A raise or promotion in 2026 is good news for your paycheck and a potential problem for your health insurance subsidy. ACA Marketplace premium tax credits are based on your projected annual Modified Adjusted Gross Income (MAGI) for the year. When you enrolled, you gave the Marketplace an estimate, and your insurer has been receiving advance premium tax credits (APTC) calculated from that number. A higher salary raises your real MAGI, which lowers the credit you actually qualify for. The Marketplace does not know about your raise unless you report it, and the IRS finds the mismatch only when you file Form 8962 with your 2026 return. In 2026 the stakes rose: enhanced premium tax credits expired on January 1, 2026, so the 400% FPL subsidy cliff is back ($63,840 for a single person, $132,000 for a family of 4 in 2026). The One Big Beautiful Bill Act also removed the repayment caps that used to limit what lower-income households owed back, starting with tax year 2026. A promotion that pushes your annual income even a little past the cliff can turn thousands of dollars of monthly credit into a bill from the IRS in 2027.
Most people who get a raise never need to switch plans, only to update numbers. Healthcare.gov requires you to report income changes within 30 days, and a raise alone is not a qualifying life event, so no Special Enrollment Period opens for a new plan. What you can control is the size of your advance credit, your choice between reducing or waiving APTC, and whether a new employer offer makes you ineligible for subsidies altogether. Promotions often come with a new title, a new employer, or new benefits eligibility, so the real question is frequently whether the job now offers coverage that costs less than 9.96% of your household income in 2026. This page walks through the exact order of actions: project your 2026 MAGI, report it, compare your options, plan for 2027 Open Enrollment (November 1, 2026 to January 15, 2027), and keep the records you need for Form 8962 and your 1095-A. Medicaid and CHIP stay available year-round if income or household size changes the other way.
6 Steps to Get Coverage
Common Mistakes That Cost People Thousands
Five mistakes cost the most after a raise or promotion in 2026:
- Waiting for tax time to deal with the raise. Every month of overpaid APTC in 2026 is owed back in full on Form 8962, because repayment caps no longer apply starting with tax year 2026.
- Assuming the 2026 repayment cap still protects you. Anyone who received excess credit for 2026 repays the entire amount, and income above 400% FPL ($63,840 single in 2026) leaves no subsidy at all.
- Ignoring a new employer offer. An affordable employer plan (employee-only premium under 9.96% of household income in 2026) ends Marketplace subsidy eligibility even if you never enroll in it.
- Switching to COBRA out of fear of the subsidy change. COBRA costs 102% of the full premium and gives no tax credit, so it rarely beats a reduced-APTC Marketplace plan or an affordable employer plan.
- Looking for a Special Enrollment Period. A raise is not a qualifying life event, so no Marketplace SEP opens for a plan change until 2027 Open Enrollment starts November 1, 2026.
Why a Raise Costs More in 2026: No Repayment Cap and the 400% FPL Cliff
Premium tax credits in 2026 are paid in advance to your insurer each month and reconciled on IRS Form 8962 after the year ends. Reconciliation compares the APTC paid for you with the credit your actual 2026 MAGI supports. Before tax year 2026, a repayment cap limited what households under 400% FPL owed back, ranging from $375 for single filers at the lowest income band to $1,625 at the highest band for the 2025 tax year. The One Big Beautiful Bill Act (Public Law 119-21, Section 71305) removed those caps for tax years beginning after December 31, 2025, and IRS guidance confirms that excess APTC for 2026 is repaid in full. A $6,000 overpayment is now a $6,000 tax bill, whether your income ends at 250% FPL or 390% FPL.
The 400% FPL cliff makes the same raise even more expensive. Enhanced premium tax credits expired on January 1, 2026, so a single filer with 2026 MAGI of $63,841 receives no credit, while a filer at $63,840 still does. A mid-year promotion that lifts annual income from $55,000 to $68,000 can erase the entire year's credit, and the 2026 repayment covers every month of APTC received. Reporting the raise promptly shrinks the overpayment to the months before the report. For borderline cases, contributions to a traditional 401(k) (2026 limit $24,500) or an HSA ($4,400 self-only, $8,750 family in 2026 with a qualifying high-deductible plan) reduce MAGI and can keep you under the line.
Employer Coverage After a Promotion: The 9.96% Affordability Test for 2026
Promotions frequently move workers from part-time or contractor status into benefits-eligible roles. An employer plan is considered affordable in 2026 if the employee-only premium for the lowest-cost qualifying plan is 9.96% or less of household income (IRS Rev. Proc. 2025-25), and it meets minimum value if it covers at least 60% of allowed costs. When both tests pass, premium tax credits end for the employee, and the Marketplace SEP rules do not let you keep subsidized Marketplace coverage because you declined the offer. Family members are judged separately: the family glitch fix means a spouse or child can qualify for subsidies if the cost of covering the family through the employer exceeds 9.96% of household income in 2026.
Employer plans usually give 30 days from the eligibility date to enroll, and missing that window can mean waiting for the next employer open enrollment. Once you enroll, report the employer coverage to healthcare.gov and cancel the Marketplace plan so APTC stops. If the employer plan starts later than the Marketplace plan ends, schedule the cancellation for the last day before the employer start date to avoid a gap. COBRA from a prior job is rarely the right bridge, because COBRA costs 102% of the full premium and a new Marketplace plan can start the first day of the month after you pick it when you qualify for a loss-of-coverage Special Enrollment Period.
Medicaid and CHIP Pivot When a Raise Changes Household Eligibility in 2026
Medicaid enrollment runs year-round in all 50 states under medicaid.gov rules, and a raise can cut both ways for a household. Medicaid expansion covers adults up to 138% FPL in 40 states plus DC, which is $22,025 for one person and $45,540 for a family of 4 in 2026. If your raise lifts income above that line, you lose Medicaid and open a 60-day Marketplace Special Enrollment Period. State brands include Medi-Cal in California, AHCCCS in Arizona, BadgerCare in Wisconsin, MassHealth in Massachusetts, Apple Health in Washington, and TennCare in Tennessee. Children often stay eligible after parents lose Medicaid, because CHIP income limits are far higher, commonly 200% to 300% FPL in 2026, with state brands such as Medi-Cal for Kids, AllKids in Illinois, and NJ FamilyCare.
Frequently Asked Questions
What is the deadline to report a raise to the Marketplace in 2026?
Healthcare.gov asks you to report income changes within 30 days of the change. The clock starts the day the raise takes effect, so a raise starting October 15, 2026 should be reported by November 14, 2026. The Marketplace usually applies the new APTC from the first day of the month after you report. Reporting late does not cancel your coverage, but each month of excess APTC is repaid in full on Form 8962 when you file your 2026 return, because the repayment cap no longer applies starting with tax year 2026. State-based exchanges such as Covered California, MNsure, and Pennie use the same 30-day standard through their own portals.
How do I document a raise or promotion for my Marketplace application?
Keep your offer or promotion letter showing the new salary and effective date, your first pay stub at the new rate, and your year-to-date 2026 earnings statement. Healthcare.gov rarely asks for proof when you report a modest change, but it may open a data-matching issue if the figure you enter differs sharply from IRS or employer records, and then you upload pay stubs. Save the confirmation screen showing the date you reported. In early 2027 you also need Form 1095-A from your healthcare.gov account to complete IRS Form 8962.
What if I miss the 30-day window to report my raise?
Missing the 30-day window does not end your coverage or lock you out of reporting. Report the raise as soon as you notice, because every month you wait adds to the excess APTC you owe on Form 8962 in 2027. For 2026 the IRS no longer caps that repayment, so the full overpayment comes back, and income above 400% FPL ($63,840 single, $132,000 family of 4) means the entire year's credit may be owed. If you cannot change plans mid-year, your best move is to lower or waive APTC now and use 2027 Open Enrollment (November 1, 2026 to January 15, 2027) to reset.
Can I get retroactive coverage or a retroactive subsidy correction after a raise?
Marketplace coverage is not retroactive for a raise, because a raise is not a qualifying life event and opens no Special Enrollment Period. Subsidy corrections do work in both directions through Form 8962: if your actual 2026 income ends lower than you estimated, you receive the extra credit as a refund, and if it ends higher, you repay the excess in full. Medicaid is the exception, since it can cover medical bills from up to three months before your application date in many states if you were eligible then. A raise usually points the opposite way, away from Medicaid.
What is the difference between COBRA and the Marketplace after a raise?
COBRA lets you keep a former employer's plan for 18 to 36 months at 102% of the full premium and gives no tax credit, so a raise does not change its cost. A Marketplace plan pays premium tax credits only if your 2026 MAGI is under 400% FPL ($63,840 single, $132,000 family of 4) and you have no affordable employer offer. COBRA fits a worker who must keep a specific doctor or has met the deductible. Most people who just got a raise save money with a reduced-APTC Marketplace plan or the new employer's plan. Compare all three before you drop a plan.
What state-specific rules apply when I get a raise?
Federal rules set the 30-day reporting standard and the 400% FPL line, but your state controls where you report and which Medicaid program applies. Twenty states plus DC run their own exchanges, including Covered California, MNsure, Pennie, kynect, Washington Healthplanfinder, and Get Covered Illinois, and you report in that portal. Medicaid brands include Medi-Cal, AHCCCS, BadgerCare, MassHealth, and Apple Health. A few states, including New Mexico and California in some cases, add state premium subsidies on top of federal credits in 2026, so check your state exchange for extra help before you decide.
Do I still qualify for Medicaid after a raise or promotion?
You qualify for Medicaid expansion in 2026 only if household MAGI stays at or below 138% FPL: $22,025 for one person, $29,863 for two, $37,702 for three, and $45,540 for four. A raise that pushes income over that line ends adult Medicaid and opens a 60-day Marketplace Special Enrollment Period, where you can apply for premium tax credits. Medicaid applications run year-round at healthcare.gov or your state agency, such as Medi-Cal or AHCCCS. In the 10 non-expansion states, adult limits are far lower, often under 100% FPL for non-disabled parents.
What happens to my children's coverage after my raise?
Children often keep coverage after a raise because CHIP and children's Medicaid limits sit well above adult Medicaid limits, commonly 200% to 300% FPL in 2026 depending on the state. For a family of 4, 200% FPL is $66,000 and 300% FPL is $99,000 in 2026. State brands include Medi-Cal for Kids, AllKids in Illinois, BadgerCare, NJ FamilyCare, and HUSKY Health in Connecticut. Apply at healthcare.gov or your state agency at any time. If your children are not eligible, they stay on your Marketplace plan or join your employer plan.
