HealthCare.gov - Premium Tax Credit Usage

[Nepflea]

Hello,

I was put on furlough and lost my healthcare so I hit up the market place. I found  coverage and qualified for the tax credit and thought I should use the full benefit as I was thinking I may only be out of work until maybe end of June or July. However, I'm worried that I may be on furlough longer than I estimated at the time and now I'm not sure I fully understood the consequences of my original decision. I know I can change how much of this credit I use at any time so want to take action now if I have actually set myself up for a heavy tax bill come April.  So, come next tax season, will I be paying back this "tax credit" that is being used to help pay my monthly healthcare payments? If so, maybe I should put something aside so I'm not blind sided? Thoughts? Many thanks!

[rmhalili]

The best way for you to determine this is to run the numbers. I suggest reviewing the form 8692 and instructions. Using this, you can get a good estimate of what Premium Tax Credit you are entitled to based on your best guess of your 2020 income. Also, if your FPL % is below 400%, you will be capped on how much you owe, if you were given too much Advanced Premium Tax Credit.

[BillM223 · Accepted solution]

@Nepflea

Note that if you overestimate your income for the year at the time you take out the Marketplace insurance, then at the end of the year, you will not be required to pay back any premium tax credit (PTC) - in fact, you may get some more (but as rmhalili points out, it all depends on your numbers).

You only have to pay back PTC if your income at the end of the year turned out to be larger than what you estimated at the beginning of the year - it doesn't sound like this is likely, based on what you said.

At any time during the year, if you have a life change (married/divorced/having a child/new job/losing a job), you should (as you note) call the Marketplace to let them adjust your credit.