If you work for yourself and buy coverage on the marketplace, one number now shapes your health insurance bill more than any company or plan: 400% of the federal poverty level. For 2027 coverage that is $63,840 for a single person and $132,000 for a family of four. Earn a dollar under it and you can get a subsidy; earn a dollar over and you get nothing.
That cliff returned in 2026, when the enhanced premium tax credits expired. For a self-employed person, whose income moves around and whose deductions are partly a matter of choice, it turns health insurance into a planning exercise. This guide explains your coverage options, how to estimate your subsidy, and the legal ways to keep your income on the right side of the line.
Last reviewed: October 2026 · SmartCoverage Editorial Team · How we research
Your realistic options
The marketplace (HealthCare.gov or your state’s exchange). For most self-employed people without access to a spouse’s employer plan, this is the main route. Plans must cover essential benefits and preexisting conditions, and subsidies are based on income, not employment. Our guide to the best health insurance companies covers which insurers to look at.
A spouse’s or partner’s employer plan. Often the best value, because employers usually pay a large share of the premium. Compare the cost of adding you with a marketplace plan; if the employer offer is considered affordable under IRS rules, you generally cannot get a marketplace subsidy anyway.
COBRA, if you recently left a job. You can keep your old employer plan for up to 18 months in most cases, but you pay the full premium plus up to 2%. It is usually expensive, and it is worth comparing with the marketplace, where losing job-based coverage opens a special enrollment period.
Short-term plans and health care sharing ministries. Both can cost less, but neither is ACA-compliant insurance. They can exclude preexisting conditions and cap what they pay, and sharing ministries are not insurance at all. Our guide to short-term health insurance explains when, if ever, they make sense.
If you have employees, or plan to, a QSEHRA or an individual coverage HRA lets your business reimburse premiums tax-free. These have their own rules and are worth discussing with an accountant.
Estimate your subsidy, and see the cliff
Marketplace subsidies are calculated so that you pay no more than a set percentage of your income for the benchmark Silver plan in your area. For 2027 that percentage ranges from 2.15% at the lowest incomes to 10.22% between 300% and 400% of the poverty level, according to the IRS. Above 400%, there is no subsidy at all. Try your own numbers below.
2027 subsidy and cliff check
For marketplace coverage in 2027. Enter your expected income and the benchmark Silver premium shown for your area on HealthCare.gov or your state marketplace.
Uses the 2026 HHS poverty guidelines for the 48 contiguous states and DC ($15,960 for one person plus $5,680 for each additional person) and the IRS 2027 applicable percentages (Rev. Proc. 2026-26). Alaska and Hawaii have higher guidelines. Below 100% of the poverty level, or below 138% in Medicaid expansion states, Medicaid may apply instead. Your real subsidy is set when you apply and reconciled on your tax return. For guidance only.
Benchmark premiums rise sharply with age, which is why the cliff hurts older self-employed people most. A 60-year-old couple can face a benchmark premium of $2,000 or more a month in many areas, so a few thousand dollars of extra income can cost them well over $10,000 in lost subsidy.
Legal ways to lower your marketplace income
The income that counts is your modified adjusted gross income, or MAGI. For the self-employed, it is based on your net business profit after deductions, which gives you more control over it than an employee has. The main levers are:
- Retirement contributions. Contributions to a SEP-IRA, a solo 401(k) or a traditional IRA reduce your adjusted gross income. A solo 401(k) allows the largest contributions for many sole proprietors.
- A health savings account. If you choose an HSA-eligible plan, your contributions lower your income too, and the money can pay medical costs tax-free. Our HSA vs FSA guide explains the rules.
- Legitimate business expenses. Equipment, software, a home office and other genuine costs reduce your net profit. Timing a necessary purchase into the right year can help; inventing expenses is fraud.
- The self-employed health insurance deduction. You can deduct the premiums you pay yourself, which also lowers your adjusted gross income. The interaction with the premium tax credit is complicated, so use tax software or an accountant.
One change makes accuracy more important than before. Starting with 2026 coverage, there is no longer a cap on how much excess subsidy you must repay if your income comes in higher than you estimated. If you cross the 400% line, you can owe back the entire amount. Update your income on the marketplace during the year if your business has a better year than expected, and keep good records.
Choosing a plan as a self-employed person
With a subsidy, the benchmark Silver plan is the reference point, but not always the best choice. If your income is below 250% of the poverty level, a Silver plan also comes with cost-sharing reductions that lower deductibles and copays, a benefit you get only with Silver. Above that, many healthy self-employed people choose a Bronze plan with an HSA: lower premiums, a tax deduction for HSA deposits, and protection from the out-of-pocket maximum, which is capped at $10,600 for an individual in 2026.
If you or your family use care regularly, run the numbers before choosing the lowest premium. The metal tier calculator in our health insurance companies guide shows how a Gold plan can cost less overall in a year with surgery or a new baby.
Check the network carefully, too. Many marketplace plans are HMOs or EPOs with narrower networks than employer plans, and out-of-network care may not be covered at all except in emergencies.
A year on the calendar
If you are between jobs rather than self-employed, see our guide to health insurance without an employer.
This guide provides general information, not tax, legal or financial advice. Subsidy rules and amounts change every year and depend on your household, location and income. Use HealthCare.gov or your state marketplace for official estimates, and consider a tax professional for income planning.
Sources
- IRS Revenue Procedure 2026-26: 2027 applicable percentage table
- HHS ASPE: 2026 poverty guidelines
- KFF: What we know so far about 2026 ACA marketplace enrollment, premiums and deductibles
- ACS CAN: Summary of the 2025 reconciliation law’s health provisions (premium tax credit repayment changes)
- HealthCare.gov: Out-of-pocket maximum