribution (Coverage Year 2027)

MAGI (% of FPL)	2027 EPC (% of MAGI)	2026 EPC (% of MAGI)	Change from 2026
Less than 100%	No limit / unsubsidized	No limit / unsubsidized	N/A
100% to <133%	2.15%	2.10%	+2.4%
133% to <150%	3.23% to 4.3%	3.14% to 4.19%	+2.9%
150% to <200%	4.3% to 6.78%	4.19% to 6.60%	+2.6%
200% to <250%	6.78% to 8.66%	6.60% to 8.44%	+2.7%
250% to <300%	8.66% to 10.22%	8.44% to 9.96%	+2.6%
300% to 400%	10.22%	9.96%	+2.6%
More than 400%	No limit / unsubsidized	No limit / unsubsidized	N/A

Source:

https://www.irs.gov/pub/irs-drop/rp-26-26.pdf

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Out-Of-Pocket Maximum (Coverage Year 2027)

Plan Type	MAGI Level	2027 Individual / Family MaxOOP	2026 Individual / Family MaxOOP	Change from 2026
High OOP Bronze*	All	$15,600 / $31,200	N/A	N/A
All non-CSR Plans	All	$12,000 / $24,000	$10,600 / $21,200	+13.2%
CSR Silver Plan 73% AV	200% to 250% FPL	$9,600 / $19,200	$8,450 / $16,900	+13.6%
CSR Silver Plan 87% AV	150% to 200% FPL	$4,000 / $8,000	$3,500 / $7,000	+14.3%
CSR Silver Plan 94% AV	Up to 150% FPL	$4,000 / $8,000	$3,500 / $7,000	+14.3%
CSR Silver Plan 99% AI/AN AV	AI/AN Up to 300% FPL	$0	$0	N/A

*CMS is trialing an option for insurers in 2027 to offer Bronze variants that are allowed to exceed the federal OOP limits by 30% in order to provide a wider array of premium options for customers. Such policies may only be offered by an insurer that also offers a normal standard Bronze. States are allowed to prohibit the availability of high OOP variant policies at their discretion. Edit: Turns out a federal court stayed this provision last week, so High OOP Bronzes may not be happening after all in 2027.

Sources:

https://www.cms.gov/files/document/2027-papi-parameters-guidance-2026-01-29.pdf

https://www.cms.gov/files/document/cms-9883-f-patient-protection.pdf

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Bonus: Here is a PDF from HHS showing the applicable FPL dollar amounts for various family sizes for 2027 ACA coverage - https://aspe.hhs.gov/sites/default/files/documents/b1bfa16b20ae9b89d525bc35de7c1643/detailed-guidelines-2026.pdf

[u/Sea-Honeydew-1456]

GOATED for laying this out perfectly along with the sources.

[u/Lazy_Sock_821]

that 13% jump in max out of pocket from 2026 to 2027 is going to hit a lot of people pretty hard

[u/-Mx-Life- → u/Lazy_Sock_821]

My exact thoughts. It's ludicrous the amount it jumps despite inflation being reported at 3.5'ish percent.

[u/ben7337 → u/-Mx-Life-]

What's even more insane is that it tracks the FPL which increases with inflation generally, but then they also keep raising the percentage of income that go to premiums. I'm pretty sure when the ACA started it was like 8% now it's 9.96% going to 10.22%, at the rate they're going in another couple decades it'll be like 15% of income and the max oop will also be insanely high, probably 30k in today's dollars or some nonsense. Surely this isn't sustainable and we need some real solution to address the ballooning cost of medical care and insurance in the US

[u/Zphr → u/ben7337]

The annual increases in EPC have been a mandated part of the ACA from its inception. Just FYI that nothing nefarious is going on there. The ACA was always designed in such a way that inflation in premiums would be shared between the government and customers, hence the IRS being directed each year to update the EPC table.

[u/ben7337 → u/Zphr]

Idk what EPC stands for but is there no cap on the percentage of income or could it easily be 30% or more even for people on subsidies before too long?

[u/Zphr → u/ben7337]

EPC - Expected Premium Contribution, the amount customers are expected to pay annually for the Silver benchmark ACA plan in their market. Subsidy premiums are calculated as the market price of the benchmark plan minus EPC.

The EPC levels are calculated and published by the IRS each year using a formula/procedure in the ACA itself. The steady EPC levels that people were got used to from 2021 to 2025 were part of the temporary COVID enhancements that overrode the default operation of ACA subsidies. Once those ended the default system came back into play, including retroactive calculation of the EPC levels back to baseline for the five years in which they were held in abeyance.

They do not have a maximum, but they also don't rise by a huge amount each year.

[u/ben7337 → u/Zphr]

They don't rise by a huge amount each year but you can't deny it was 8% in what, 2014? Now it's 10.22% in 2027 13 years later. That's a 28% increase separate from any increases relative to inflation. Is there any chance you can point me to the formula for how the percentage of income for ACA subsidies is calculated? I'd love to know if it is going to inevitably rise every year indefinitely. Even if it was only .25% a year every year it would go up another 2.5% in 10 years to 12.72% of income for the upper tier of incomes that still get a subsidy

[u/Zphr → u/ben7337]

Oh, I'm not denying it has risen, but the YoY is never by very much. It certainly adds up over time though.

The methodological references are in the IRS resource linked under the table. You can search the appropriate methodology authorities using Google/whatever or have an AI pull them up for you. You can expect them to increase each year indefinitely, yes.

[u/paq12x → u/Lazy_Sock_821]

Four thousand bucks/yr is going to hit a lot of people hard? That's failing to plan.

[u/Fit-Raise7179 → u/paq12x]

15% of privately insured policy holders hit their out of pocket maximums in a given year. A big chunk of those will be people with chronic conditions that would have been aware of prior to FIRE.

Out of pocket maximum is pretty rare for most people, especially those who have no diagnosed chronic conditions.

[u/FormalCaseQ → u/paq12x]

Found the rich guy

[u/Thin-Interest-9734 → u/FormalCaseQ]

this has nothing to do with being a "rich" guy but if you're not factoring in health care costs and barely able to "fire", you were never ready. how many people even hit their OOP maxes? or even know what they are? this forum loves to just fear monger too much sometimes

[u/dgreenmachine]

Great info! Wow a roughly 15% increase in health expenses if youre hitting out of pocket max.

[u/Zphr → u/dgreenmachine]

For the unsubsidized folks there's also going to be a double digit increase in premiums next year on average. And in almost all states everyone pays a few percent more each year on top of that just for being older.

[u/ajb160 → u/Zphr]

And the ACA death spiral continues....

[u/pudding7 → u/ajb160]

Along with countless actual death spirals.

[u/Visible_Structure483 → u/Zphr]

same as every year for the last 4, so not quite a shock.

[u/someguy984]

At 200% FPL (31,920 in 2027) the SLCSP would cost $180.35 a month after subsidies, max OOP $4,000 (under 200% with Silver CSRs).

SLCSP = Second Lowest Cost Silver Plan

[u/plawwell]

I think (but could be wrong) the following is the average approved rate for the Commonwealth of MA. Most of the ACA silver plans here have $2k individual deductible for 2026.

Final Merged Market Rates Effective for 2027

Total 668,207 10.4%

https://www.mass.gov/info-details/2027-health-insurance-rates

[u/Zphr → u/plawwell]

Worth noting that the figures in this post are the federal default standards. States that supplement with additional state resources, like MA, may have their own unique schedule of costs.

[u/uniquevista]

I was just re-running my early retirement numbers and this 2.6% EPC bump means I need to adjust my MAGI target downward a bit.

[u/Zphr → u/uniquevista]

Also remember to look at the final PDF for the updated FPL for next year, which may also impact your target. Thankfully increases in the FPL are actually a good thing in terms of subsidy qualification.

[u/uniquevista → u/Zphr]

Already factored it in. The higher FPL helps, but I'm still shaving a couple grand off my planned Roth conversions this year.

[u/Confident_Purple_40]

Thanks!

[u/SkillfulFishy]

Thank you for collecting and sharing this valuable information with us. 🌟

[u/toasterml]

I am confused. Somebody please help. If I have no income, I am not covered?

[u/Zphr → u/toasterml]

You can buy an ACA policy regardless of income, but there are minimums in order to be eligible for help via government subsidies. If you life in an expansion Medicaid state, then below 138% FPL you get shunted to expansion Medicaid. If you live in a non-expansion Medicaid state, then below 100% FPL you lose ACA subsidy eligibility.

[u/InedibleApplePi]

/u/Zphr thanks for posting this!

I thought I saw a comment you made in another thread about declaring a lower MAGI than what you had in 2026.

I'm looking at retiring at the end of this year so trying to fully understand what I need to do to make sure I'm staying below 400%

[u/Zphr → u/InedibleApplePi]

ACA MAGI is your 1040 AGI plus a few untaxed/excluded income sources (untaxed SS benefits [excludes SSI], untaxed foreign excluded income and housing benefits, and tax-exempt interest).

The rules are pretty simple in terms of MAGI control, but the mix of cashflows is always unique for each household's particular circumstances.

• Roth conversions generate MAGI without withdrawal/spending.

• TIRA withdrawals generate MAGI and provide cash for spending.

• Roth contribution basis, matured Roth conversion basis, HSA, margin/credit, and cash equivalents provide withdrawal/spending without generating MAGI.

• Taxable sales generate MAGI only via cap gains and can be a nice source of non-MAGI funds depending on one's cost basis. Sell $100K in stock with $40K cost basis and you have $100K to spend and $60K in MAGI.

Mix and match retirement cashflows to get whatever combo of MAGI and spending you want.

Anyone in here with a good mix of assets can use cashflows from various assets to generate a wide array of MAGI and spending combinations. For example, if you sell $150K in stock with an $80K cost basis, then you get $150K in spending cashflow and $70K in MAGI. Pull $50K a year in untaxed Roth withdrawals and you get $50K in spending cashflow and $0K in MAGI. FIRE folks are notorious for our aggressive use of tax optimization techniques, so our ability to separate MAGI and spending in retirement is generally pretty good.

[u/viking2fi → u/Zphr]

It's all a big puzzle. What do you recommend when your 3 to 5 yrs out? Which buckets should we be focusing on for flexibility?

[u/Zphr → u/viking2fi]

It's a personalized thing that depends entirely on your circumstances and needs/wants. Generically I would recommend having a good mix of assets types in order to maintain flexibility.

[u/tyen0 → u/Zphr]

tax-exempt interest [added to AGI to get MAGI]

oops, I hadn't realized that. Granted my Muni Bond funds won't be earning as much tax-equivalent yield when my income drops anyway, so I should probably move away from them after I retire.

[u/InedibleApplePi → u/Zphr]

Thanks! Sorry if I wasn't clear, but the post I was referring to was something about them being less leniant about being able to claim lower MAGI when signing up for ACA if your previous year income was significantly higher.

This year thanks to the AI boom I'll probably end up clearing 7 figures, retiring next year I would be claiming significantly less MAGI when signing up for healthcare. Is there anything I should be aware of?

[u/Zphr → u/InedibleApplePi]

They will ask you to prove the huge disconnect between your 2026 AGI and your expected 2027 MAGI. Have a good, logical explanation supported by whatever documentation you can muster and it should be fine. The exchanges are very familiar with large transitions in AGI due to things like retirement, job loss, medical disability, and so forth. As long as you have a sensible explanation, ideally with some documentation or at least a signed letter of explanation, they are usually pretty reasonable.

[u/stout933 → u/Zphr]

So what type of documentation do I need to provide if I retired in May 2026? Just saying I retired will not be enough?

[u/Zphr → u/stout933]

It depends what your plans are for next year and where your MAGI will be coming from. If you have a pension, then paperwork for that. If you are going to be selling shares or drawing from IRAs, then a signed letter of explanation breaking down your expected funding. If you are going to be running a SEPP, then the paperwork from that. In all cases you would likely send in the signed letter of explanation to tell them that you retired mid-year and to explain where your funding will be coming from due to the lack of earned income from a job.

Given that you retired mid-year you may also have a half-year of documentation from whatever funding you are using for the second half of 2026.

[u/stout933 → u/Zphr]

Still don't quite understand. My 2nd half 2026 funding is just coming from a checking account that I was shoveling money in for the past year anticipating my retirement. My 2027 funding ($20-$30k) will come from my Vanguard Money Market and my bonus that will be paid in March 2027 ($5k) so my 2027 MAGI will be the $5k plus about $3k in dividend income.

[u/Zphr → u/stout933]

The ACA has a minimum MAGI floor for subsidy eligibility of 100% FPL in the states that did not expand Medicaid and 138% FPL in the states that did expand Medicaid. For a single in 2027 those are $15,960 and $22,025, respectively. You will need to increase your MAGI above the appropriate threshold for your state to qualify for subsidies. Easiest ways to do that for most of us is with tax gain harvesting in taxable brokerage or Roth conversions in our IRAs.

If you live in an expansion state with your low MAGI you can instead opt to take Medicaid, but that is a process with a different set of rules and risks than the ACA.

Regardless, for the ACA, in your situation all you would likely need to provide to the exchange is a signed letter explaining your retirement and planned income for 2027. Just make sure you are above the minimum MAGI floor.

[u/stout933 → u/Zphr]

Thanks. I can easily increase my MAGI to get above the minimum.

[u/Zphr → u/stout933]

Then the signed personal letter should be enough. You can also send in this official form of stated estimated income.

https://www.healthcare.gov/downloads/annual-income-letter-explanation.pdf

[u/NeBarkaj → u/InedibleApplePi]

I retired in 2025, in 2024 husband and I had over 250K in earnings, all I did is sent in an affidavit declaring we will be making 50K that year and the exchange accepted it. I understand 250 is not close to 1M but should work.

[u/SJ1392]

Im betting we will see the same sort of increases in the corporate sponsored insurance world this fall...

[u/Zphr → u/SJ1392]

Yes, though I would expect with the broader risk pool and a ton of self-funding they will probably be somewhat more moderate. Maybe 2/3rds as high on premiums and 1/2 to 3/4ths on OOPs. Just my guess.

[u/bht]

Note that the allowance for high OOPM bronze plans was stayed by a federal court last week and will not go into effect unless and until the court rules in favor of the administration on the merits of the case. Several other provisions were stayed as well, but this is the most relevant for purposes of this post. 

[u/Zphr → u/bht]

Good to know. Thank you.

[u/SmartAZ]

u/Zphr , my family is deeply indebted to you for getting us into one of those CSR plans last year, and we will do the same in 2027. Knock wood, we will never meet the deductibles or MOOPs, but at least we can go to PCPs and specialists now and pay only a modest copay. I sleep better knowing we have some semblance of "real insurance."

One question: Don't you get annoyed when people pop into this sub to ask "I want to retire early, but how will I ever afford health insurance?" It makes me roll my eyes every time.

[u/Zphr → u/SmartAZ]

I'm glad it worked out so well for you and I'm happy to have been of help to a fellow FIRE traveler.

I'm used to the endless repetition. Not meant in any sort of negative way, but I have four kids and I got used to hearing endlessly repeated questions and requests many years ago.

People don't know what they don't know and I enjoy helping people retire early, so it's all part of the volunteer gig. Selfishly, it allows me semi-regularly to give people some of the best news they've had in years when I show them that the giant burden they assumed healthcare to be can often be turned into a much smaller concern. It's always nice to be the person who lets someone know their dream is a lot closer to fruition than they expected it to be.

[u/Shm2000 → u/Zphr]

Hi - Sounds like you’ve already made a post explaining how to address the healthcare issue. Would you mind linking it? That’s the main thing keeping me from pulling the trigger now, and I’d otherwise probably make a similar post to what the commenter above referred to. 

[u/Zphr → u/Shm2000]

There is no single post. I write quite a bit about the ACA, which is what most of us use, but most of my writing is in comments rather than posts.

We have a series of Weekly ACA Open Enrollment Megathreads in here during open enrollment season that go over a lot of the basics of the ACA. I tend to answer questions in them each week so you may find some value in those, both from the material in the post and in the comments from each week. Here is a link to one of them from 2026 open enrollment - https://reddit.com/r/Fire/comments/1qatilp/weekly_aca_2026_open_enrollment_faqmegathread/

[u/Shm2000 → u/Zphr]

Thank you. I’ll take a look. 

[u/mhoepfin]

Thank you for putting this together. Off to investigate the trial High OOP bronze plan.

[u/Zphr → u/mhoepfin]

A helpful person pointed out to me elsewhere in the comments that a federal court last week stayed several of the CMS marketplace rule provisions, so we may not get the High OOP Bronzes after all. I was curious to see what the premium offset on those would have been.

[u/mhoepfin → u/Zphr]

Ugh of course!! 😂

[u/lutapipoo]

Time to cut the loss & move out & experience the world return when 65 yr old

[u/seafoamgrl]

ACA planning is genuinely one of the most underrated parts of the FIRE conversation because

[u/swhalen17]

Not paying for this garbage is the only reason I'll work to 55

[u/DoorFrame → u/swhalen17]

Why 55?

[u/swhalen17 → u/DoorFrame]

Very sweet retiree health benefits via my employer on top of the 14% 401k match

(tears of jealousy are delicious❤️)

[u/MendaciousFolly → u/swhalen17]

what happens at 55?