When you applied for health insurance from the Marketplace, you would have given healthcare.gov an estimate of how much income you would receive in 2024. That estimated income for 2024 (and your family size and zip code) is what the Marketplace uses to calculate how much of the insurance premium would be covered by your premium tax credit and how much you would have to pay.
One way to avoid having to repay all or part of your premium assistance is to elect to have all or part of your premium assistance sent to you as a tax refund when you file your tax return, instead of being paid in advance to your health insurer during the year.
The Marketplace application asks for an estimate of your expected household income for the year that you want coverage to determine your eligibility for financial assistance and other coverage options.
When your discount is overstated, you will have to pay it back on your tax return.
The Premium Tax Credit is a little tricky. The premium tax credit was made available to you immediately at the time you enrolled in a healthcare plan through the Marketplace. The Marketplace discounted the amount you had to pay for coverage throughout the year. Your payments of the premium tax credit went directly to the insurer to pay a share of the monthly health insurance premiums charged to you. The amount was calculated based on what you estimated your 2024 income would be. It's also based on how many people your plan needs to cover and where you live.
Certain changes to your household income or family size may also affect the amount of your premium tax credit. These changes can alter your tax refund, or cause you to owe more tax.
When you enroll in coverage, the Health Insurance Marketplace estimates the amount of the premium tax credit you will be allowed.
This estimate is based on the following:
- Your family composition
- Your household income (estimated for the year)
- Whether those you are enrolling are eligible for other non-Marketplace coverage
Based on that estimate from the Marketplace, you were asked to choose to have all, some, or none of your "estimated credit" paid in advance directly to your insurance company on your behalf.
These "advance payments" of the premium tax credit will lower what you pay out-of-pocket for your monthly healthcare premiums.
If you choose to receive "advance payments" of the premium tax credit, you must report "certain life events" to the Marketplace throughout the tax year. These are called "changes in circumstances".
If your household income goes up or the size of your household is smaller than you must report this to the Marketplace. Then the Marketplace will lower the amount of your advance credit payments.
If you don't report the change and your advance credit payments are more than the premium tax credit you are allowed, you have to reduce your refund or increase the amount of tax you owe by all or a portion of the difference when you file your federal tax return.
These "changes in circumstances" can significantly affect your credit include:
- Lump-sum payments of Social Security and Social Security Disability benefits
- Lump-sum taxable distributions from an IRA or Retirement plan
- Debt forgiveness or cancellation
- Marriage or divorce
- Birth or adoption of a child
- Filing status changes
- Gaining or losing eligibility for employer or governmental health care coverage
If you had any of these changes, that may be the cause of the loss of your premium tax credit in 2024.
If you have questions about your Premium Tax Credit (PTC) or Form 1095-A, you should contact your Marketplace directly.
You can also call the IRS Healthcare Hotline for ACA questions at 800-919-0452.
Click here for "Questions and answers on the Premium Tax Credit"
Click here for "Premium Tax Credit: Claiming the credit and reconciling advance credit payments"
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