Last year I helped a good bit of people sign up for coverage through the marketplace. It came to my attention this year, as I talked to them again, that a few actually had lower incomes than they expected. Such as, people who were self employed but business wasn’t as good, or they got fired or laid off from work and actually came out making too little to have qualified them.

I told them life can be tricky and a lot if not most forgot to call and make an update to their new situation.

Read in an article on here that if you indeed make too little, but signed up anyway thinking you would make the amount, that the repayment amounts would start at $300 and go up depending on income.

This would be great news for them but I have never seen this and wanted to know where you guys got this information.

Is it in the Affordable Care Act language?

Also the tax preparers that I have spoke to. All but 2, seem out of touch with filing the 1095-A forms. The other form 8962 or the form you also fill out seem to sound foreign to them. Could you get back to me as soon as possible.


Answer

If you got too many or too few tax credits in Advance, then you'll file the Premium Tax Credit form 8962 and adjust your credits. If your income was lower than expected you'll be owed a refund. If your income was higher you'll owe back credits up to the repayment limit for your income level.

The repayment amounts can be found in the 8962 instructions (click the link below). Here they are for quick reference:

Line 28. Repayment Limitation. The amount is limited to certain amounts insuring you can’t owe more than you can afford.

Less than 200% FPL ………………………….. $300 single, $600 any other filing status
At least 200% FPL but less than 300% … $750 single, $1,500 any other filing status
At least 300% FPL but less than 400% … $1,250 single, $2,500 any other filing status

Learn all about the PTC form 8962 here.

The 8965  form is for exemptions and the 1095-A form is filed by the Marketplace to show how much cost assistance a person got and what months they had coverage. Both forms may be helpful for filling out the PTC form, depending upon your situation.

Learn all about other ObamaCare Forms here.

And thank you for helping to make sure people are covered and informed. That is very cool of you.

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D. King on

What if your income was so small they would have put you in Medicare and charged you more per month than they did on ACA? What would the tax/penalty be for two people?

ObamaCareFacts.com on

If you didn’t make enough for subsidies you would have gotten Medicaid. You won’t owe the penalty for having Medicaid as that counts as coverage. If your income is low enough to where you don’t have to file taxes you are exempt on that fact alone. If you got subsidies, and then lost income and had to switch to Medicaid, you won’t owe back tax credits generally.

Nicholas Duva on

In some states like GA you would not get Medicaid even if your income was zero.

Nicholas Duva on

I have a ROTH, an IRA and a Savings account that I live off. I have a budget of $36,000 a year that I withdraw from those three accounts. How much should I withdraw from each to maximize the ACA credits and minimize taxes.

ObamaCareFacts.com on

Look at the federal poverty level for your family size. Then make sure you stay below 400% FPL so you can get assistance. If you want more generous assistance, then make sure to come in under.

Remember, if you paid money upfront (like you do with a ROTH) then it doesn’t add to your MAGI. See here: https://obamacarefacts.com/how-before-tax-and-after-tax-contributions-affect-subsides/

d. r. on

What if I live in a state that did not expand Medicaid and with my final income it turns out I shouldn’t have received tax credits at all – yet I estimated I would make enough income to get $575 a month in advance tax credits, which I received? For the sake of answering, assume I made $1 less than 100% of poverty level.

ObamaCareFacts.com on

I am pretty sure the net result of the instructions for 8962 and 8965 is that you pay nothing, it is either that or $200 (that is the stated amount, but I am fairly confident I remember that this is waived if you clock in under, as per the instructions. That said I haven’t filed out the form since last year when I did it for the site, so double check).

The correct thing to do is update the marketplace if you notice this happening mid-year.

Sky on

I tried filing taxes today. I was told I would owe $950 because they gave too much in tax credit. I’m confused because I only make 37,000 in 2015 with an estimation of 40,000 when I did my application over the phone. I fear the representative entered my projected income incorrectly? Help. I called marketplace, spoke to a supervisor who hung up on me. She was more upset than I am . I was confused and she would not listen and kept talking over me till she threatens to disconnect. I don’t understand. At a loss, I was honest and got healthcare to avoid the fine. Who do I talk to to resolve this? She also said they cannot open old applications. And if I tried it would “zero out.”

ObamaCareFacts.com on

Hmm, well you should have been allotted an amount based on the income projected versus the second lowest cost silver plan in your state versus the federal poverty level for your family size. So you can re-check 8962 and the 1095-a to make sure this happened. You can also contact your insurer to confirm their side of things. Unfortunately getting to the bottom means going through those forms.

Sounds like an unfortunate conversation, sorry. Anyway, that is the general advice.

Kimberly Spriggs on

Thanks to an Obamacare rep in 2014 asking me how much I “would earn in 2015” and telling her (based on READING MY PAYCHECK TO HER, which she calculated), then my company gave me a bonus on Dec. 23rd, 2015… and it put me over the Income level that I reported at the beginning of the year! I did not KNOW I was getting a bonus!!!

I was TOLD by the Marketplace rep in 2016 when I asked WHY I had to pay back the subsidy she said, “Even if you reported the income by the time you received it, it would not have been entered until Jan. 2016 so you still would have had the penalty.”

HOW WAS I SUPPOSED TO KNOW I WAS GETTING A BONUS???!!!!

Thank you Obama, I’m a single mother (like your mother was), with healthcare that I couldn’t use last year (because I was WORKING full time!) and I PAID out of my own pocket $900 for it and now i have to pay the IRS back $878 and I am UNEMPLOYED!!!!

Your mother would be ashamed of what you have done to people…

So thank you (Obama) for being stupid enough to allow me to think I HAD to get this, I FOLLOWED THE RULES and for 2 years had lousy healthcare because my employers get away with hiding behind this farce!

You (Obama) should have NEVER tacked this onto the IRS dog-and-pony-show – How are we (the little people) supposed to find out if you get a bonus, ASK YOUR BOSS AT THE BEGINNING OF THE YEAR? “Hey boss, can you tell me “IF” I’m going to get as a bonus? [because you’re too cheap to pay for group insurance] And oh, yeah I need to know NOW what I will get as an amount in that bonus… and please don’t fire me for being impertinent – the Government wants to know NOW!”

I NEVER should have voted for you!

ObamaCareFacts.com on

I think lots of mothers would be ashamed. We have to consider that the choice was between the ACA and nothing. But as you say, basing tax credits on annual income has big drawbacks… especially in cases like yours. 100% agree this is frustrating.

The ugly truth is that you are repaying tax credit advances, so it’s repayment and not a fee… although logistics-wise that is little consolation.

D' on

When my family enrolled last May 2016, we were receiving a certain amount due to a long term disability monthly benefit. Several months later, we were paid off with a lump sum jumping our income excessively for 2016. I called ACA to explain and they informed me that we would have a difference to repay when we filled income tax return. What is the guideline for this penalty we will need to pay back and is there a cap? We have no income reporting for 2017 until S ocial Security Disability is hopefully approved. Help!

ken allen on

I’m still confused….if in 2015, we estimated our income at $40,000 and the actual income after filing the tax returns comes out to $18k, I understand the family will get back premium tax credits, BUT does this affect the PAST coverage in 2015 because they shouldn’t have qualified for ACA as they were way under the poverty guidelines in a state where they didn’t expand their Medicaid?

What’s to stop this family from estimating their income at $40,000 every single year in order to qualify for ACA coverage while actually only making $18k each year? So in actuality, they are being covered through the ACA and should be applying for coverage at the state level.

Charles Poling on

I estimated my wife and I’s income $30,000.00 for 2015 and was told I had a monthly credit of $852 to purchase insurance. Our actual AGI on form 1040 is $30,183. According to form 8962 my credit was only $149 per month and I owe some $4,000.00 because my credit from Health Insurance marketplace was too high. Went to Health Insurance marketplace site to verify income that I reported and was shocked to find out it no longer exists. Called them several times, same answer “sorry we can’t access that information”. Here is how the scam works. People being paid to approve credits so Obama care appears to be successful and then you find out a year or more later they falsified income info that YOU reported and they conveniently can no longer access, therefor you AND I have no proof what we reported in order to be approved THAT INCOME INFORMATION SHOULD BE IN OUR ACCOUNTS AND ACCESSIBLE want to go to court?

Will on

We had the exact same thing happen – and you are correct the original information is not accessible. We own an extra grand that we weren’t expecting to. This smacks of fraud and is reprehensible.

Steve R. on

I projected my MAGI would be $11,880 for 2016 which was the minimum below which I would not qualify for a Marketplace insurance plan. If I end up making less than that, what will happen? Will I lose the coverage I got through the Marketplace? Will I have to pay a penalty?

I never how much I will make for the year until the end of the year. So, in June for instance, I won’t know how much I will have made by the end of the year.

ObamaCareFacts.com on

That was smart, just file your 8962 and 8965 accordingly. I think the fee is $0 for going under (I need to recheck specifics). You only owe the full amount if you go over, not under.

Kpm on

So i just found out that the marketplace has had my income listed wrong this whole time. Ive already surpassed the amount i thought i would make so i called them to update it and they tell me it was set WAY below what i told them to put it at which means ive spent pretty much this whole year paying way less than i was suppose to. So does this mean because of their mistake I’m going to have to pay back a huge amount?

Tammy on

My daughter received subsidized insurance last year. She thought she would make $15,000 for the year but only made $11,000. So what happens if you make less? Will she have to pay money back? A broker told us she needed to make $15,000 to qualify in Texas.

Jennifer on

I live in NC state. The tax year of 3016 was my secon year of Obahmacare. I worked for full year of 2015. I had a rep I used yearly resign me up for 2016. Only I got let go of my job beginning of 2016 and had major stomach surgery which kept me from working the rest of the year. A friend of mine who works for medicad told me don’t apply for medicade, I wouldn’t get it being as my lease and all my utilities were in my name and my boyfriend was paying all the bills until I git back on my feet? I have tried for 10 months to get back to work. Still looking for a job. Do I gave to pay subsidues back? I only earned under 500 for the year but estimated my amount on rhe previous year of 2015 at around 12.000. I was bever told by my rep to repirt any chances. I was told uf I didnt select Obama care, U would be penalized and owe the government for refusing to apoy for coverage? Confused, because now they want me file and Im stilk not working

Tim on

Hello,

I filed for an exemption for the health care fee back in August since I lost my health care coverage with my university when my graduate fellowship terminated. My projected income was only $10000 based on my W2 and employment record and I received an ECN code to provide on my Federal return. However, it turns out I have $20000 in capital gains for the year, which I didn’t realize until I received that tax info from my brokerage. Can I still claim this exemption or will I have to pay the penalty for not having adequate health insurance from Sept. through December? Thank you.

swurxer on

what if you underestimated income and your true income would have qualified you for medicaid instead of the marketplace

ObamaCareFacts.com on

You just update the marketplace and go on Medicaid…. and then at tax time you report your income correctly and avoid paying back tax credits and potentially get money back. You won’t however get back your based-line premiums or expenses. You can correct tax related parts, but you ultimately did purchase and use a plan. That is the gist, please check the details with the marketplace / insurer / tax professional.

Michael on

So if you didn’t know that you were going to make more money that year, you are still penalized? How does that make sense?

ObamaCareFacts.com on

That probably should be listed as a sticking point, but that is kind of how advanced tax credits with a repayment fee necessarily work.

nomore lobotomy on

Were people who wrote this lobotomized ?
You are solely processing the subsidy and ignoring the level of the premium.
Tax payers get hit with paying
sum of premium plus adjusted subsidy
two years after the premium was set.
In many cases the premium level never gets adjusted to the applicable year income.. It remains on the previous year level.

Is that too complicated for obamacare lobotomy writers ?

Julie Morgan on

I injured my back early in the year and could work very little and then I was in a car wreck that further injured my back. I could not work from July 21 – Dec. 15. As I’m self employed this made things even more difficult. How do I account for this? My income is no where near what I projected and even that was low as it is a new business. What do I do?

ObamaCareFacts.com on

Assuming you got marketplace tax credits: All you would do in a case like this is update the marketplace and adjust for it on the 8962 form at the end fo the year.

Rob on

Hello, I read through many of the questions on this site and this site is very informative. I read where you said with uncertainty, that if someone takes a tax subsidy when they were supposed to have taken Medicaid due to income level then they will only have a couple hundred dollar penalty or possibly no penalty at all? I know it is best to contact and update info but I also know not everyone will so so. Was wondering if you had a definite answer to that situation.

ObamaCareFacts.com on

I do need to double check that. I am always nervous about saying that without proof in front of me. If you work through the math in the instructions on form 8962 it will result in an answer (it is something I have to find the time to do so I can give a certain update).

Thanks for the reminder! And thanks for the kind words, they are appreciated.