ACA Tax Credits: How Changes in Family Size Impact Premiums
The Affordable Care Act (ACA) provides tax credits to help make health insurance more affordable for individuals and families. The amount of tax credit you qualify for depends on a number of factors, including your income and family size.
What Happens if My Family Size Changes During the Year?
If your family size changes during the year, you need to report the change to the Health Insurance Marketplace and modify your tax credit estimate. You can do this by logging into your HealthCare.gov account or by calling the Marketplace at 1-800-318-2596.
The change in your family size will be effective the first of the month after the change occurs. For example, if you have a baby in December, your increased family size will be effective January 1st.
How Will the Change in My Family Size Affect My Tax Credit?
The change in your family size will affect your tax credit in two ways:
Your income threshold for qualifying for a tax credit will change. The income threshold for qualifying for a tax credit is based on the number of people in your family. So, if your family size increases, your income threshold will also increase.
The amount of your tax credit will change. The amount of your tax credit is based on your income and family size. So, if your family size increases, the amount of your tax credit will also increase.
What if I Don’t Report the Change in My Family Size?
If you don’t report the change in your family size, you may end up paying too much or too little in taxes. If you pay too much in taxes, you will have to file an amended tax return to claim the correct amount of tax credit. If you pay too little in taxes, you may have to pay a penalty when you file your taxes.
Conclusion
If your family size changes during the year, it is important to report the change to the Health Insurance Marketplace so that your tax credit can be adjusted accordingly. By doing this, you can avoid paying too much or too little in taxes.
For further questions or help reporting the change, please reach out to our licensed agents by clicking the “Contact Us” on our website.
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