Why Do I Owe Back Subsidies After Getting a Job?

I signed up for Covered California when I was under-employed early in 2014 and my income was very low. I got a nearly full-time job in July 2014 which increased by income significantly and offered insurance beginning in October. I cancelled my Covered California insurance in October when my employer insurance started. My tax preparer tells me I now owe the government over $4,300 dollars – or every dime of the subsidy I received early in the year when I my income was much lower. My adjusted gross income for the year was still only $28,000. This seems extremely unfair. I was not warned about this, and needed the subsidized insurance until my new job started. How could I know I would get a job? Is there anyway this can be reduced or forgiven?

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I was out of work but healthy enough to not need insurance and willing to risk not having it. But I’m forced to purchase insurance or get fined. So as a law abiding citizen I get the insurance required. I continue my search for a job and fortunately land a good one in July of 2017. I cancel the insurance with ACA immediately. Thank you for the assistance I’m sure my previous 30 years of taxes has got it covered. Well I just found out that ACA wants $8000.00 dollars from me to repay “Tax Credits” You mean MY TAX CREDITS I GAVE YOU FOR 30 YEARS?? Never once in my life have I requested any assistance from the Government outside the 7 months I was out of work. So did I just get punished for working? The first paragraph of the answer is work is bad and doing less is good. A forced “loan” is the same as extortion and employment means you get a beating.


You aren’t being punished, but it is possible that there is a mistake happening in your case. There are limits to how much a person is required to repay (see Advanced Tax Credit Repayment Limits). However, there is a scenario when a person would have to repay significant amounts of premium tax credits after a period of unemployment. Health insurance is incredibly expensive. For example, employers can pay as much as 20% of payroll to pay the premiums for their employees.

If you are being asked to repay $8,000 in ACA Premium Tax Credits by the IRS (the ACA marketplaces have nothing to do with the tax credits other than applying advanced credits towards your premiums if you choose to have them applied to your premium in advance), it means that you received more than $8,000 during tax year to help cover your premiums for health insurance through the marketplace when you were unemployed. It would also mean that once employed (or through other sources of income) ended up earning over 400% of the federal poverty level during the same tax year. If this is not the case for you, I recommend contacting an accountant or try to find a Tax Assistance Center near you to help you get it corrected: https://apps.irs.gov/app/officeLocator/index.jsp


Yes, this is ridiculous. My daughter was earning only 960 a month for 6 months of 2016 – she began a good job and her salary increased the next 6 months. We cancelled obama care immediately for the next 6 months.
She just filed her taxes and owed all of the subsidy for those 6 months
Leaving her a balance to pay in taxes.

It doesn’t make since that she would owe money for the 6 months she was basically living in poverty- but that is exactly what happened.


This is a horrible thing to do to people. It can put an undue burden on. Someone you before this job was financially struggling behind on their house so many other things. This should be treated like anything else when you cancel it it doesn’t mean you have to go back and reimburse them for all the previous months you had it. It’s Healthcare it’s not a loan.


I agree fully. Now I’m pretty screwed with what I owe back.


For the record. I’m not a fan of fining people for finding work and increasing their income. Sure “the fine” is just people paying back advanced tax credits, but the psychology of it “stinks” (in my opinion). https://obamacarefacts.com/2016/04/05/the-psychology-of-obamacares-advanced-tax-credits-and-repayment-limits/


When I signed up for an Obamacare plan last December, I did not have a job so I put $0 as my projected yearly income. Due to that, I did not receive any subsidy on the plan I chose. I was not told anything about “projecting your income at 100% FPL and get cost assistance accordingly” when I signed up. I didn’t even think that was possible to do considering you had to provide employment and employer information when signing up.

Anyway, I did find employment and I should be over the minimum threshold annual salary to receive a subsidy when all is said and done this year. Considering this, will I receive a lump sum subsidy back-payment when I file my taxes?


Yes, you can (when you file taxes) claim that tax credits you are due. The tax credits people take up front are being given in advance. When not taken in advance they are simply taken via the 8962 form in retrospect.

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