Affordable Care Act: Coverage, Tax Credits, and Enrollment

The Affordable Care Act gives you a way to buy health insurance that cannot turn you away for pre-existing conditions, must cover a core set of medical services, and often comes with income-based subsidies that cut your monthly premium. Affordable Care Act coverage is sold through a federal or state marketplace during a set enrollment window each year, with financial help available to households earning between 100 and 400 percent of the Federal Poverty Level for 2026, or roughly $15,960 to $63,840 for a single person and $33,000 to $132,000 for a family of four.¹ The law also lets young adults stay on a parent’s plan until they turn 26.

Who Qualifies to Enroll

You can enroll if you are a U.S. citizen, U.S. national, or lawfully present in the country. Lawfully present includes permanent residents, refugees and asylees, people with valid nonimmigrant visas, holders of Temporary Protected Status, and several other immigration categories.² You must also live in the United States and cannot be incarcerated when you sign up.

Having a job that offers health insurance does not shut you out. If the cheapest self-only plan your employer offers costs more than 9.96 percent of your household income for the 2026 plan year, that coverage counts as unaffordable, and you can shop on the marketplace and potentially receive subsidies. The same 9.96 percent test now applies to family members: if adding your spouse or dependents to the employer plan crosses that threshold, they can qualify for marketplace subsidies on their own.

What Every Marketplace Plan Must Cover

Every plan sold on the marketplace has to include ten categories of care known as essential health benefits. This is a floor. Plans can cover more, none can cover less.³

Outpatient care, including doctor visits and specialist appointments
Emergency services, regardless of whether the facility is in your plan’s network
Hospitalization, including surgeries and inpatient stays
Maternity and newborn care, from prenatal visits through delivery and postnatal services
Mental health and substance use treatment, covered on equal terms with physical health services
Prescription drugs, with at least one drug in every therapeutic category
Rehabilitative and habilitative services, such as physical, occupational, and speech therapy
Laboratory services, including blood work and imaging
Preventive and wellness services, including screenings and chronic disease management
Pediatric services, including dental and vision care for children under 19⁴

Preventive Services at No Cost

A subset of preventive care must be covered with zero out-of-pocket cost when you use an in-network provider. No copay, no coinsurance, no deductible. That includes blood pressure and cholesterol screenings, diabetes testing, many cancer screenings such as mammograms and colonoscopies, routine vaccinations, flu shots, well-child visits, and prenatal screening.⁵

Two things trip people up. The provider has to be in your plan’s network, or you can expect a bill. And the preventive service itself has to be the main reason for the visit. If you raise a new health concern during a preventive appointment and the doctor runs additional tests or provides treatment, the plan can charge you for that portion.

Protections That Apply to Every Plan

Pre-Existing Conditions

Insurers cannot deny you coverage, cancel your plan, or charge you more because of your health history. Diabetes, a prior cancer diagnosis, asthma, mental health treatment, pregnancy — none of it changes what you pay or whether you can enroll.⁶

Dependent Coverage to Age 26

If you are under 26, you can stay on a parent’s plan whether or not you are married, financially independent, living in another state, or still in school. The plan must offer dependent coverage until the day you turn 26.⁷ Losing that coverage triggers a special enrollment period on the marketplace.

No Lifetime or Annual Dollar Limits

Plans cannot cap what they will pay for essential health benefits over your lifetime or in a single year. This protection applies to marketplace plans and to most employer plans.⁸ Services outside the essential categories can still be limited.

Premium Tax Credits for 2026

Premium tax credits are the main way the law makes coverage affordable. For 2026, they go to households earning between 100 and 400 percent of the Federal Poverty Level who do not have access to affordable employer coverage or qualify for Medicaid. The enhanced subsidies that had temporarily removed the 400 percent income cap expired on January 1, 2026, so households above that line no longer receive any credit.⁹

The credit caps the share of your income you are expected to spend on a benchmark silver plan. Near 100 percent of the poverty level, that share is around 2 percent. It rises with income and tops out at about 9.96 percent for households near 400 percent of the poverty level. If the benchmark plan costs more than your required contribution, the government pays the difference.¹⁰

You can take the credit in advance, which lowers your monthly bill, or claim the whole amount on your tax return. Most people take it in advance. There is a risk built in: if your actual income comes in higher than your estimate, you owe money back at tax time. Starting with plan year 2026, there is no cap on how much excess advance credit you must repay. In earlier years that repayment was limited by income.¹¹

Cost-Sharing Reductions

Cost-sharing reductions are separate financial help that lower your deductible, copays, and coinsurance rather than your premium. To qualify, you must enroll in a silver-tier plan and earn between 100 and 250 percent of the Federal Poverty Level. The savings apply automatically once you pick an eligible silver plan.¹²

There are three income tiers. Between 100 and 150 percent of the poverty level, the plan covers about 94 percent of average medical costs instead of the standard 70 percent for silver. Between 150 and 200 percent, coverage rises to about 87 percent. Between 200 and 250 percent, coverage reaches about 73 percent. For a single person in 2026 the income range runs roughly $15,960 to $39,900.

This is where money gets left on the table. If you qualify for cost-sharing reductions and pick a bronze or gold plan instead of silver, you get none of it. An enhanced silver plan can end up more valuable than a gold plan at a lower price, especially if you use medical care regularly.

Medicaid Expansion and the Coverage Gap

The law originally expected every state to expand Medicaid to adults earning up to 138 percent of the Federal Poverty Level, about $22,025 for an individual in 2026. A 2012 Supreme Court ruling made expansion optional. As of early 2025, roughly 41 states plus the District of Columbia have adopted it and 10 have not.¹³

In expansion states, adults below 138 percent of the poverty level can enroll in Medicaid year-round with no premium. In non-expansion states, a coverage gap opens between the top of traditional Medicaid and the 100 percent floor for marketplace tax credits. An estimated 1.4 million people fall into it. If you live in a non-expansion state and earn below the poverty level, you may have no affordable coverage option through either program.

When You Can Enroll

Open enrollment runs from November 1 through January 15. Enroll or switch plans by December 15, and coverage starts January 1. Enroll between December 16 and January 15, and coverage starts February 1. After January 15, you cannot sign up or change plans without a special enrollment period.¹⁴

A special enrollment period opens when a qualifying life event happens, and you generally have 60 days from the event to enroll.¹⁵ Qualifying events include:

Losing existing coverage through job loss, aging off a parent’s plan at 26, losing Medicaid eligibility, divorce, or an employer dropping its plan
Household changes such as marriage, birth or adoption, or a death that causes you to lose coverage
Moving to a new ZIP code or county, or moving to the U.S. from abroad, if you had qualifying coverage for at least one day in the 60 days before the move
Becoming a U.S. citizen, leaving incarceration, or being affected by a natural disaster

Losing Medicaid or CHIP gives you 90 days instead of 60. Miss these windows and you wait for the next open enrollment, which can leave you uninsured for months.

How to Apply

You apply at HealthCare.gov, or at your state’s own marketplace site if the state runs one. Before you start, gather these for every household member who needs coverage:

Social Security numbers, or immigration document numbers for lawfully present noncitizens
Recent income records: W-2s, tax returns, 1099s for self-employment income, and pay stubs from the past month
Details on any employer-offered plan, including the cost of the cheapest employee-only option; HR can provide this on the Employer Coverage Tool
Policy numbers for any existing coverage

The application asks you to project your household income for the coming year, because subsidies are based on the year ahead rather than last year’s earnings. That projection matters. Underestimate, and you will owe the excess advance credit back at tax time, and for 2026 there is no cap on that repayment.¹¹ Overestimate, and you get less advance help than you deserved.

Once you submit, the system verifies your identity and income against federal databases and shows an eligibility determination with your subsidy amounts. You then choose a plan. Coverage does not begin until you pay the first month’s premium directly to the insurance company.¹⁶ Lying on the application is a federal offense carrying fines or up to five years in prison.¹⁷

Choosing a Plan

Marketplace plans are grouped into four metal tiers that describe how costs are split between you and the insurer. Tier does not reflect quality of care; a bronze plan covers the same essential health benefits as a platinum plan.¹⁸

Bronze plans pay about 60 percent of average costs. Lowest premiums, highest out-of-pocket expenses. Suits people who rarely use medical care.
Silver plans pay about 70 percent. The only tier that qualifies for cost-sharing reductions, which makes it the best value for lower-income enrollees.
Gold plans pay about 80 percent. Higher premiums, lower costs at the point of care. A reasonable pick if you use services often and do not qualify for cost-sharing reductions.
Platinum plans pay about 90 percent. Highest premiums, lowest out-of-pocket costs. Not sold in every market.

Each plan uses a provider network that determines which doctors and hospitals are covered.¹⁹ An HMO covers only in-network providers except in emergencies and usually requires a referral to see a specialist. A PPO covers both in-network and out-of-network providers, with higher costs out of network, and does not require referrals. An EPO covers only in-network providers like an HMO but generally skips the referral requirement.

Before you enroll, check whether your current doctors and preferred hospital are in the plan’s network. A low premium disappears fast when every visit is out of network.

Reporting Changes and Filing Form 8962

Update your marketplace application whenever your income or household changes. Raises, pay cuts, marriage, divorce, a new baby, gaining or losing a household member, or a new offer of employer coverage all need to be reported.²⁰ Reporting an income increase lowers your advance credit in real time and helps you avoid a large tax bill later. Reporting a decrease can raise your subsidy or move you onto Medicaid.

If you took advance premium tax credits at any point during the year, you must file a federal tax return and attach IRS Form 8962 to reconcile what you received against what you actually earned. This applies even if your income is otherwise too low to require a return.²¹ If income came in lower than projected, you may pick up more credit as part of your refund. If it came in higher, the excess is added to your tax liability, and for 2026 there is no cap on that amount.

Appealing a Denied Claim

If your insurer refuses to pay for a service or denies a treatment request, you can challenge the decision in two stages. First, file an internal appeal asking the insurer to reconsider. If the denial stands, you can request an external review by an independent third party with no ties to the insurance company. You have four months from the denial notice to file for external review, and the reviewer must issue a decision within 45 days.²²

Urgent situations qualify for an expedited review with a decision in 72 hours, available when a standard timeline would seriously jeopardize your health or you are in the middle of emergency treatment. The external reviewer’s decision binds both you and the insurer.

State Mandates

The federal penalty for going without health insurance was reduced to zero starting in 2019. There is no federal tax consequence for being uninsured. A handful of states and the District of Columbia enforce their own insurance mandates through state tax returns, generally structured as the higher of a flat dollar amount per adult or a percentage of household income, often capped at the average cost of a bronze-tier plan in your area. If you live in one of these states and go without qualifying coverage for more than a brief gap of two or three months, you will owe a penalty at state tax time. Check your state’s tax authority for the specifics.

1
U.S. Department of Health and Human Services. 2026 Poverty Guidelines
2
HealthCare.gov. Health Coverage for Lawfully Present Immigrants
3
Centers for Medicare & Medicaid Services. Information on Essential Health Benefits Benchmark Plans
4
HealthCare.gov. Essential Health Benefits
5
U.S. Department of Health & Human Services. Preventive Care
6
Office of the Law Revision Counsel. 42 USC 300gg-3 – Prohibition of Preexisting Condition Exclusions or Other Discrimination Based on Health Status
7
Office of the Law Revision Counsel. 42 USC 300gg-14 – Extension of Dependent Coverage
8
Office of the Law Revision Counsel. 42 USC 300gg-11 – No Lifetime or Annual Limits
9
Congressional Research Service. Enhanced Premium Tax Credit and 2026 Exchange Premiums
10
Internal Revenue Service. The Premium Tax Credit – The Basics
11
CMS Agent and Broker FAQ. Are There Limits to How Much Excess Advance Payments of the Premium Tax Credit Consumers Must Pay Back
12
Office of the Law Revision Counsel. 42 USC 18071 – Reduced Cost-Sharing for Individuals Enrolling in Qualified Health Plans
13
HealthCare.gov. Medicaid Expansion and What It Means for You
14
HealthCare.gov. When Can You Get Health Insurance
15
HealthCare.gov. Getting Health Coverage Outside Open Enrollment
16
HealthCare.gov. Complete Your Enrollment and Pay Your First Premium
17
Office of the Law Revision Counsel. 18 USC 1001 – Statements or Entries Generally
18
Centers for Medicare & Medicaid Services. Actuarial Value Calculator Methodology
19
HealthCare.gov. Health Insurance Plan and Network Types
20
HealthCare.gov. Why Report Changes to the Marketplace
21
Internal Revenue Service. Instructions for Form 8962
22
Centers for Medicare & Medicaid Services. HHS-Administered Federal External Review Process for Health Insurance Coverage