Open enrollment for 2027 coverage opens November 1, and for millions of people who buy their own insurance, it’s going to sting. The enhanced premium tax credits that made marketplace plans affordable for the last few years are gone, and the old subsidy cliff is firmly back in place.
Here’s the headline for your employees and clients: once again, anyone earning more than 400% of the federal poverty level gets no premium tax credit at all. Not a smaller one, none. Earn a dollar over the line and you pay full price. Barring new action from Congress, that’s the rule heading into 2027, just as it was all of 2026.
How We Got Here
The COVID-era enhanced credits did two things: they boosted subsidy amounts and erased the 400%-of-poverty cutoff, so even middle-income people who earned a little too much could still get help. Those enhancements expired at the end of 2025, Congress didn’t extend them, and on January 1, 2026, the cliff came back.
What Changed, and What It Costs
- The cliff is back: above 400% of FPL, premium tax credits drop to zero, and below it, subsidies shrank toward pre-2021 levels.
- Premiums jumped. KFF estimates subsidized enrollees are paying roughly 114% more out of pocket on average, about $1,016 more a year.
- Coverage is shrinking. Analysts project more than 7 million people will lose subsidized marketplace coverage, with millions more going uninsured.
Why It Matters Heading Into Open Enrollment
When the individual market gets this expensive, employer coverage becomes far more valuable, and employees notice. Expect more of them and their spouses to take a hard look at your group plan this fall, and more interest in options like the Individual Coverage HRA (ICHRA), where the employer funds an employee’s own policy with tax-advantaged dollars.
- Employees who used to buy on the marketplace may ask about joining the group plan for 2027.
- For some, your plan is now clearly the cheaper route; for those near the old cliff, the jump is painful.
- ICHRA and spousal-coverage strategies are worth a fresh look before November 1.
Bottom Line
The subsidy cliff isn’t news anymore; it’s the landscape. As 2027 open enrollment opens November 1, employees will feel the higher individual-market costs firsthand. Employers who get ahead of it with the right plan design and a clear heads-up will look like heroes, right when their people are doing the math.