Every year, the federal government updates the Federal Poverty Level (FPL) — the benchmark used to determine eligibility for Affordable Care Act (ACA) subsidies and tax credits. These updates directly affect how much financial help individuals and families receive to lower their monthly health insurance premiums.
As we move through 2025, it is especially important to understand how the new federal poverty guidelines influence ACA premium tax credits, and how recent laws like the American Rescue Plan (ARP) will continue to affect affordability heading into 2026.
What Is the Federal Poverty Level (FPL)?
The Federal Poverty Level is an income measure issued annually by the U.S. Department of Health and Human Services (HHS). It determines eligibility for a range of federal and state assistance programs, including Marketplace health insurance savings, Medicaid, and the Children’s Health Insurance Program (CHIP).
The FPL depends on household size and is updated each January. These figures are then used to calculate Marketplace eligibility and subsidy amounts for the following year’s coverage.
The 2025 Federal Poverty Guidelines apply to the 48 contiguous states and Washington, D.C., while Alaska and Hawaii use slightly higher limits due to cost-of-living differences.
2024 Federal Poverty Guidelines (Coverage Year 2025)
| # in Household | 100% FPL | 138% FPL | 150% FPL | 200% FPL | 250% FPL | 300% FPL | 400% FPL |
| 1 | $15,060 | $20,783 | $22,590 | $30,120 | $37,650 | $45,180 | $60,240 |
| 2 | $20,440 | $28,207 | $30,660 | $40,880 | $51,100 | $61,320 | $81,760 |
| 3 | $25,820 | $36,632 | $38,730 | $51,640 | $64,550 | $77,460 | $103,280 |
| 4 | $31,200 | $43,056 | $46,800 | $62,400 | $78,000 | $93,600 | $124,800 |
| 5 | $36,580 | $50,480 | $54,870 | $73,160 | $91,450 | $109,740 | $146,320 |
| 6 | $41,960 | $57,905 | $62,940 | $83,920 | $104,900 | $125,880 | $167,840 |
| 7 | $47,340 | $65,329 | $71,010 | $94,680 | $118,350 | $142,020 | $189,360 |
| 8 | $52,720 | $72,754 | $79,080 | $105,440 | $131,800 | $158,160 | $210,880 |
For households with more than 8, add $5,380 for each additional person.
Source (plus Hawai‘i and Alaska guidelines): aspe.hhs.gov/poverty-guidelines
Eligibility for premium tax credits in coverage year 2025 is based on 2024 poverty guidelines.
FPL = Federal Poverty Line
How the Federal Poverty Level Affects ACA Premium Tax Credits
When you apply for a health plan through the Marketplace, your Modified Adjusted Gross Income (MAGI) is compared to the current Federal Poverty Level for your household size. This determines whether you qualify for premium tax credits, and if so, how much financial assistance you will receive each month.
Key factors to understand:
- Households with incomes between 100% and 400% of the FPL typically qualify for ACA subsidies.
- Lower-income households receive larger tax credits that reduce their monthly premiums.
- Since 2021, individuals above 400% of FPL may still qualify for savings if their premiums exceed a set percentage of their income.
- Each year, as the FPL increases slightly, more households may become eligible for financial help.
Accurately estimating your income is crucial. Overestimating or underestimating can affect how much subsidy you receive and whether you owe or receive a credit at tax time.
The American Rescue Plan: Expanding ACA Affordability
The American Rescue Plan (ARP), passed in 2021, brought major improvements to the affordability of Marketplace health insurance. It temporarily expanded eligibility and increased the value of premium tax credits for millions of Americans.
Here’s how the ARP changed ACA affordability:
- Removed the 400% FPL cap
Before ARP, individuals and families earning above 400% of the poverty level were not eligible for subsidies. ARP eliminated that cap, allowing anyone to qualify if their Marketplace premiums exceeded 8.5% of their household income.
- Increased subsidies for lower- and middle-income families
ARP reduced the percentage of income most households had to pay for benchmark Silver plans, significantly lowering monthly premium costs.
- Expanded access to coverage during economic hardship
Many people who lost employer coverage or faced reduced income during the pandemic gained affordable coverage through the Marketplace.
The Inflation Reduction Act of 2022 later extended these ARP subsidy enhancements through 2025, meaning the improved affordability remains available for current Marketplace enrollees.
What Happens in 2026: The End of ARP Enhancements?
Unless Congress acts to extend or renew these provisions, the enhanced ACA subsidies from the American Rescue Plan and the Inflation Reduction Act will expire after 2025.
Here’s what that could mean starting in 2026:
- The 400% FPL income cap for subsidy eligibility would return.
- Premium contributions as a percentage of income would rise.
- Middle-income families who currently receive help could lose access to subsidies.
- Out-of-pocket premium costs could increase for many households, especially older adults and those in high-premium areas.
For example, a 60-year-old couple earning $80,000 currently qualifies for ACA subsidies under ARP rules. Without the enhanced subsidies in 2026, that same couple may no longer qualify, potentially facing thousands of dollars more per year in premiums.
This makes 2025 a critical planning year for anyone relying on ACA coverage. Understanding your income level, reviewing your plan options, and staying informed about upcoming legislative updates can help you prepare for any changes in 2026.
Medicaid Expansion and State Variations
While the Federal Poverty Guidelines are uniform across most of the U.S., state Medicaid expansion continues to influence how these numbers affect real-world eligibility.
- In Medicaid expansion states, individuals with incomes below 138% of the FPL may qualify for Medicaid rather than Marketplace coverage.
- In non-expansion states, adults with incomes below 100% of the FPL often fall into a coverage gap, meaning they earn too much for Medicaid but not enough for ACA tax credits.
Because of this variation, knowing both your income level and your state’s expansion status is essential when applying for coverage.
Why Understanding the 2025 FPL Matters
The updated 2025 Federal Poverty Level is more than a statistic — it’s the foundation for determining whether you and your family can access affordable health insurance.
Understanding how your income compares to these guidelines helps you:
- Estimate your eligibility for ACA premium tax credits and cost-sharing reductions
- Plan your Marketplace enrollment strategy for 2025 and 2026
- Report income changes promptly to maintain accurate subsidy amounts
- Prepare for possible policy changes after the American Rescue Plan enhancements expire
Final Thoughts
The 2025 Federal Poverty Guidelines and the extended American Rescue Plan provisions continue to make health insurance more accessible and affordable for millions of Americans. However, with these enhancements set to end in 2025, planning ahead for 2026 is crucial.Faith Insurance Solutions is here to help you stay informed, calculate your eligibility, and make confident decisions about your coverage. Whether you are applying for the first time or re-evaluating your current Marketplace plan, we can help you navigate every update and policy change with clarity and confidence.
Now is the time to review your 2025 income, explore your ACA options, and prepare for the possible 2026 adjustments. Affordable coverage begins with the right guidance — and that’s what Faith Insurance Solutions delivers.
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