ACA Cliff Glossary

Premium Tax Credit (PTC)

A refundable federal income-tax credit established under 26 U.S.C. § 36B for individuals and families who buy health insurance through the ACA Marketplace. The credit equals the difference between the second-lowest-cost Silver plan (SLCSP) available to the household and the household's required contribution (a % of MAGI per the §36B(b)(3)(A) applicable-percentage table), floored at zero.

Source: 26 U.S.C. § 36B

Advance Premium Tax Credit (APTC)

The PTC paid in advance during the plan year directly to the insurer, based on projected household income. At tax filing, the household reconciles APTC paid vs. PTC actually due on Form 8962. If APTC exceeded PTC due (e.g., income rose during the year), the household repays the excess up to statutory caps; if APTC was less than PTC due, the household claims the difference as a refundable credit.

Source: 26 U.S.C. § 36B(c)(2)(B)

Modified Adjusted Gross Income (MAGI)

For ACA PTC purposes, MAGI is AGI plus tax-exempt interest, the non-taxable portion of Social Security benefits, and foreign earned income excluded under § 911. This definition is statute-specific to § 36B and differs from MAGI as used for IRA contribution phase-outs or other code sections.

Source: 26 U.S.C. § 36B(d)(2)(B)

Adjusted Gross Income (AGI)

Gross income (wages, interest, dividends, capital gains, business income, etc.) minus above-the-line deductions (HSA contributions, deductible Traditional IRA, SEHI, one-half SE tax, SEP-IRA or Solo 401(k), student-loan interest, and a handful of others). Shown on Form 1040 line 11.

Source: IRS Form 1040 instructions

Federal Poverty Level (FPL)

Annual income thresholds published by HHS ASPE used to determine eligibility for federal assistance programs. ACA PTC eligibility uses the prior-year FPL guidelines for the household size and region (contiguous 48 + DC, Alaska, Hawaii). For TY2026 PTC, the calculator uses the 2025 HHS ASPE Poverty Guidelines.

Source: HHS ASPE Poverty Guidelines

Applicable-percentage table

The table at 26 U.S.C. § 36B(b)(3)(A)(i), updated annually by IRS revenue procedure, that sets a household's required contribution as a percentage of MAGI based on the household's MAGI expressed as a percentage of FPL. For TY2026, IRS Rev. Proc. 2025-25 sets the table with no row above 400% FPL — restoring the pre-ARPA hard cliff.

Source: IRS Rev. Proc. 2025-25 (IRB 2025-32), 26 U.S.C. § 36B(b)(3)(A)

Related: Premium Tax Credit (PTC) ·

Benchmark plan / SLCSP

The second-lowest-cost Silver plan available to the household in their rating area. Under §36B(b)(3)(B), the SLCSP is the benchmark against which the PTC is calculated — the credit equals the SLCSP premium minus the household's required contribution, floored at zero. The household can use the credit toward any metal-level plan, not just Silver.

Source: 26 U.S.C. § 36B(b)(3)(B)

Household income

For PTC purposes, household income is the tax filer's MAGI plus the MAGI of every dependent required to file a federal return (those over the gross-income filing threshold), per 26 U.S.C. § 36B(d)(2)(A). Dependents who file only to claim a refund of withheld taxes are excluded.

Source: 26 U.S.C. § 36B(d)(2)(A)

Family size

For PTC purposes, family size equals the number of individuals for whom the taxpayer is allowed a dependency deduction for the tax year — the taxpayer, the taxpayer's spouse (if any), and the taxpayer's dependents. Family size determines the FPL threshold the household's MAGI is measured against.

Source: 26 U.S.C. § 36B(d)(1)

Employer-sponsored coverage affordability

Under §36B(c)(2)(C), an offer of employer-sponsored coverage that is affordable (employee-only premium below the §36B(c)(2)(C)(i)(II) percentage of household income — 9.96% for plan year 2026) and provides minimum value disqualifies the employee from receiving the PTC. The family-glitch rule, fixed by Treasury regulation in 2022, evaluates affordability separately for family-coverage offers.

Source: 26 U.S.C. § 36B(c)(2)(C)

Related: Minimum value ·

Minimum value

An employer-sponsored plan provides minimum value under §36B(c)(2)(C)(ii) if it covers at least 60% of the total allowed costs of benefits (i.e., a 60% actuarial value, equivalent to Bronze metal level) and includes substantial coverage of physician services and inpatient hospital services.

Source: 26 U.S.C. § 36B(c)(2)(C)(ii)

Medicaid expansion

The ACA option for states to expand Medicaid eligibility to adults with household incomes up to 138% FPL. As of 2026-05, 41 states + DC have expanded; 10 states have not. Non-expansion creates the coverage gap for adults below 100% FPL who earn too much for traditional state Medicaid but too little for the PTC.

Source: KFF Status of State Medicaid Expansion Decisions

Coverage gap

The zone of household incomes below 100% FPL in non-expansion states where adults earn too much to qualify for traditional state Medicaid but too little to qualify for the PTC (which starts at 100% FPL). Affects an estimated 1.5–2 million adults in the 9 non-expansion states without §1115 waivers (Wisconsin is the exception).

Source: KFF Status of State Medicaid Expansion Decisions

Wisconsin BadgerCare quirk

Wisconsin did not formally expand Medicaid under the ACA but covers adults to 100% FPL via a §1115 waiver (BadgerCare). The result: no coverage gap exists in Wisconsin — adults below 100% FPL enroll in BadgerCare, and adults between 100% and 138% FPL are eligible for the PTC instead. The calculator special-cases Wisconsin in its expansion-status logic.

Source: KFF Wisconsin BadgerCare brief

Related: Medicaid expansion · Coverage gap

Cost-sharing reduction (CSR)

Reduced deductibles, copays, and out-of-pocket maximums available to PTC-eligible households below 250% FPL who enroll in a Silver plan through the Marketplace. CSR is statutory under §1402 of the ACA but Treasury stopped paying CSR reimbursements to insurers in 2017; insurers responded by loading CSR cost into Silver premiums ("silver loading"), which incidentally inflates the SLCSP and therefore the PTC for all households.

Source: 42 U.S.C. § 18071

Related: Silver loading · Metal levels

Silver loading

The insurer practice of adding the cost of statutorily-required CSR subsidies to Silver-tier premiums (rather than spreading across all metal levels) after Treasury stopped reimbursing insurers for CSR in 2017. Silver loading is sanctioned by CMS and persists in nearly every state marketplace as of 2026; it increases Silver-tier premiums, which through the §36B(b)(3)(B) benchmark mechanic increases the PTC available to all PTC-eligible households.

Source: CMS Marketplace Rate Filing Guidance

Special Enrollment Period (SEP)

A window outside open enrollment during which an individual can enroll in or change a Marketplace plan after a qualifying life event — loss of other coverage, marriage, birth/adoption, permanent move to a new rating area, or income changes that newly qualify the household for Medicaid or CSR. SEP windows are typically 60 days from the qualifying event.

Source: healthcare.gov special enrollment

Related: Open enrollment

Open enrollment

The annual federal Marketplace enrollment window — typically November 1 through January 15 for coverage effective January 1 (or February 1 for late enrollees). State-based marketplaces sometimes set different windows; check your state marketplace for exact dates.

Source: healthcare.gov open enrollment dates

Qualified Health Plan (QHP)

A health insurance plan certified by an ACA Marketplace as meeting the essential-health-benefits, actuarial-value, and consumer-protection requirements of the ACA. Only QHPs are eligible for PTC and CSR subsidies. Off-Marketplace plans from the same insurers may have identical benefits but are not subsidy-eligible.

Source: 42 U.S.C. § 18021

Metal levels

ACA QHPs are categorized by actuarial value: Bronze (60%), Silver (70%), Gold (80%), Platinum (90%), and Catastrophic (limited to people under 30 or with a hardship exemption; ~60% AV with very high deductibles). PTC is computed against the Silver benchmark (SLCSP) and can be applied to any metal level. CSR is available only on Silver plans.

Source: 42 U.S.C. § 18022(d)

IRS Form 8962

The federal tax form used to reconcile APTC paid during the year against the PTC actually due based on year-end MAGI. A Form 8962 must be filed by anyone whose household received APTC during the year, regardless of whether the household ends up owing or being owed money.

Source: IRS Form 8962

Form 1095-A

The information return Marketplaces send to enrolled households in January, summarizing premiums paid, SLCSP figures, and any APTC paid during the year. The 1095-A is the primary input to Form 8962 reconciliation.

Source: IRS Form 1095-A

Recapture cap (repayment limitations)

Statutory caps under §36B(f)(2)(B) on how much excess APTC a household must repay if year-end MAGI is higher than projected. Caps are tiered by % of FPL and filing status, ranging from ~$375 single / $750 joint at <200% FPL to unlimited repayment at 400%+ FPL. The unlimited tier means a household that crosses the 400% FPL cliff during the year can face a clawback equal to all APTC received.

Source: 26 U.S.C. § 36B(f)(2)(B)

State-based marketplace (SBM) vs federally-facilitated marketplace (FFM)

States either operate their own ACA marketplace (SBM — e.g., Covered California, NY State of Health), run a state-based marketplace on the federal platform (SBM-FP — they make plan-management decisions but use healthcare.gov technology), or default to the federally-facilitated marketplace at healthcare.gov (FFM). As of 2026, ~20 states operate SBMs, ~7 operate SBM-FPs, and the rest use the FFM.

Source: CMS Marketplace Status Report

Related: Qualified Health Plan (QHP)

MFS abuse exception

Married Filing Separately (MFS) ordinarily disqualifies a household from receiving the PTC. Under 26 C.F.R. § 1.36B-2(b)(2), an MFS filer who is a victim of domestic abuse or spousal abandonment may claim the PTC despite filing MFS, by indicating the exception on Form 8962. The exception is narrowly construed and requires the taxpayer to certify the abuse/abandonment in good faith.

Source: 26 C.F.R. § 1.36B-2(b)(2)

Related: Premium Tax Credit (PTC)