Do you have insurance through the Health Insurance Marketplace?
If so, the IRS says now is the time for a mid-year premium tax credit checkup.
If you obtained health insurance through the Health Insurance Marketplace you may be getting tax credits in the form of advance payments made directly to your insurance company to lower your monthly premium.
If this applies to you, it is important to keep in mind that changes in your income or family size may affect your premium tax credit. In fact, depending on your income, you may have to pay back part or all of the premium tax credit.
If your circumstances have changed, the IRS says the time is right for a mid-year checkup to see if you need to adjust the premium assistance you are receiving.
Where to Report Changes
Report changes that have occurred since you signed up for your health insurance plan to your Marketplace as they occur. Here are examples of some of the changes you should report:
- an increase or decrease in your income
- marriage or divorce
- the birth or adoption of a child
- starting a job with health insurance
- gaining or losing your eligibility for other health care coverage
- changing your residence
Why You Should Report Changes
Reporting the changes will help you avoid getting an advance payment that is either higher or lower than the allowed premium tax credit. Getting too much means you may owe additional money or get a smaller refund when you file your taxes. Getting too little could mean missing out on premium assistance to reduce your monthly premiums.
Repayments of Excess Premiums
Repayments of excess premium assistance may be limited to an amount between $400 and $2,500 depending on your income and filing status.
However, if advance payment of the premium tax credit was made but your income for the year turns out to be too high to receive the premium tax credit, you will have to repay all of the payments that were made on your behalf, with no limitation. Therefore, it is important that you report changes in circumstances that may have occurred since you signed up for your plan.
Changes in circumstances also may qualify you for a special enrollment period to change or get insurance through the Marketplace. In most cases, if you qualify for the special enrollment period, you will have sixty days to enroll following the change in circumstances.
UPDATE FROM THE IRS -
Information on the two July 22, 2014, Federal Appeals Court rulings regarding Premium Tax Credits under the Affordable Care Act:
It’s important for individuals receiving advance payments of the premium tax credit to know that at this time, nothing has changed and tax credits remain available.
Whether enrolled in coverage through a federally-run or state-run Health Insurance Exchange, also known as a Marketplace, individuals do not need to take any additional action or make any changes in response to the court rulings. We will provide any updates on IRS.gov/aca.