ACA Premium Tax Credit: What You Need to Know

Imagine you’ve just gotten a new job with health insurance, and you’re wondering if you still need to keep your Obamacare insurance. Before you make any decisions, it’s essential to understand how your new job impacts your eligibility for premium tax credits.

Premium Tax Credit: Eligibility

The premium tax credit is a financial assistance program that helps low- and moderate-income individuals and families afford health insurance through the Health Insurance Marketplace. To be eligible for these tax credits, you must meet specific income requirements and enroll in a qualified health plan.

When you get a job with health insurance, you need to report this change to the Marketplace. If your new employer’s health insurance coverage meets certain standards and is affordable (less than 9.12% of your household income), you may lose your eligibility for premium tax credits.

Consequences of Having Dual Coverage

If you continue to receive premium tax credits after becoming ineligible, this overpayment will need to be repaid when you file your taxes. The amount you repay depends on your income and the duration of overpayment.

Our Case in Point

In our case, the individual enrolled in Obamacare while unemployed and received a premium tax credit. After getting a seasonal job, they failed to report the change and continued to receive the tax credit. As a result, they may have to repay $1600 in taxes when they file.

Recourse Options

There may be limited recourse in such cases. If you discover that you received premium tax credits when you weren’t eligible, you can:

Contact the Marketplace and request a review of your eligibility.
Make estimated tax payments to cover the potential repayment.
Seek professional help from a tax advisor or licensed insurance agent.

Conclusion

It’s crucial to report any changes in your employment or income to the Marketplace promptly to avoid overpayment of premium tax credits. Understanding the eligibility requirements and consequences of dual coverage can help you avoid costly surprises come tax time. Remember, it’s always best to seek the guidance of a licensed insurance agent or consult with the Marketplace for personalized information.