Overestimated Your Income on Your ACA Application? Don’t Panic, Here’s What You Need to Know
If you’re like many Americans, you may have found yourself in a situation where you overestimated your income when you applied for ACA health insurance. Don’t worry, you’re not alone. In this blog post, we’ll guide you through what happens when you report that your income was below the poverty level, and what you need to do to avoid paying back premium subsidies.
Filing Your Taxes with Lower-than-Estimated Income
The good news is that people whose income ends up being below 100% of the poverty level generally do not have to repay premium tax credits when they file their tax return. That’s because the IRS considers you to be eligible for Medicaid if your income is below this level. As a result, you won’t have to pay back any subsidies you received.
Intentional or Reckless Disregard
However, it’s important to note that this only applies if you provided information to the exchange in good faith, without “intentional or reckless disregard for the facts.” If the IRS determines that you intentionally or recklessly overestimated your income, you may be required to repay some or all of the premium tax credits you received.
Reporting Your Income Accurately
To avoid this, it’s crucial to report your income accurately when you apply for ACA health insurance. If you’re not sure what your income will be, it’s always better to estimate low. You can update your income information throughout the year if your income changes.
Seeking Help from a Licensed Agent
If you’re not sure how to report your income or have any other questions about ACA health insurance, it’s advisable to seek help from a licensed insurance agent. They can help you understand your options and ensure that you’re getting the coverage you need.
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