Unexpectedly Didn't Make Enough for Premium Tax Credit for Health Insurance Marketplace

[middle89]

I unexpectedly had my two major income streams fall through last year, but I had a marketplace health plan. This unexpectedly put me below the minimum income to receive the premium tax credit. So I received a lot of premium tax credit and could be at risk of losing a large amount of money to pay it back.

I saw that there is something that may help me, the Treasury Regulation § 1.36B-2(b)(6), which protects people receiving the premium tax credit that have income suddenly fall through. But I'm not sure how I do this in TurboTax?

[Vanessa A]

TurboTax will automatically determine if you have to repay anything based on your income when you enter your 1095-A into the program.  There is not a special box for you to check. The calculations will be done on form 8962.  If your income is too low, you are correct, Treasury Regulation § 1.36B-2(b)(6) is a safe harbor to protect those who income falls unexpectedly.  You generally would not have to repay the credit. 

Also, if the safe harbor did not apply to you then your repayment is limited to $375 if your income is less than 200% of the Federal Poverty Level.  For 2025, the 2024 FPL is used to calculate your premium tax credit and repayment limitations. 

Basically, if you are not eligible for the Premium Tax Credit because your income is too low, then you would not have to pay it back assuming you answered the questions honestly when you enrolled. If your income is below 100% of the federal poverty  line and you expect it to be so for this upcoming year, then you should contact the marketplace to update your income.  You may be eligible for Medicaid.  If you are eligible for Medicaid when you enroll, then you are not eligible for the Premium Tax Credit.  

[middle89]

Thanks for the reply Vanessa!

How would I input the reasons that my income fell through so that they know it was unexpected and not intentionally miscalculated? And how will I know if I owe the $375 or $0?

And will this be true for next year as well? I should already be on track to meet the income requirements, but if not is it true that this same Treasury Regulation § 1.36B-2(b)(6) will not apply anymore for 2026?

[MarilynG1]

You don't need to give any statement about your income variances, as the PTC calculations on Form 8962 take your total yearly income into account.  For example, some folks earned less part of the year, then their income went up, and vice versa. 

Since your income went down, you should not have to repay any of the PTC you received.

Here's more info on the Premium Tax Credit.

@middle89