Help Paying Marketplace Premiums: Challenges Estimating Income and Tax Consequences

I want to apply for premium subsidies, and I’m pretty sure I know what my income for the coming year will be. But what if I’m wrong and my income ends up being higher?

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The American Rescue Plan made changes to marketplace subsidy eligibility and repayment for 2021 and 2022.

For the 2021 and 2022 tax years, The American Rescue Plan expanded eligibility for premium tax credits to people at all income levels.  If your income for 2022 turns out to be greater than the amount you estimated when you sign up, you may have to repay some or all of the excess credit.  For example, say you estimated at sign up that your 2022 income would be 350% of the poverty level, and you receive advanced premium tax credit of $4,300 based on that income.  But, when you file your 2022 return, your actual income turns out to be 410% FPL and you would only be eligible for a $3,100 tax credit based on that income.  In this case you might have to repay $1,200 in excess credit when you file your 2022 return.  

If you experience a change in income during the year, you can log into your marketplace account, update your information, and reduce the monthly premium tax credit for the remainder of the year in order to minimize any excess credit that might need to be repaid.

While we have made every effort to provide accurate information in these FAQs, people should contact the health insurance Marketplace or Medicaid agency in their state for guidance on their specific circumstances.

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