ACA income minimum limits-what if not enough income in 2024

[Perplexed Taxpayer]

For 2024, I'm helping my adult grandsons (college students ages 22 and 23....currently not working but hope to) get their own medical coverage after their coverage with their Mom's COBRA plan lapsed last July(her error, but too late now).  I'm  looking at coverage for them through the Marketplace but if we chose that, and they take the advance ACA credit:

...is there a minimum income requirement for ACA credit for 2024?  Is it calculated annually or monthly?

...what happens if they don't meet the minimum income requirement?  Do they lose the credit entirely and have to pay ALL of the advance back or just part of it?(like what if one only made $10,000 for the year and the other one didn't work at all)

...neither are employed at the moment, but hope to get jobs(one is part time student, other is full time student)  One has a paid summer internship....assuming it actually happens

***I think I need a crystal ball here 🙂 and answers on the internet are hard to find.  To be clear, I prepare the taxes for all of my various family members, am pretty familiar with the tax code(at least the parts I have had to use) but this isn't anything I've ever needed to know.

***please help me.....I'd hate to advise them wrong and have them be faced with a big tax bill at the end of the year! 

[Bsch4477]

Assuming the college students can be claimed as dependents they are not eligible for the premium tax credit. They can be covered by the parent. 

[Perplexed Taxpayer]

They are not dependents, but file their own tax return.

[Bsch4477]

Have them talk to the Marketplace. If their incomes are low enough they could qualify for Medicaid. If their incomes are high the marketplace will tell them what, if any, premium tax credit they are eligible to get.  Once they have coverage they should inform the Marketplace of any change in income. 

[Perplexed Taxpayer]

Thanks Champ but we've already done this and that doesn't answer my original question.  Right now they have no income, but highly likely to have some income in 2024 ....and you have to provide estimated income to market place....crystal ball anyone.  Medicaid probably not an option....takes too long and I want them to have medical coverage now.  I just wanted to know what the tax implications are if they sign up and then don't have the minimum income to qualify for the tax credit.

[Bsch4477]

When you sign up with the Marketplace they won’t cover you if your income is too low. They will refer you to Medicaid. So just keep increasing the estimated income until a policy is offered. If offered at the lowest income level the premium tax credit will be large so it would be important to notify the Marketplace when income increases so that the credit is decreased preventing a huge pay back at tax time next year. 

[Perplexed Taxpayer]

...what happens if they don't earn the minimum income requirement(100% of Fed Poverty Level)?  Do they lose the credit entirely and have to pay ALL of the advance back or just part of it?(like what if one only made $10,000 for the year and the other one didn't work at all but had $1800 in interest income)

[Bsch4477 · Accepted solution]

You pay back the credit if your income was too high not too low. 

[Perplexed Taxpayer]

Thanks for all your help Bsch4477....you're a lifesaver!  I like to be prepared and not get surprises at the end of the tax year.  PS I addressed you as "Champ".  Didn't realize that is a level they assign you.  You're my Champ anyway 🙂