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How to keep premium tax credits

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9 months ago

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The so-called subsidy cliff for Affordable Care Act health insurance premiums is about to return in 2026.

But there are steps households can take to avoid the cliff — and potentially save thousands of dollars on premiums next year, according to financial planners.

The subsidy cliff refers to the strict income threshold households must meet to qualify for premium tax credits. Those tax credits, or subsidies, make monthly insurance premiums more affordable for 22 million Americans who purchase health plans through the ACA marketplace, the vast majority of enrollees.

Before 2021, households with incomes at or below 400% of the federal poverty line were eligible for subsidies. Anyone earning more — even $1 more — was ineligible. Those individuals had to pay the full, unsubsidized ACA insurance premium.

But Congress passed legislation during the Biden administration that made the subsidies more generous and eliminated the subsidy cliff.

But that cliff will come back in January, absent congressional action. Its return could amount to a huge financial shock for households that lose premium tax credits as a result, financial advisors said.

“It’s one of those phantom taxes that has a tremendous impact,” said Tommy Lucas, a certified financial planner and enrolled agent at Moisand Fitzgerald Tamayo, which was No. 69 on CNBC’s Financial Advisor 100 list for 2025.

About 1.5 million people — roughly 7% of all ACA enrollees — had incomes over 400% of the poverty line in 2024, according to the Centers for Medicare and Medicaid Services.

Households at risk of losing the subsidies should “do everything to stay as far away from that cliff as possible,” Lucas said. “You don’t want to put your toes up to that cliff and play with it.”

ACA subsidies likely to expire unabated, says Wolfe Research's Tobin Marcus

It’s not a foregone conclusion that the cliff will return.

Extending the enhanced subsidies was a key demand for Democrats during the government shutdown.

A group a Senate Democrats broke from their party to help Republicans pass legislation to end the shutdown, without an extension to the enhanced ACA subsidies. However, Republican leaders assured that the Senate would vote on a health care bill drafted by Democrats before the second week of December.

Many observers view its success as a long shot.

“It looks pretty much like a done deal that those subsidies will go away,” Lucas said. “[It’s a] plan-for-the-worst and hope-for-the-best scenario.”

The financial impact of the ACA subsidy cliff

The healthcare.gov website on a laptop arranged in Norfolk, Virginia, US, on Saturday, Nov. 1, 2025.

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The income threshold for the subsidy cliff varies by household size.

For example, a one-person household would lose ACA subsidies in 2026 if the individual’s income exceeds $62,600. The threshold is $128,600 for a household of four.

The financial impact of the cliff will vary based on age, geography and income, according to a recent analysis by Shameek Rakshit, a research associate at KFF, a nonpartisan health policy research group.

Households just over the threshold — especially older adults, who typically have higher premiums — will generally be the hardest-hit, Rakshit wrote.

For example, a 60-year-old earning $64,000 (409% of the federal poverty line) would pay about $14,900 in annual premiums without a tax credit in 2026, according to Rakshit. Meanwhile, someone of the same age living in the same city, making $62,000 (396% of the poverty line), would receive a tax credit and pay approximately $6,200.

Senate Minority Leader Chuck Schumer (D-NY) speaks at a press conference with other members of Senate Democratic leadership following a policy luncheon at the U.S. Capitol in Washington, DC on October 15, 2025.

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The individual making $62,000 would have a premium capped at 10% of annual income, while the one earning $64,000 would pay the full, uncapped price, likely about a quarter of that person’s income, he wrote.

“Managing income becomes incredibly important,” said Jeffrey Levine, a certified public accountant and certified financial planner based in St. Louis. “The worst thing you could be is $1 over the cliff.”

“If you’re on that border … basically [do] anything to get back under,” said Levine, the chief planning officer at Focus Partners Wealth.

4 ways to lower income to qualify for ACA subsidies

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There are a few financial steps households on the edge of the cliff can take — this year and next — to reduce their income and qualify for subsidies, according to financial advisors.

“A lot of these [strategies] are for people on the fringe,” Lucas said. “If you’re blowing it by $50,000, there’s probably nothing we can do.”

The first thing to know: The key number is the household’s annual “modified adjusted gross income” for 2026.

Enrollees will estimate their MAGI for 2026 when they sign up for health insurance on the ACA marketplace during open enrollment, and will receive premium subsidies based on that estimated income. Households that underestimate their income would need to repay excess subsidies to the federal government.

Financial advisors say there are four ways households can potentially reduce their MAGI and qualify for lower premiums.

1. Roth IRA conversions and withdrawals

A Roth individual retirement account is a type of after-tax account — accounts are funded by after-tax contributions but the balance grows tax-free.

Withdrawals are also tax-free for many people. Importantly, that means withdrawals from a Roth IRA generally don’t count toward adjusted gross income, Lucas said.

Those on the edge of the ACA subsidy cliff might therefore withdraw Roth account money for income in 2026 without raising their annual income and losing their premium tax credits, financial advisors said.

However, Roth IRAs come with rules that could trigger tax penalties for the unwary.

For example, investors must be age 59½ or older to withdraw account earnings free of taxes and penalties. They must also have owned the Roth account for at least five years.

Breaching these rules would mean a withdrawal’s earnings count toward one’s adjusted gross income, and investors would additionally owe a 10% penalty.

By comparison, investors can withdraw any contributions to Roth accounts at any time without penalty.

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Those who don’t have ample Roth savings can consider converting pre-tax money currently held in a 401(k)-type plan or IRA to Roth funds, Lucas said.

They would need to do so by the end of 2025, he said. That way, they’d have a larger pool of Roth funds available to them next year, he said.

Investors would owe income tax on the conversion, but it may be worthwhile if they can save thousands of dollars on health premiums next year, Lucas said.

2. Contribute to an IRA, HSA or other tax-advantaged account

Households can also consider contributing to a pre-tax account like an IRA or health savings account in 2026, Lucas said.

Investors generally get an upfront tax break for saving in these accounts, thereby reducing their adjusted gross income.

But again, there are caveats.

For example, the ability to write off IRA contributions depends on factors like income and your workplace retirement plan.

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Further, HSAs are only available to households enrolled in a high-deductible health plan. They’d need to pick that health insurance plan by Dec. 15 for coverage to start at the beginning of 2026.

However, more households likely have health savings accounts available to them through the ACA marketplace due to the “big beautiful bill” passed in July. That law makes anyone covered under a bronze or catastrophic plan — two tiers of plans available on the ACA marketplace — eligible for an HSA.

However, a plan with a high deductible might not make financial sense for a household planning for many costly medical procedures next year, Lucas said.

3. Sell investments at a loss

Investors who own stocks or other investments like bonds in a taxable brokerage account might consider selling those assets for income in 2026 — but generally only if the assets haven’t generated a big profit, or even if they’re in the red, Lucas said.

That’s because only the capital gain — i.e., profit — is counted as part of one’s adjusted gross income. A stock or other asset with a small net gain wouldn’t be expected to significantly raise one’s AGI.

The healthcare.gov website on a laptop arranged in Norfolk, Virginia, US, on Saturday, Nov. 1, 2025.

Stefani Reynolds | Bloomberg | Getty Images

Further, an investment with a net loss could even help lower an investor’s AGI, Lucas said.

If capital losses exceed capital gains, investors can generally lower their income dollar-for-dollar up to $3,000.

Here’s a simple example: If an investor bought a stock for $9,000 and sold it for $10,000, they would only include the $1,000 gain in their AGI. If they sold the stock for $8,000, it would reduce income by $1,000 without other investing losses, all else equal.

4. Work less

Hourly workers or others who have flexible incomes might simply choose to work less in 2026 to ensure their income is low enough to qualify for a premium tax credit, advisors said.

“If someone is going to end up being $5,000 over the cliff, they should literally just stop working,” said Levine of Focus Partners Wealth.

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$20,000 Caution Bond Requirement for US Visa Applications imposed on 50 Countries

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6 days ago

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August 8, 2026

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The United States Department of State has officially implemented a revised visa policy introducing a mandatory posting requirement for caution payments of up to $20,000 on select foreign travel applications. Under the updated regulatory framework, consular officials are authorized to require temporary nonimmigrant visa applicants from targeted foreign countries to post a refundable financial bond of $20,000 as a condition for visa issuance. The policy mechanism is designed to address diplomatic concerns regarding high overstay rates among temporary visitor, business, and educational visa categories.

The caution bond pilot program applies selectively to foreign nationals from designated countries whose diplomatic entities record historical visa overstay rates exceeding established federal thresholds. Under administrative guidelines published by the State Department, the full financial deposit is posted directly to a dedicated federal escrow account prior to final visa issuance. The entire caution payment is automatically refunded to the applicant upon verified proof of timely departure from the United States in strict compliance with the authorized duration of stay. Conversely, failure to depart within the legal timeframe results in full forfeiture of the posted financial bond to the United States government.

Diplomatic representatives and travel policy experts have expressed varying perspectives regarding the operational implementation of the caution bond system. Administration officials emphasize that the measure serves as an effective, market-based incentive to enforce international travel compliance and preserve domestic immigration security standards. However, international trade organizations and foreign diplomatic missions have raised concerns regarding the financial burden imposed on legitimate business travelers, foreign students, and commercial partners from developing nations.

The United States finalized the rule to make the temporary visa bond program permanent, taking effect on August 3, 2026. The updated permanent regulation replaces the prior 12-month pilot, eliminates the lowest $5,000 tier, and raises the maximum required bond amount to $20,000 for specific B-1/B-2 business and tourist visa applicants.

Here is the list of the 50 countries on the list as o August 3, 2026

African Nations (31 Countries)

  • Algeria
  • Angola
  • Benin
  • Botswana
  • Burundi
  • Cabo Verde (Cape Verde)
  • Central African Republic
  • Côte d’Ivoire (Ivory Coast)
  • Djibouti
  • Ethiopia
  • Gabon
  • The Gambia
  • Ghana
  • Guinea
  • Guinea-Bissau
  • Lesotho
  • Malawi
  • Mauritania
  • Mauritius
  • Mozambique
  • Namibia
  • Nigeria
  • São Tomé and Príncipe
  • Senegal
  • Seychelles
  • Tanzania
  • Togo
  • Tunisia
  • Uganda
  • Zambia
  • Zimbabwe

Asian & Eastern European Nations (11 Countries)

  • Bangladesh
  • Bhutan
  • Cambodia
  • Georgia
  • Kyrgyzstan
  • Mongolia
  • Nepal
  • Papua New Guinea
  • Tajikistan
  • Turkmenistan
  • Uzbekistan

Caribbean & Latin American Nations (5 Countries)

  • Antigua and Barbuda
  • Cuba
  • Dominica
  • Grenada
  • Venezuela

Oceanian Nations (3 Countries)

  • Fiji
  • Tonga
  • Vanuatu

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Next-Generation Retirement Planning: Managing Longevity Risk and Variable Income Streams

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1 week ago

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August 7, 2026

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Retirement planning strategies are evolving in 2026 to address increased life expectancies, shifting dynamic market conditions, and the transition away from traditional defined-benefit pensions. Individual investors and financial advisors are abandoning rigid retirement models in favor of flexible, multi-asset strategies designed to mitigate longevity risk and preserve purchasing power over multi-decade retirement horizons.

Mitigating Longevity Risk with Dynamic Asset Allocation
As average life expectancies extend past eighty-five years, one of the primary financial risks facing retirees is outliving their accumulated wealth. Traditional fixed income allocations—such as the standard 60/40 equity-to-bond portfolio—are being reevaluated to ensure portfolios generate sufficient capital growth alongside reliable income.

Financial planners recommend maintaining a meaningful equity allocation throughout retirement to offset long-term inflation erosion. High-dividend equity funds, global real estate investment trusts (REITs), and inflation-indexed Treasuries are combined to create diversified portfolios that deliver both growth and income stability.

The Transition to Dynamic Withdrawal Strategies
The classic “4% safe withdrawal rule” is increasingly replaced by dynamic withdrawal strategies that adapt annually based on market performance. Under a dynamic withdrawal framework, retirees adjust their annual distribution rates within pre-set caps and floors:
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– Market Downturns: During market pullbacks, spending distributions are temporarily reduced to prevent sequence-of-returns risk and preserve core investment principal.

Guaranteed Lifetime Income Options and Deferred Annuities
To establish a guaranteed baseline for essential living expenses, individuals are incorporating modern fixed-indexed and deferred longevity annuities into their broader retirement architectures. Modern annuity structures offer competitive return caps, transparent fee schedules, and inflation-adjustment options.

By funding essential expenses—such as housing, healthcare, and insurance—with guaranteed income streams from Social Security, pensions, and annuities, retirees can manage discretionary investment portfolios with greater flexibility and lower emotional stress during market volatility.

Actionable Steps for Future Retirees
1. Calculate Baseline Retirement Expenses: Determine fixed living costs and map guaranteed income sources to cover essential expenditures.
2. Adopt Flexible Withdrawal Rules: Implement dynamic spending rules to protect investment principal against market downturns.
3. Incorporate Inflation-Protected Assets: Maintain exposure to dividend-growing equities and inflation-indexed bonds to safeguard long-term purchasing power.

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Building Generational Wealth: Family Governance, Estate Tax Optimization, and Asset Protection

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As the largest intergenerational transfer of wealth in history accelerates, high-net-worth families, entrepreneurs, and individual investors are placing heightened emphasis on comprehensive estate planning, family governance, and asset protection. Preserving capital across generations requires a balanced approach combining tax-efficient legal structures with open family communication and financial literacy education.

Optimizing Estate Tax Exemptions and Trust Structures
With potential modifications to federal estate tax exemption thresholds on the horizon, proactive estate planning is essential for high-net-worth households. Estate planning attorneys and wealth advisors are establishing multi-generational trust structures to transfer wealth efficiently while minimizing estate and gift tax exposure.

Popular structural strategies include:
– Irrevocable Life Insurance Trusts (ILITs): Utilizing life insurance proceeds to provide liquidity for estate tax obligations without expanding the taxable estate.
– Grantor Retained Annuity Trusts (GRATs): Transferring rapidly appreciating assets to beneficiaries with minimal gift tax consequences.
– Dynasty Trusts: Preserving wealth across multiple generations while providing long-term asset protection from creditor claims and legal liabilities.

Establishing Family Governance and Financial Education
Legal and financial structures alone cannot guarantee long-term wealth preservation without effective family governance. Financial advisors report that a significant percentage of multi-generational wealth dissipation stems from lack of communication and inadequate financial preparation among heir generations.

Families are establishing formal family governance frameworks, including periodic family meetings, written mission statements, and structured philanthropic foundations. Involving younger family members in charitable grant-making and investment discussions fosters financial stewardship and prepares heirs to manage family assets responsibly.

Digital Asset Custody and Legacy Planning
In today’s modern economy, estate planning must extend beyond physical real estate and traditional brokerage accounts to encompass digital assets. Comprehensive estate plans now include detailed inventories and legal access protocols for corporate domain names, intellectual property, digital media rights, and cryptocurrency holdings.

Fiduciaries and estate executors should be provided with secure, encrypted access mechanisms and clear legal authority to manage and transfer digital holdings in accordance with the owner’s estate directions.

Practical Steps for Legacy Planning
1. Review and Update Estate Documents: Ensure wills, revocable trusts, and power-of-attorney designations accurately reflect current family structures.
2. Establish Structured Trusts: Utilize irrevocable trusts to protect assets from creditors and minimize future estate tax liabilities.
3. Create a Digital Estate Inventory: Document access protocols and legal permissions for all online accounts, intellectual property, and digital assets.

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