Husband 65 retired. Wife early retirement in health ins mktplace 40,000 total int div cap gains All the mo adv pmt prem tx credit to be repaid. Any other choices?

[Nancy5236]

husband is retired on medicare  wife retired early getting ssn and entered into health ins marketplace.   Advance payment premium credit 13000.   Husband and wife had 40,000 worth of interest, dividends and capital gains. Program has all premium credit being paid back

[BMcCalpin · Accepted solution]

Was the receipt of the $40,000 unexpected? At the beginning of the year when you apply for health care through the marketplace, they ask you to estimate your income for the year,

Then they use this information to calculate how much Premium Tax Credit (PTC) they will pay your insurance company towards your premiums.

If your income changes during the year, the marketplace asks you to call them immediately so that they can adjust your PTC.

If at the end of the year, your income was higher than what you estimated, then you will have to pay some or all of the PTC back. Fortunately, the amount to be repaid is capped depending on filing status and other things - otherwise, some taxpayers would have to pay back a great deal. This happens to taxpayers who are unemployed for the first few months, get marketplace insurance, later in the year get a great job, but forget to call the marketplace. The taxpayer has to pay back all the PTC, unless the amount exceeds the cap.

Since the government has put out their money for you (they paid the insurance company on your behalf), they will want the money back if you made more than you expected. No, there is not a way around this.