Did Your Income Change? It Could Affect Your Health Insurance Tax Credit

If you receive health insurance through the Marketplace and qualify for a premium tax credit, it’s important to keep your information up to date throughout the year.

Your premium tax credit is based on information such as your household income, family size, and other circumstances. If any of these change, your subsidy may change as well.

What Changes Should You Report?

You should notify the Marketplace if you experience a significant change in your circumstances, including:

• Your household income changes

• You get married or divorced

• You have a child or another change in your household

• You start a new job

• You lose your job

• You become eligible for health insurance through your employer

For example, if you lose your job and expect your income to be lower than originally estimated, your Marketplace subsidy may increase. This could help lower the amount you pay each month for your health insurance.

On the other hand, if you get a new job or expect your income to be higher than you originally reported, your premium tax credit could decrease.

Why Is This Important at Tax Time?

The subsidy you receive during the year is based on your estimated income. When you file your tax return, the IRS compares that estimate with your actual income for the year.

If you earned more than you originally estimated, you may have received more in advance premium tax credits than you were actually eligible for. In that situation, you could receive a smaller refund or potentially owe additional tax.

That’s why it’s important not to “set it and forget it” when it comes to your Marketplace coverage.

Keep Your Information Updated

If your income or household situation changes during the year, take a few minutes to update your Marketplace application. Keeping your information current can help prevent an unexpected tax bill when you file your return.

The bottom line: If you receive a Marketplace health insurance subsidy, changes in your income or household can affect the amount of assistance you qualify for. Reporting those changes throughout the year can help keep your premium tax credit closer to the amount you’re actually eligible to receive.