Early retirees: how withdrawals affect your Obamacare subsidy

Updated November 2026

If you retired before 65 and buy coverage on the Marketplace, how you draw on your savings determines your subsidy. Above 400% of the poverty line ($62,600 for one person and $84,600 for two in 2026, in the 48 contiguous states), there is no credit at all.

What counts as income

• Count: traditional IRA and 401(k) withdrawals, Roth conversions, pensions, capital gains, dividends, interest (including tax-exempt interest), and all of your Social Security benefits.
• Generally don't count: qualified Roth IRA distributions, return of your own basis in a taxable account, and HSA withdrawals used for medical expenses.

Planning ideas

• Spread large withdrawals or Roth conversions across years to stay under the limit.
• Use cash savings or Roth funds in years when you need to keep income low.
• Watch year-end capital gains distributions from mutual funds, which can add income you didn't plan for.

These strategies have tax consequences beyond the premium tax credit. Confirm your plan with a tax professional.

Related guides

This guide is general information, not tax advice. Clawback Check is not affiliated with HealthCare.gov, any state Marketplace, or the IRS.