ACA Subsidies: Understanding Income Thresholds and Your Options

The Affordable Care Act (ACA) provides health insurance subsidies to eligible individuals and families, making healthcare more affordable for many Americans. However, it’s important to understand the income thresholds and rules for obtaining these subsidies. In this blog, we will explore these topics, focusing specifically on states that have not expanded Medicaid, such as Florida.

ACA Income Thresholds

To qualify for ACA subsidies, your income must fall within certain limits. These limits are based on the federal poverty level (FPL) and are adjusted each year. For 2025, the FPL for a two-person household is $20,440.

Generally, the following income thresholds apply:
Minimum: To receive the full subsidy, your income must be at least 100% of the FPL ($20,440 for a household of two in 2025).
Maximum (without Medicaid expansion): If your income exceeds 400% of the FPL ($81,760 for a household of two in 2025), you will not be eligible for any subsidies.

Note that these thresholds may differ for states that have expanded Medicaid under the ACA.

Using Retirement Funds to Manage Income

If your income is below the minimum threshold to qualify for ACA subsidies, you may consider using retirement funds to boost your income. One option is the Rule of 55, which allows individuals to withdraw from their retirement accounts without penalty after age 55. Withdrawals made under the Rule of 55 are considered taxable income, which will increase your MAGI and make you eligible for subsidies.

Another option is to convert funds from traditional IRAs to Roth IRAs. Roth conversions are not taxed when withdrawn, but they do count towards your MAGI in the year they are made. Therefore, you can time your Roth conversions to maximize your ACA subsidy by adjusting your income within the qualifying range.

Seeking Professional Guidance

Understanding ACA income thresholds and managing your income to qualify for subsidies can be complex. It’s advisable to seek guidance from a qualified professional, such as a tax planner or a health insurance broker. These professionals can help you determine your eligibility for subsidies, optimize your retirement withdrawals, and navigate the ACA marketplace.


ACA subsidies play a crucial role in making health insurance more affordable for many Americans. By understanding the income thresholds, exploring retirement fund strategies, and seeking professional guidance, you can maximize your eligibility and reduce your healthcare costs.

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