ACA Open Enrollment 2027 in New York: The Subsidy Cliff and the Tax Bill You Can Avoid

Open enrollment for 2027 health coverage starts November 1. If you buy your own insurance through NY State of Health, because you are self-employed, between jobs, retired early, or your job does not offer coverage, this is the most expensive enrollment season in years. The extra federal subsidies that ran from 2021 through 2025 are gone, a hard income cliff is back, and starting with 2026 coverage, any subsidy you were overpaid comes back as a tax bill with no cap.

The short version: For 2027 coverage, premium tax credits follow the original Affordable Care Act formula. Below about $63,840 of income for one person (400% of the poverty line), you may get help; one dollar above it, you get nothing. If your income turns out higher than you told the marketplace, you repay all of the extra subsidy when you file, because the old repayment limits ended after 2025. In New York, the Essential Plan now covers incomes only up to 200% of the poverty line. A tax-smart income estimate and a few pre-tax contributions can be worth thousands.

What changed

Congress has not renewed the enhanced credits. If it does, the numbers change, but you have to choose a plan now.

The 400% cliff, in dollars

The premium tax credit pays the difference between the cost of the benchmark silver plan in your area and a set percentage of your income. Above 400% of the federal poverty line, roughly $63,840 for a single person and higher for larger households on 2027 coverage, the credit drops to zero all at once.

Example: a self-employed graphic designer in White Plains expects $60,000 of income, and the benchmark plan costs $9,600 a year. She pays about 10% of income, $5,976, and the credit covers the other $3,624. If her income comes in at $64,000 instead, she is over the cliff and the credit is $0. Four thousand dollars of extra income cost her $3,624 in lost subsidy before any tax on it.

Pre-tax savings can pull you back under

The cliff is measured on modified adjusted gross income, so money that comes off AGI counts. If you are near the line:

• Traditional IRA contributions (deductible if you have no workplace plan)
• Solo 401(k) or SEP IRA contributions if you are self-employed
• HSA contributions, if your marketplace plan is HSA-eligible (the 2027 limit is $4,500 self-only)
• Self-employed health insurance deduction for the premiums you pay

In the example, a $3,000 SEP IRA contribution brings $64,000 down to $61,000 and restores a credit of about $3,500, on top of the tax saved on the contribution itself. Few tax moves pay that well.

No more repayment cap

Through 2025, if you underestimated your income, the amount you had to give back was capped for incomes under 400% of the poverty line. That protection is gone starting with 2026 coverage. Whatever advance credit you received beyond what you qualified for is added to your tax bill, in full, on Form 8962.

This hits self-employed people hardest, because their income is the hardest to predict. Three habits keep it from becoming an April surprise:

1. Estimate income honestly, using last year's return and this year's bookkeeping, not a hopeful guess.
2. Update NY State of Health within 30 days when your income changes during the year.
3. Keep your books current, so you see a big contract or a slow quarter coming. Our catch-up bookkeeping service and BIB Pro both help here.

New York specifics

• Where you enroll: NY State of Health (nystateofhealth.ny.gov), not HealthCare.gov.
• When: open enrollment begins November 1, 2026. New York has run it through January 31 in past years; pick a plan by December 15 for coverage starting January 1. Confirm the final dates on NY State of Health.
• Essential Plan: still $0 premium and open year-round, but since July 1, 2026 it covers incomes up to 200% of the poverty line (about $31,920 for one person). About 450,000 New Yorkers above that moved to regular marketplace plans, where they now face premiums, deductibles and the full-repayment rule.
• Premiums do not vary by age in New York, so a 62-year-old and a 27-year-old pay the same price for the same plan in the same region. That makes the cliff especially painful for younger, healthier earners who lose the credit.

At tax time

You will get Form 1095-A from NY State of Health by early February. Your preparer uses it to complete Form 8962, which compares the credit you received with the credit you earned. A missing or ignored 1095-A is one of the most common reasons the IRS holds a refund.

Get your number before you enroll

London's Tax Services helps self-employed people, early retirees and families across Westchester County, the Bronx and New York City estimate marketplace income, plan retirement and HSA contributions around the cliff, and reconcile Form 8962 correctly, from our office at 75 South Broadway in White Plains. Book a free 15-minute call or call (646) 917-7714 before you pick your 2027 plan.