Question About American Rescue Plan Premium Subsidies Repayment Waiver

[Leif182]

At the beginning of 2020, my wife and I were relying on her modest income while I sought employment. Since we didn't know when, or if, I would become employed, we decided to purchase health insurance through our state health insurance exchange and used my wife's income to estimate our yearly income. In late February, I became employed and so we immediately canceled our marketplace coverage so that we could move to my employer-based plan. Unfortunately, my state exchange stated that it was too late to cancel until the end of March, and so we had insurance coverage from both my employer and the state exchange for one month - though we used only my employer-based plan beginning in March. While completing my taxes, TurboTax notified me that our 2020 income exceeded 400% of the FPL, and so we are on the hook for 3 months worth of insurance premium subsidies.

It was my understanding that the American Rescue Plan (ARP) waived repayment of excess premium subsidies for 2020. Am I misunderstanding the way in which the ARP is applied? Are my wife and I eligible for a waiver, or must we repay the subsidies in full? Has TurboTax not yet been updated? Thank you in advance for the assistance. 

[MaryK4]

The American Rescue Plan Act of 2021 suspends the requirement that taxpayers increase their tax liability by all or a portion of their excess advance payments of the Premium Tax Credit (excess APTC) for tax year 2020. A taxpayer's excess APTC is the amount by which the taxpayer's advance payments of the Premium Tax Credit (APTC) exceed his or her Premium Tax Credit (PTC).

The Internal Revenue Service announced that taxpayers with excess APTC for 2020 are not required to file Form 8962, Premium Tax Credit, or report an excess advance Premium Tax Credit repayment when they file.  Simply do not enter your 1095-A information.

[rjs · Accepted solution]

TurboTax has been updated to omit the repayment of excess premium tax credit. The update was just released a few days ago. The update has been installed in TurboTax Online. If you are using the CD/Download TurboTax software, make sure you have the latest updates. After you update the software, go through the Affordable Care Act topic again and you will see a different result. You do not have to remove the Form 1095-A information that you have already entered.

See the following FAQ for instructions to update your software.

How do I update my TurboTax CD/Download software program?

[Leif182]

Thank you very much for your reply, MaryK1101!

[Leif182]

Thank you very much for your reply, Champ!