1095-a reduces my refund by around $900.. why is this?

[jesseromine24]

Covered under affordable care act through market place. Policy issuer is BCBS.

Info: 

Part 3 

Box A: 311.29 | Box B: 335.16 | Box C: 311.29

Had this policy from January until June then moved over to my new jobs insurance. Not sure why this is wanting me to pay anything back?

[HelenC1]

The income you entered on the Healthcare.gov application was lower than the actual income reported on your income tax return.  Taking the Premium Tax Credit as a monthly subsidy acts like a discount and reduces what you pay monthly for coverage.

However, if your family’s situation changes during the year, the premium tax credit you qualify for also changes. If you forget to update your original estimates, you may need to pay back some or all of your credit on your tax return.

Claiming the Premium Tax Credit when you file your tax return, instead of taking a monthly subsidy:

• Because the credit is calculated with your actual 2017 tax information instead of estimates, you don’t carry the risk of having to pay it back.
• However, you won’t get a discount on your monthly health insurance bill. Instead, you’ll have to wait until you file your taxes to get your credit.

Related Information:

• What is the Premium Tax Credit?

[kimberlyjane11]

This doesn't make sense though... When I got Covered CA I estimated  how much I was making. When I got a new job with better pay, I canceled my policy with them (or whatever you call it). How was I suppose to know I was going to get a better paying job? BUT when I did, I called covered CA and cancelled because I knew I was making more. So why am I penalized for being on Covered CA when I needed it and made almost nothing, and then finding a better job and cancelling? I didn't stay on with Covered CA. I only made more money the last few months of the year and I had cancelled with CoveredCA. THIS MAKES NO SENSE!

[drbob123]

Wow, I'm in the same situation in Florida. Had healthcare marketplace coverage earlier in the year, got a better paying job, cancelled my healthcare, and now I'm getting punished for the money I made AFTER? My entire tax return just went out the window and now I OWE taxes instead. Absolutely ridiculous.

[Critter-3]

Sorry but that is how the PTC rules were written. 

[ErnieS0 · Accepted solution]

Your refund went down because you are repaying the healthcare subsidy. You received partially subsidized health insurance based on your projected annual income when you applied for medical insurance through the healthcare marketplace.

Getting a better job means you made more money than your expected. Had you known, you would have received a smaller subsidy or perhaps none at all.

Form 8962 uses your annual income.

@drbob123 

[drbob123]

Right, I understand “why”. It’s just who can possibly predict “oh I plan on getting a higher paying job in 5 months”? Like sure the rule is there and stated, but I’m just saying it’s not practical by any means. Here I am finally getting on my feet with a better job and the government comes in and basically says “wait you owe us for helping you back when you weren’t making as much and you needed the help”. Maybe a quarterly or monthly prediction of income would be a better system, I don’t know. 

[MayaD]

If you're enrolled in a Marketplace plan and your income or household changes, you should update your application with income and household changes as soon as possible.

These changes — like higher or lower income, adding or losing household members, or getting offers of other health coverage — may affect the coverage or savings you’re eligible for.

For more information check: Healthcare.gov

[myhell01]

Mine was reduced by 8,000 dollars! I had the coverage for 9 months and never even used it. Very shady of our government if you ask me.

[myhell01]

Written by a corrupt government its total trash!

[Candygiirl908]

It was done to me too, I called the market place there’s nothing that can be done. It’s such a scam from the government. I applied for insurance in December 2022 for January 2023, not knowing I’d have a change of income in April! I canceled the insurance from the marketplace because the job gives insurance and because what I claimed my projected yearly income doesn’t match what I made, regardless of me not even using market place for 7 months and canceling the insurance when there was a change. Now they took out $2000 from my taxes which is the child income tax credit! A huge rip off that needs to be changed. 

[Wyldaisy]

Hello, 

Do these repayments on the federal returns have any impacts on the state returns?

[JamesG1]

Repayments reported on IRS form 8962 would not necessarily impact your state tax return.  Not all states require medical insurance coverage to be reported on their state income tax return.  What state tax return you you filing?

The Premium Tax Credit is reported on IRS form 8962 with your Federal tax return.  You will need your IRS form 1095-A to fill out this form.

• If you used your credit to reduce your premiums, IRS form 8962 will tell you if you have any of the credit left over, in which case you could use it to reduce your taxes or receive a refund.
• On the other hand, if the amount paid to your insurer actually exceeded the credit amount that you are eligible for, you would have to pay back the excess amount with your tax return.

This can happen if your income increases during the year and you do not update your information with the Marketplace.

@Wyldaisy 

[Wyldaisy]

The state is California.  thank you

[MonikaK1]

As long as you had health insurance all year, the fact that you had to pay back some of the Federal Premium Tax Credit doesn't affect your California tax return.

Beginning January 1, 2020, California residents must either:

• Have qualifying health insurance coverage
• Obtain an exemption from the requirement to have coverage
• Pay a penalty when they file their state tax return

You report your health care coverage for 2023 on your 2023 tax return, which you will file in the spring of 2024. If you, your spouse or domestic partner, and dependents had qualifying health care coverage for each month of 2023, then make sure you check the “Full-year health care coverage box,” line 92, on your return.

See this California Franchise Tax Board webpage for more information.