Health Insurance Marketplace Help

[dreamngtree]

I was unemployed for most of 2023 and purchased health insurance through the marketplace. Because I had no income, I had an advance payment of premium tax credit.

I started a new job in September 2023. That was also the last month that I had coverage through the marketplace because I switched over to employer-provided insurance.

The software is saying I have to pay back ALL of the premium based on my 2023 income, but I only had coverage while unemployed. I don't understand why I have to pay back the premium for coverage during unemployment. I don't see how to address this in the software.

[Vanessa A]

Basically, the Premium Tax Credit is based on your annual income, not your monthly income.  At the end of the year when you fill out your tax return, form 8962 is used to reconcile what you received based on your projected ANNUAL income versus what your ANNUAL income actually was.  

This means, even if you earned nothing for 10 months and then earned $50k in 2 months, your premium tax credit would be based on the $50k you earned in the last 2 months instead of the first 10 months of the year.  For 2023 to 2025, the repayment is limited to 8.05% of your income. 

What is the Premium Tax Credit (PTC) and What is Tax Form 8962?