{"id":30,"date":"2014-03-26T17:38:11","date_gmt":"2014-03-26T22:38:11","guid":{"rendered":"http:\/\/obamacare-professor.com\/?p=30"},"modified":"2024-11-26T14:07:01","modified_gmt":"2024-11-26T19:07:01","slug":"special-enrollment-to-be-offered-to-most-people-who-miss-march-31-deadline-for-a-limited-time","status":"publish","type":"post","link":"http:\/\/obamacare-professor.com\/?p=30","title":{"rendered":"Advance Premium Tax Credits (APTC)"},"content":{"rendered":"<p>The following is an announcement from <a href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html\">The Finance Buff<\/a>:<\/p>\n<article class=\"post-7125 post type-post status-publish format-standard has-post-thumbnail category-healthcare tag-aca tag-health-insurance tag-obamacare tag-tax-credits tag-tax-prep entry\" aria-label=\"2024 2025 Cap on Paying Back ACA Health Insurance Subsidy\"><header class=\"entry-header\">\n<h1 class=\"entry-title\">2024 2025 Cap on Paying Back ACA Health Insurance Subsidy<\/h1>\n<p class=\"entry-meta\"><time class=\"entry-time\">August 30, 2024<\/time>\u00a0<span class=\"entry-author\">by\u00a0<span class=\"entry-author-name\">Harry Sit<\/span><\/span>\u00a0<span class=\"entry-categories\">in\u00a0<a href=\"https:\/\/thefinancebuff.com\/category\/healthcare\" rel=\"category tag\">Healthcare<\/a><\/span>\u00a0<span class=\"entry-comments-link\"><a href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comments\">58 Comments<\/a><\/span><br \/><span class=\"entry-tags\">Keywords:\u00a0<a href=\"https:\/\/thefinancebuff.com\/tag\/aca\" rel=\"tag\">ACA<\/a>,\u00a0<a href=\"https:\/\/thefinancebuff.com\/tag\/health-insurance\" rel=\"tag\">health insurance<\/a>,\u00a0<a href=\"https:\/\/thefinancebuff.com\/tag\/obamacare\" rel=\"tag\">Obamacare<\/a>,\u00a0<a href=\"https:\/\/thefinancebuff.com\/tag\/tax-credits\" rel=\"tag\">tax credits<\/a>,\u00a0<a href=\"https:\/\/thefinancebuff.com\/tag\/tax-prep\" rel=\"tag\">tax prep<\/a><\/span><\/p>\n<\/header>\n<div class=\"entry-content\">\n<p>[Updated on August 30, 2024.]<\/p>\n<div id=\"cls-video-container-EXTuTKCh\" class=\"adthrive\">\n<div id=\"adthrive-collapse-container\" class=\"adthrive-player-container adthrive-collapse-player\">\n<div id=\"adthrive-collapse-position\" class=\"adthrive-player-position adthrive-player-without-wrapper-text adthrive-jw-player-collapse adthrive-collapse-float adthrive-collapse-bottom-right adthrive-collapse-medium\">\n<div id=\"adthrive-collapse-close\" class=\"adthrive-wrapper-float-close adthrive-instream-close adthrive-top-left-outer adthrive-float-left\" tabindex=\"0\">\u00a0<\/div>\n<\/div>\n<\/div>\n<\/div>\n<div id=\"AdThrive_Content_1_desktop\" class=\"adthrive-ad adthrive-content adthrive-content-1 adthrive-ad-cls adthrive-video-stickyoutstream-new-player\" data-google-query-id=\"CMDdy-LP-YkDFR400AQddS88mA\">\n<div id=\"google_ads_iframe_\/18190176,1057562\/AdThrive_Content_1\/5bb267961b5c414750fe0418_0__container__\"><iframe id=\"google_ads_iframe_\/18190176,1057562\/AdThrive_Content_1\/5bb267961b5c414750fe0418_0\" tabindex=\"0\" title=\"3rd party ad content\" name=\"google_ads_iframe_\/18190176,1057562\/AdThrive_Content_1\/5bb267961b5c414750fe0418_0\" width=\"1\" height=\"1\" frameborder=\"0\" marginwidth=\"0\" marginheight=\"0\" scrolling=\"no\" aria-label=\"Advertisement\" data-load-complete=\"true\" data-google-container-id=\"e\" data-mce-fragment=\"1\"><\/iframe><\/div>\n<\/div>\n<p>The ACA health insurance subsidy, aka the premium tax credit, is set up such that, for the most part, it doesn\u2019t matter how much subsidy you receive upfront when you enroll. The upfront subsidy is only an estimate. The final subsidy will be squared up when you file your tax return next year.<\/p>\n<p>If you didn\u2019t receive the subsidy when you enrolled but your actual income qualifies, you get the subsidy as a tax credit when you file your tax return. If the government paid more subsidies than your actual income qualifies for, you pay back the difference on your tax return.<\/p>\n<h2 class=\"wp-block-heading\">Repayment Cap<\/h2>\n<p>There\u2019s a cap on how much you need to pay back. The cap varies depending on your Modified Adjusted Gross Income (MAGI) relative to the\u00a0<a href=\"https:\/\/thefinancebuff.com\/federal-poverty-levels-for-obamacare.html\">Federal Poverty Level<\/a>\u00a0(FPL) and your tax filing status. It\u2019s also adjusted for inflation each year. Here are the caps on paying back the subsidy for 2024 and 2025.<\/p>\n<figure class=\"wp-block-table\">\n<table>\n<thead>\n<tr>\n<th>MAGI<\/th>\n<th>2024 Coverage<\/th>\n<th>2025 Coverage<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>&lt; 200% FPL<\/td>\n<td>Single: $375<br \/>Other: $750<\/td>\n<td>Single: $375<br \/>Other: $750<\/td>\n<\/tr>\n<tr>\n<td>&lt; 300% FPL<\/td>\n<td>Single: $950<br \/>Other: $1,900<\/td>\n<td>Single: $975<br \/>Other: $1,950<\/td>\n<\/tr>\n<tr>\n<td>&lt; 400% FPL<\/td>\n<td>Single: $1,575<br \/>Other: $3,150<\/td>\n<td>Single: $1,625<br \/>Other: $3,250<\/td>\n<\/tr>\n<tr>\n<td>&gt;= 400% FPL<\/td>\n<td>No Cap<\/td>\n<td>No Cap<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<figcaption class=\"wp-element-caption\">ACA APTC Repayment Cap<\/figcaption>\n<\/figure>\n<p>Source: IRS\u00a0<a href=\"https:\/\/www.irs.gov\/pub\/irs-drop\/rp-23-34.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">Rev. Proc. 2023-34<\/a>, author\u2019s calculations.<\/p>\n<h2 class=\"wp-block-heading\">No Cap Above 400% of FPL<\/h2>\n<p>The repayment caps in 2024 and 2025 apply only when your actual income is below 400% of FPL. There\u2019s no repayment cap if your actual income exceeds 400% of FPL \u2014 you will have to pay back 100% of the difference between what you received and what your actual income qualifies for.<\/p>\n<h2 class=\"wp-block-heading\">Large Change in Income<\/h2>\n<p>The caps are also set sufficiently high such that the amount you need to pay back will fall below the cap unless there\u2019s a big difference between your actual income and your estimated income at the time of enrollment.<\/p>\n<div id=\"AdThrive_Content_2_desktop\" class=\"adthrive-ad adthrive-content adthrive-content-2 adthrive-ad-cls\" data-google-query-id=\"CLaor6rQ-YkDFRmUgwgdoCwUeQ\">\n<div id=\"google_ads_iframe_\/18190176,1057562\/AdThrive_Content_2\/5bb267961b5c414750fe0418_0__container__\">\u00a0<\/div>\n<\/div>\n<p>For example, suppose you\u2019re married filing jointly and you estimated your income would be $50,000 in 2024 when you enrolled. Suppose by the time you file your tax return, your income turns out to be $60,000. Because your income is $10,000 higher than you originally estimated, you qualify for a lower subsidy now. You will be required to pay back the $1,596 difference. The cap doesn\u2019t really help you because this $1,596 difference is well under the $3,150 repayment cap.<\/p>\n<p>In addition, because you\u2019re required to notify the healthcare marketplace of your income changes during the year in a timely manner so that they can adjust your advance subsidy, normally the difference between the advance subsidy you received and the subsidy you finally qualify for should be well under the cap. The cap helps only when your income increases close to the end of the year to make it too late to adjust your advance subsidy.<\/p>\n<h2 class=\"wp-block-heading\">Easier for Singles<\/h2>\n<p>Still, a late income change can happen, and the change can be large enough to make the difference in the health insurance subsidy higher than the repayment cap. This is true especially when you\u2019re single with a lower repayment cap.<\/p>\n<div id=\"AdThrive_Content_3_desktop\" class=\"adthrive-ad adthrive-content adthrive-content-3 adthrive-ad-cls\" data-google-query-id=\"CKuP-sXR-YkDFYalWgUdH_IZBQ\">\n<div id=\"google_ads_iframe_\/18190176,1057562\/AdThrive_Content_3\/5bb267961b5c414750fe0418_0__container__\">\u00a0<\/div>\n<\/div>\n<p>For example, suppose you\u2019re single and you estimated your income would be $30,000 in 2024 when you enrolled. Suppose in December 2024 you decide to convert $20,000 from a Traditional IRA to a Roth IRA. This pushes your income to $50,000. The extra $20,000 income lowers your health insurance subsidy by $2,866, but because your repayment cap is $1,575, you only need to pay back $1,575. You get to keep the other $1,291. In this case, you\u2019re better off asking for the subsidy upfront during enrollment. If you only wait until you file your tax return, you won\u2019t benefit from the repayment cap.<\/p>\n<p>Bottom line: You should try to estimate your income conservatively and qualify for as much subsidy as you can upfront when you enroll. Maybe it won\u2019t help. Maybe it will.<\/p>\n<div class=\"blurb\">\u00a0<\/div>\n<\/div>\n<\/article>\n<div id=\"AdThrive_Below_Post_1_desktop\" class=\"adthrive-ad adthrive-below-post adthrive-below-post-1 adthrive-ad-cls\">\n<div id=\"google_ads_iframe_\/18190176,1057562\/AdThrive_Below_Post_1\/5bb267961b5c414750fe0418_0__container__\">\u00a0<\/div>\n<\/div>\n<div id=\"comments\" class=\"entry-comments\">\n<h3>Comments<\/h3>\n<ol class=\"comment-list\">\n<li style=\"list-style-type: none;\">\n<ol class=\"comment-list\">\n<li id=\"comment-26285\" class=\"comment even thread-even depth-1\">\n<article id=\"article-comment-26285\"><header class=\"comment-header\">\n<p class=\"comment-author\"><span class=\"comment-author-name\">GMShedd<\/span>\u00a0<span class=\"says\">says<\/span><\/p>\n<p class=\"comment-meta\"><time class=\"comment-time\"><a class=\"comment-time-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-26285\">December 8, 2020 at 8:37 am<\/a><\/time><\/p>\n<\/header>\n<div class=\"comment-content\">\n<p>As usual, Harry, you\u2019ve done an excellent job of analyzing a complicated set of rules, and then presenting them in such a way that others can benefit from your digging. I\u2019ll add a couple of points of interest for others who buy ACA insurance, and who are in the income levels where the benefits become most variable. In the earliest years of the exchanges, the Silver plans were by far the best bang for the buck for those who had incomes that qualified for CSR\u2019s, but in 2017 the Trump administration discontinued the payments to insurers as reimbursement for the lower deductibles and OOP maximums (without changing the law that required the insurers to provide them), so the premiums for the Silver plans have shot up as a result (higher than Gold and Platinum in some cases), because the effective ratio of premiums to paid-out benefits for Silver plans was no longer simply 70% for everyone as intended, but more like 95% for those getting the largest CSR, and probably &lt;70% for those who aren&#8217;t. People who don&#8217;t qualify for CSR&#8217;s are probably better off buying a non-Silver plan, where it&#8217;s easier for the insurers to calculate the deductibles and OOP maximum that will yield a 60% (Bronze) or 80% (Gold) payout ratio. One other potential bonus of buying an ACA plan is that when insurers make too much profit (less than 80% of revenue actually spent on healthcare), they are required to rebate the excess to customers\u2013even if most of the premium was covered by a PTC and not by the policyholder.<\/p>\n<\/div>\n<div class=\"comment-reply\"><a class=\"comment-reply-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-26285\" rel=\"nofollow\" data-commentid=\"26285\" data-postid=\"7125\" data-belowelement=\"article-comment-26285\" data-respondelement=\"respond\" data-replyto=\"Reply to GMShedd\" aria-label=\"Reply to GMShedd\">Reply<\/a><\/div>\n<\/article>\n<\/li>\n<li id=\"comment-26286\" class=\"comment odd alt thread-odd thread-alt depth-1\">\n<article id=\"article-comment-26286\"><header class=\"comment-header\">\n<p class=\"comment-author\"><span class=\"comment-author-name\">Brian<\/span>\u00a0<span class=\"says\">says<\/span><\/p>\n<p class=\"comment-meta\"><time class=\"comment-time\"><a class=\"comment-time-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-26286\">December 8, 2020 at 10:44 am<\/a><\/time><\/p>\n<\/header>\n<div class=\"comment-content\">\n<p>A very good and interesting article; you highlighted many cautionary areas that people need to be aware of.<\/p>\n<p>Our experience with the ACA: We were on the ACA from 2014-2018 and usually chose the lowest cost silver plan each year. Each year we carefully estimated our annual income and received the premium tax credit up front, always being careful not to go below the minimum income threshold. (We never had to submit any documentation to prove our income. I don\u2019t recall our ACA insurance companies offering credit card rewards when paying the full premium up front.)<\/p>\n<p>Our income estimates were usually quite accurate. However, in 2017 we exceeded our income estimate due to unexpected income towards the end of the year; but due to the repayment cap only had to pay back $1,500 of the excess APTC we had received. (Note that even though a portion of the APTC may have to be repaid, the CSR subsidies received do not have to be repaid. That\u2019s a feature of the ACA that needs to be considered when applying.)<\/p>\n<p>After we learned the ACA process, we found that by strategically pulling money from different financial \u201cbuckets,\u201d we could (usually) hit whatever MAGI we were targeting. In 4 of those 5 years we were able to push our MAGI below 250% of the FPL to get a very good APTC and to qualify for the other CSRs that you mentioned.<\/p>\n<p>A major hiccup occurred however, when in 2016 the ACA co-op insurance company we had signed up with went bankrupt. (<a href=\"https:\/\/www.google.com\/amp\/s\/www.bizjournals.com\/columbus\/news\/2016\/05\/26\/ohio-shuts-down-states-obamacare-nonprofit-co-op.amp.html\" rel=\"nofollow ugc\">https:\/\/www.google.com\/amp\/s\/www.bizjournals.com\/columbus\/news\/2016\/05\/26\/ohio-shuts-down-states-obamacare-nonprofit-co-op.amp.html<\/a>) So, mid-year we had to signup with another ACA insurance company, and in the process lost all out-of-pocket expenses we had made with that bankrupted insurance company.<\/p>\n<p>All things considered, the ACA worked very well for us, and came at a time when we had retired early and needed affordable coverage to bridge us to our Medicare years (which we\u2019re on now).<\/p>\n<p>Again, an excellent article that all should take note of. Thanks!<\/p>\n<\/div>\n<div class=\"comment-reply\"><a class=\"comment-reply-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-26286\" rel=\"nofollow\" data-commentid=\"26286\" data-postid=\"7125\" data-belowelement=\"article-comment-26286\" data-respondelement=\"respond\" data-replyto=\"Reply to Brian\" aria-label=\"Reply to Brian\">Reply<\/a><\/div>\n<\/article>\n<\/li>\n<li id=\"comment-26287\" class=\"comment even thread-even depth-1\">\n<article id=\"article-comment-26287\"><header class=\"comment-header\">\n<p class=\"comment-author\"><span class=\"comment-author-name\">Paul<\/span>\u00a0<span class=\"says\">says<\/span><\/p>\n<p class=\"comment-meta\"><time class=\"comment-time\"><a class=\"comment-time-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-26287\">December 9, 2020 at 5:44 am<\/a><\/time><\/p>\n<\/header>\n<div class=\"comment-content\">\n<p>Harry, do repayment caps also apply to an individual who fails to report a life change in the middle of the year. An example would be becoming eligible for group health insurance at work in the middle of the year.<\/p>\n<\/div>\n<div class=\"comment-reply\"><a class=\"comment-reply-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-26287\" rel=\"nofollow\" data-commentid=\"26287\" data-postid=\"7125\" data-belowelement=\"article-comment-26287\" data-respondelement=\"respond\" data-replyto=\"Reply to Paul\" aria-label=\"Reply to Paul\">Reply<\/a><\/div>\n<\/article>\n<\/li>\n<\/ol>\n<\/li>\n<\/ol>\n<div id=\"AdThrive_Below_Post_3_desktop\" class=\"adthrive-ad adthrive-below-post adthrive-below-post-1 adthrive-ad-cls\" data-google-query-id=\"CMjLj7HP-YkDFW2KgwgdCNUnxQ\">\n<div id=\"google_ads_iframe_\/18190176,1057562\/AdThrive_Below_Post\/5bb267961b5c414750fe0418_0__container__\">\u00a0<\/div>\n<\/div>\n<ol class=\"comment-list\">\n<li style=\"list-style-type: none;\">\n<ol class=\"comment-list\">\n<li id=\"comment-26298\" class=\"comment odd alt thread-odd thread-alt depth-1\">\n<article id=\"article-comment-26298\"><header class=\"comment-header\">\n<p class=\"comment-author\"><span class=\"comment-author-name\">john<\/span>\u00a0<span class=\"says\">says<\/span><\/p>\n<p class=\"comment-meta\"><time class=\"comment-time\"><a class=\"comment-time-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-26298\">December 11, 2020 at 10:55 pm<\/a><\/time><\/p>\n<\/header>\n<div class=\"comment-content\">\n<p>Hi Harry,<\/p>\n<p>1) I am running the numbers for Alameda county single person age 44. With a $30K income the deductible is $3700 and with $40K income the deductible is $4K. So the difference does not seem as large for Cost-Sharing Reductions?<\/p>\n<p>2) Also if at end of year my income increases, does it change the deductible amounts of the plan? Eg: if my deductible was $3700 and now with new income in dec it should ideally be $4K; do I need to also pay back the plan for the deductible difference? Or is it only subsidy repayment with cap that I need to worry about.<\/p>\n<p>3) I also noticed that Gold plans have no deductible. If I know some procedures are needed which will result in coinsurance; would Gold in such circumstances be the right plan considering the difference in premiums between Silver and Gold is still less than the deductible in Silver (while Gold has no deductible)<\/p>\n<\/div>\n<div class=\"comment-reply\"><a class=\"comment-reply-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-26298\" rel=\"nofollow\" data-commentid=\"26298\" data-postid=\"7125\" data-belowelement=\"article-comment-26298\" data-respondelement=\"respond\" data-replyto=\"Reply to john\" aria-label=\"Reply to john\">Reply<\/a><\/div>\n<\/article>\n<ul class=\"children\">\n<li id=\"comment-26301\" class=\"comment even depth-2\">\n<article id=\"article-comment-26301\"><header class=\"comment-header\">\n<p class=\"comment-author\"><span class=\"comment-author-name\">Harry Sit<\/span>\u00a0<span class=\"says\">says<\/span><\/p>\n<p class=\"comment-meta\"><time class=\"comment-time\"><a class=\"comment-time-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-26301\">December 12, 2020 at 9:24 am<\/a><\/time><\/p>\n<\/header>\n<div class=\"comment-content\">\n<p>Cost-Sharing Reductions come in three tiers. You only get a small reduction at 250% of FPL. Larger reductions come in at 200% and 150% of FPL. You\u2019ll see a larger difference when your income is $25,000 or $19,000. The CSRs don\u2019t have to be paid back. If you notify the exchange of your higher income and there\u2019s still time to adjust your plan, they\u2019ll move you to a different plan going forward. It won\u2019t affect your past. As GMShedd said in comment #1, if you\u2019re not receiving the CSR or you\u2019re only receiving a small reduction, the Gold plan can be a better value.<\/p>\n<\/div>\n<\/article>\n<\/li>\n<\/ul>\n<\/li>\n<li id=\"comment-26345\" class=\"comment odd alt thread-even depth-1\">\n<article id=\"article-comment-26345\"><header class=\"comment-header\">\n<p class=\"comment-author\"><span class=\"comment-author-name\">DM<\/span>\u00a0<span class=\"says\">says<\/span><\/p>\n<p class=\"comment-meta\"><time class=\"comment-time\"><a class=\"comment-time-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-26345\">December 19, 2020 at 9:26 pm<\/a><\/time><\/p>\n<\/header>\n<div class=\"comment-content\">\n<p>Hi Harry,<br \/>Very educational article! Thanks!<br \/>In 2019, I took full premium up front (around 13K total) assuming my 2018 AGI would be about the same at 25K. I also converted 30K from IRA to Roth. Unfortunately this transaction pushed my 2019 over 55K, and I was advised to pay back every penny of APTC = 13K. Does the \u2018Payback Cap\u2019 mentioned in the article applied in this case?<\/p>\n<\/div>\n<div class=\"comment-reply\"><a class=\"comment-reply-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-26345\" rel=\"nofollow\" data-commentid=\"26345\" data-postid=\"7125\" data-belowelement=\"article-comment-26345\" data-respondelement=\"respond\" data-replyto=\"Reply to DM\" aria-label=\"Reply to DM\">Reply<\/a><\/div>\n<\/article>\n<ul class=\"children\">\n<li id=\"comment-26346\" class=\"comment even depth-2\">\n<article id=\"article-comment-26346\"><header class=\"comment-header\">\n<p class=\"comment-author\"><span class=\"comment-author-name\">Harry Sit<\/span>\u00a0<span class=\"says\">says<\/span><\/p>\n<p class=\"comment-meta\"><time class=\"comment-time\"><a class=\"comment-time-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-26346\">December 20, 2020 at 8:52 am<\/a><\/time><\/p>\n<\/header>\n<div class=\"comment-content\">\n<p>If you were a household of one person in the lower 48 states in 2019, $55k was above 400% of FPL. Your payback cap was unlimited. That\u2019s why you had to pay back every penny of your premium subsidy. Had you converted $20k instead of $30k, you would\u2019ve had a lower payback cap.<\/p>\n<\/div>\n<\/article>\n<\/li>\n<\/ul>\n<\/li>\n<\/ol>\n<\/li>\n<\/ol>\n<ol class=\"comment-list\">\n<li style=\"list-style-type: none;\">\n<ol class=\"comment-list\">\n<li id=\"comment-26478\" class=\"comment odd alt thread-odd thread-alt depth-1\">\n<article id=\"article-comment-26478\"><header class=\"comment-header\">\n<p class=\"comment-author\"><span class=\"comment-author-name\">Dana<\/span>\u00a0<span class=\"says\">says<\/span><\/p>\n<p class=\"comment-meta\"><time class=\"comment-time\"><a class=\"comment-time-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-26478\">January 17, 2021 at 3:16 pm<\/a><\/time><\/p>\n<\/header>\n<div class=\"comment-content\">\n<p>Outstanding article! A question for you now along these lines. I went on Medicare last year and ended up with several months of \u201coverlap\u201d ACA insurance while on Medicare because of a miscommunication with the ACA. Assuming I am &lt;400% of FPL for the year and the over-lap was $1500\/mo. for three months, how is the amount that I must pay back calculated, assuming it must be paid back?<\/p>\n<p>Thanks!<\/p>\n<\/div>\n<div class=\"comment-reply\"><a class=\"comment-reply-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-26478\" rel=\"nofollow\" data-commentid=\"26478\" data-postid=\"7125\" data-belowelement=\"article-comment-26478\" data-respondelement=\"respond\" data-replyto=\"Reply to Dana\" aria-label=\"Reply to Dana\">Reply<\/a><\/div>\n<\/article>\n<\/li>\n<li id=\"comment-26586\" class=\"comment even thread-even depth-1\">\n<article id=\"article-comment-26586\"><header class=\"comment-header\">\n<p class=\"comment-author\"><span class=\"comment-author-name\">Kelly<\/span>\u00a0<span class=\"says\">says<\/span><\/p>\n<p class=\"comment-meta\"><time class=\"comment-time\"><a class=\"comment-time-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-26586\">February 6, 2021 at 3:12 pm<\/a><\/time><\/p>\n<\/header>\n<div class=\"comment-content\">\n<p>Very informative. I had a question regarding taxes. I had to repay all of my subsidy due to extra income from annuities, Social Security and IRA\u2019s at the end of the year. Since I essentially paid the premiums by myself, can I include these costs as medical premiums if I itemize deductions on my taxes. Thanks!<\/p>\n<\/div>\n<div class=\"comment-reply\"><a class=\"comment-reply-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-26586\" rel=\"nofollow\" data-commentid=\"26586\" data-postid=\"7125\" data-belowelement=\"article-comment-26586\" data-respondelement=\"respond\" data-replyto=\"Reply to Kelly\" aria-label=\"Reply to Kelly\">Reply<\/a><\/div>\n<\/article>\n<ul class=\"children\">\n<li id=\"comment-26587\" class=\"comment byuser comment-author-tfb bypostauthor odd alt depth-2\">\n<article id=\"article-comment-26587\"><header class=\"comment-header\">\n<p class=\"comment-author\"><span class=\"comment-author-name\">Harry Sit<\/span>\u00a0<span class=\"says\">says<\/span><\/p>\n<p class=\"comment-meta\"><time class=\"comment-time\"><a class=\"comment-time-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-26587\">February 6, 2021 at 4:13 pm<\/a><\/time><\/p>\n<\/header>\n<div class=\"comment-content\">\n<p>You can, but if you aren\u2019t self-employed, the first 7.5% of your AGI isn\u2019t deductible. From the IRS:<\/p>\n<p><a href=\"https:\/\/www.irs.gov\/taxtopics\/tc502\" rel=\"nofollow ugc\">https:\/\/www.irs.gov\/taxtopics\/tc502<\/a><\/p>\n<\/div>\n<\/article>\n<\/li>\n<\/ul>\n<\/li>\n<\/ol>\n<\/li>\n<\/ol>\n<ol class=\"comment-list\">\n<li style=\"list-style-type: none;\">\n<ol class=\"comment-list\">\n<li id=\"comment-26668\" class=\"comment even thread-odd thread-alt depth-1\">\n<article id=\"article-comment-26668\"><header class=\"comment-header\">\n<p class=\"comment-author\"><span class=\"comment-author-name\">Julia<\/span>\u00a0<span class=\"says\">says<\/span><\/p>\n<p class=\"comment-meta\"><time class=\"comment-time\"><a class=\"comment-time-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-26668\">February 20, 2021 at 8:10 pm<\/a><\/time><\/p>\n<\/header>\n<div class=\"comment-content\">\n<p>What if I only had a marketplace plan for 6 months of the year? Am I still responsible for paying back the full contribution based on my income?<br \/>For example, I made $32,000 and am expected to contribute about 9% or $2,880 per year to the cost of the health insurance premium. However, if I was only covered six months, shouldn\u2019t this contribution be reduced to $1,440? I\u2019ve prepared a tax return and it looks like I\u2019m still expected to pay back the full cost of the annual contribution.<\/p>\n<\/div>\n<div class=\"comment-reply\"><a class=\"comment-reply-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-26668\" rel=\"nofollow\" data-commentid=\"26668\" data-postid=\"7125\" data-belowelement=\"article-comment-26668\" data-respondelement=\"respond\" data-replyto=\"Reply to Julia\" aria-label=\"Reply to Julia\">Reply<\/a><\/div>\n<\/article>\n<ul class=\"children\">\n<li id=\"comment-26671\" class=\"comment odd alt depth-2\">\n<article id=\"article-comment-26671\"><header class=\"comment-header\">\n<p class=\"comment-author\"><span class=\"comment-author-name\">Harry Sit<\/span>\u00a0<span class=\"says\">says<\/span><\/p>\n<p class=\"comment-meta\"><time class=\"comment-time\"><a class=\"comment-time-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-26671\">February 20, 2021 at 9:18 pm<\/a><\/time><\/p>\n<\/header>\n<div class=\"comment-content\">\n<p>Yes, your expected contribution is prorated by the number of months. When you\u2019re entering your 1095-A into tax software, fill out the month-by-month rows. If you read the instructions carefully, you\u2019ll see you use the totals only when you were covered for all 12 months and the numbers for each month are the same.<\/p>\n<\/div>\n<\/article>\n<\/li>\n<\/ul>\n<\/li>\n<li id=\"comment-26690\" class=\"comment even thread-even depth-1\">\n<article id=\"article-comment-26690\"><header class=\"comment-header\">\n<p class=\"comment-author\"><span class=\"comment-author-name\">Jennifer<\/span>\u00a0<span class=\"says\">says<\/span><\/p>\n<p class=\"comment-meta\"><time class=\"comment-time\"><a class=\"comment-time-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-26690\">February 24, 2021 at 2:53 pm<\/a><\/time><\/p>\n<\/header>\n<div class=\"comment-content\">\n<p>I made below income and recieved tax credit for 2 years. I now have no income and applying for SSI. I cannot afford any premiums and now am worried. I was not eligible for medicaid as I have no dependents. So now what? How do I obtain insurance with no or very little income?<\/p>\n<\/div>\n<div class=\"comment-reply\"><a class=\"comment-reply-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-26690\" rel=\"nofollow\" data-commentid=\"26690\" data-postid=\"7125\" data-belowelement=\"article-comment-26690\" data-respondelement=\"respond\" data-replyto=\"Reply to Jennifer\" aria-label=\"Reply to Jennifer\">Reply<\/a><\/div>\n<\/article>\n<ul class=\"children\">\n<li id=\"comment-26691\" class=\"comment odd alt depth-2\">\n<article id=\"article-comment-26691\"><header class=\"comment-header\">\n<p class=\"comment-author\"><span class=\"comment-author-name\">Harry Sit<\/span>\u00a0<span class=\"says\">says<\/span><\/p>\n<p class=\"comment-meta\"><time class=\"comment-time\"><a class=\"comment-time-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-26691\">February 24, 2021 at 5:56 pm<\/a><\/time><\/p>\n<\/header>\n<div class=\"comment-content\">\n<p>Many states don\u2019t require a dependent to qualify for Medicaid. If yours still does, maybe moving is an option?<\/p>\n<p><a href=\"https:\/\/www.healthcare.gov\/medicaid-chip\/medicaid-expansion-and-you\/\" rel=\"nofollow ugc\">https:\/\/www.healthcare.gov\/medicaid-chip\/medicaid-expansion-and-you\/<\/a><\/p>\n<\/div>\n<\/article>\n<\/li>\n<\/ul>\n<\/li>\n<\/ol>\n<\/li>\n<\/ol>\n<ol class=\"comment-list\">\n<li style=\"list-style-type: none;\">\n<ol class=\"comment-list\">\n<li id=\"comment-26693\" class=\"comment even thread-odd thread-alt depth-1\">\n<article id=\"article-comment-26693\"><header class=\"comment-header\">\n<p class=\"comment-author\"><span class=\"comment-author-name\">Chris B<\/span>\u00a0<span class=\"says\">says<\/span><\/p>\n<p class=\"comment-meta\"><time class=\"comment-time\"><a class=\"comment-time-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-26693\">February 24, 2021 at 6:58 pm<\/a><\/time><\/p>\n<\/header>\n<div class=\"comment-content\">\n<p>Harry I have a horror story. My spouse and I both became unemployed in March. We informed the Market place of the income change to zero. I filed for unemployment, my spouse found temporary work with varying hours. We were not sure how much income either of us would make for sure. Unemployment was approved for $214.00 a week after taxes. But pandemic payments became unpredictable increasing the payments. After my 26 week unemployment ended, I informed the Market place of our income status. In November my spouse was offered full time employment. I told the Market place but the 10k made put us over the amount for subsidies. We now must pay back over 12000.00. We briefly stepped across the poverty line and now must pay a hefty penalty.<\/p>\n<\/div>\n<div class=\"comment-reply\"><a class=\"comment-reply-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-26693\" rel=\"nofollow\" data-commentid=\"26693\" data-postid=\"7125\" data-belowelement=\"article-comment-26693\" data-respondelement=\"respond\" data-replyto=\"Reply to Chris B\" aria-label=\"Reply to Chris B\">Reply<\/a><\/div>\n<\/article>\n<ul class=\"children\">\n<li id=\"comment-26700\" class=\"comment odd alt depth-2\">\n<article id=\"article-comment-26700\"><header class=\"comment-header\">\n<p class=\"comment-author\"><span class=\"comment-author-name\">Kelly<\/span>\u00a0<span class=\"says\">says<\/span><\/p>\n<p class=\"comment-meta\"><time class=\"comment-time\"><a class=\"comment-time-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-26700\">February 25, 2021 at 4:47 pm<\/a><\/time><\/p>\n<\/header>\n<div class=\"comment-content\">\n<p>You may also be able to open up an HSA for you and your spouse.<\/p>\n<\/div>\n<\/article>\n<\/li>\n<\/ul>\n<\/li>\n<li id=\"comment-26695\" class=\"comment even thread-even depth-1\">\n<article id=\"article-comment-26695\"><header class=\"comment-header\">\n<p class=\"comment-author\"><span class=\"comment-author-name\">Brian<\/span>\u00a0<span class=\"says\">says<\/span><\/p>\n<p class=\"comment-meta\"><time class=\"comment-time\"><a class=\"comment-time-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-26695\">February 25, 2021 at 4:36 am<\/a><\/time><\/p>\n<\/header>\n<div class=\"comment-content\">\n<p>This isn\u2019t insurance, but\u2026\u2026Is there an FQHC (Federally Qualified Health Center) near you? Those centers provide health services on a sliding fee scale based on income, family size, etc.<br \/>They often provide services for individuals with no income if that can be verified (through a self declaration form or some other official agency records, e.g., written statement from a landlord or other person outside the household having knowledge of the applicant\u2019s financial situation).<br \/>You should look into an FQHC in your community.<\/p>\n<\/div>\n<div class=\"comment-reply\"><a class=\"comment-reply-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-26695\" rel=\"nofollow\" data-commentid=\"26695\" data-postid=\"7125\" data-belowelement=\"article-comment-26695\" data-respondelement=\"respond\" data-replyto=\"Reply to Brian\" aria-label=\"Reply to Brian\">Reply<\/a><\/div>\n<\/article>\n<\/li>\n<\/ol>\n<\/li>\n<\/ol>\n<ol class=\"comment-list\">\n<li style=\"list-style-type: none;\">\n<ol class=\"comment-list\">\n<li id=\"comment-26696\" class=\"comment odd alt thread-odd thread-alt depth-1\">\n<article id=\"article-comment-26696\"><header class=\"comment-header\">\n<p class=\"comment-author\"><span class=\"comment-author-name\">Brian<\/span>\u00a0<span class=\"says\">says<\/span><\/p>\n<p class=\"comment-meta\"><time class=\"comment-time\"><a class=\"comment-time-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-26696\">February 25, 2021 at 4:50 am<\/a><\/time><\/p>\n<\/header>\n<div class=\"comment-content\">\n<p>You\u2019ll have to do some careful math on this, but can you open a deductible IRA for just the right amount of dollars to lower your 2020 modified AGI enough to briefly step back across that threshold for subsidies and avoid having to pay that hefty penalty? Or are you too far above that threshold?<\/p>\n<\/div>\n<div class=\"comment-reply\"><a class=\"comment-reply-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-26696\" rel=\"nofollow\" data-commentid=\"26696\" data-postid=\"7125\" data-belowelement=\"article-comment-26696\" data-respondelement=\"respond\" data-replyto=\"Reply to Brian\" aria-label=\"Reply to Brian\">Reply<\/a><\/div>\n<\/article>\n<\/li>\n<li id=\"comment-26703\" class=\"comment even thread-even depth-1\">\n<article id=\"article-comment-26703\"><header class=\"comment-header\">\n<p class=\"comment-author\"><span class=\"comment-author-name\">Karie<\/span>\u00a0<span class=\"says\">says<\/span><\/p>\n<p class=\"comment-meta\"><time class=\"comment-time\"><a class=\"comment-time-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-26703\">February 25, 2021 at 6:37 pm<\/a><\/time><\/p>\n<\/header>\n<div class=\"comment-content\">\n<p>Thank you so much for the article. I also have a horror story. My husband and I own an electrical contracting business. We qualified for the PPP loan last year. My husband and I don\u2019t generally take a regular paycheck. I put us both on the payroll to satisfy the requirements of the PPP loan. We have been doing our taxes and have discovered we now owe $28,000 in penalties for the Obama Care Insurance. Please help! Is there anything we can do?<\/p>\n<\/div>\n<div class=\"comment-reply\"><a class=\"comment-reply-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-26703\" rel=\"nofollow\" data-commentid=\"26703\" data-postid=\"7125\" data-belowelement=\"article-comment-26703\" data-respondelement=\"respond\" data-replyto=\"Reply to Karie\" aria-label=\"Reply to Karie\">Reply<\/a><\/div>\n<\/article>\n<ul class=\"children\">\n<li id=\"comment-26704\" class=\"comment odd alt depth-2\">\n<article id=\"article-comment-26704\"><header class=\"comment-header\">\n<p class=\"comment-author\"><span class=\"comment-author-name\">Karie<\/span>\u00a0<span class=\"says\">says<\/span><\/p>\n<p class=\"comment-meta\"><time class=\"comment-time\"><a class=\"comment-time-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-26704\">February 25, 2021 at 6:43 pm<\/a><\/time><\/p>\n<\/header>\n<div class=\"comment-content\">\n<p>Is there a chance I can now take that 28,000 and add it to my deduction on my health insurance premiums?<\/p>\n<\/div>\n<\/article>\n<\/li>\n<li id=\"comment-26707\" class=\"comment even depth-2\">\n<article id=\"article-comment-26707\"><header class=\"comment-header\">\n<p class=\"comment-author\"><span class=\"comment-author-name\">Harry Sit<\/span>\u00a0<span class=\"says\">says<\/span><\/p>\n<p class=\"comment-meta\"><time class=\"comment-time\"><a class=\"comment-time-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-26707\">February 25, 2021 at 7:01 pm<\/a><\/time><\/p>\n<\/header>\n<div class=\"comment-content\">\n<p>As Brian mentioned in comment #12, depending on how much your income is over the 400% FPL cutoff, you may be able to bring it below the cutoff by contributing $6,000 to a Traditional IRA for each of you ($7,000 each if both of you are 50 or over). That lowers your income by $12,000 or $14,000. And if your health insurance was an HSA-eligible plan (Bronze plan more likely), you can contribute another $7,200 to an HSA. That also lowers your income for the subsidy qualification.<\/p>\n<p>Finally, yes, self-employed health insurance is deductible. If you\u2019re using tax software, be sure to enter it in the right place. When your health insurance was that expensive, deducting part of the health insurance by itself may bring your income below the cutoff. See how to do it in\u00a0<a href=\"https:\/\/thefinancebuff.com\/Tax%20Filing%20For%20Self-Employed%20Health%20Insurance%20Through%20ACA\" rel=\"nofollow\">TurboTax<\/a>\u00a0and\u00a0<a href=\"https:\/\/thefinancebuff.com\/aca-self-employed-health-insurance-in-hr-block-software.html\">H&amp;R Block software<\/a>.<\/p>\n<\/div>\n<\/article>\n<\/li>\n<li id=\"comment-26708\" class=\"comment odd alt depth-2\">\n<article id=\"article-comment-26708\"><header class=\"comment-header\">\n<p class=\"comment-author\"><span class=\"comment-author-name\">Karie<\/span>\u00a0<span class=\"says\">says<\/span><\/p>\n<p class=\"comment-meta\"><time class=\"comment-time\"><a class=\"comment-time-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-26708\">February 25, 2021 at 7:03 pm<\/a><\/time><\/p>\n<\/header>\n<div class=\"comment-content\">\n<p>Or, could I put 26,000 into a 401K for 2020 and use it as a reduction of income for 2020?<\/p>\n<\/div>\n<\/article>\n<\/li>\n<li id=\"comment-26709\" class=\"comment even depth-2\">\n<article id=\"article-comment-26709\"><header class=\"comment-header\">\n<p class=\"comment-author\"><span class=\"comment-author-name\">Karie<\/span>\u00a0<span class=\"says\">says<\/span><\/p>\n<p class=\"comment-meta\"><time class=\"comment-time\"><a class=\"comment-time-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-26709\">February 25, 2021 at 7:07 pm<\/a><\/time><\/p>\n<\/header>\n<div class=\"comment-content\">\n<p>Thanks Harry! We have already contributed to our IRA for last year, if we put it into an IRA for next year would it still count towards lowering our 2020 income? We ended up at $99,000 on our income. There is just the two of us. We are over 50<\/p>\n<\/div>\n<\/article>\n<\/li>\n<li id=\"comment-26710\" class=\"comment odd alt depth-2\">\n<article id=\"article-comment-26710\"><header class=\"comment-header\">\n<p class=\"comment-author\"><span class=\"comment-author-name\">Harry Sit<\/span>\u00a0<span class=\"says\">says<\/span><\/p>\n<p class=\"comment-meta\"><time class=\"comment-time\"><a class=\"comment-time-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-26710\">February 25, 2021 at 7:11 pm<\/a><\/time><\/p>\n<\/header>\n<div class=\"comment-content\">\n<p>A little late for the 401k if you didn\u2019t already have one set up for your business before December 31, but you can do a SEP-IRA for each of you. You can contribute 25% of your respective payroll to the SEP-IRA. That also lowers your income for the subsidy qualification.<\/p>\n<\/div>\n<\/article>\n<\/li>\n<li id=\"comment-26712\" class=\"comment even depth-2\">\n<article id=\"article-comment-26712\"><header class=\"comment-header\">\n<p class=\"comment-author\"><span class=\"comment-author-name\">Harry Sit<\/span>\u00a0<span class=\"says\">says<\/span><\/p>\n<p class=\"comment-meta\"><time class=\"comment-time\"><a class=\"comment-time-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-26712\">February 25, 2021 at 8:13 pm<\/a><\/time><\/p>\n<\/header>\n<div class=\"comment-content\">\n<p>Contributing to a Traditional IRA for 2021 won\u2019t lower your income for 2020. Look into the SEP-IRA. A household of two in the lower 48 states in 2020 needs to have income below $67,640 to receive a premium subsidy. Even though your $99,000 income is quite far from it, lowering your income by all means plus deducting some of your self-employed health insurance may still make you qualify for _some_ subsidy.<\/p>\n<\/div>\n<\/article>\n<\/li>\n<\/ul>\n<\/li>\n<\/ol>\n<\/li>\n<\/ol>\n<ol class=\"comment-list\">\n<li style=\"list-style-type: none;\">\n<ol class=\"comment-list\">\n<li id=\"comment-26774\" class=\"comment odd alt thread-odd thread-alt depth-1\">\n<article id=\"article-comment-26774\"><header class=\"comment-header\">\n<p class=\"comment-author\"><span class=\"comment-author-name\">M Myers<\/span>\u00a0<span class=\"says\">says<\/span><\/p>\n<p class=\"comment-meta\"><time class=\"comment-time\"><a class=\"comment-time-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-26774\">March 7, 2021 at 9:32 am<\/a><\/time><\/p>\n<\/header>\n<div class=\"comment-content\">\n<p>Was interested in knowing what happens when your estimated income ends up being higher due to unemployment payments and lottery winnings during 2020? Estimated income was $19,000 but ended up being $33,000. Will health care subsidy need to be paid back?<\/p>\n<\/div>\n<div class=\"comment-reply\"><a class=\"comment-reply-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-26774\" rel=\"nofollow\" data-commentid=\"26774\" data-postid=\"7125\" data-belowelement=\"article-comment-26774\" data-respondelement=\"respond\" data-replyto=\"Reply to M Myers\" aria-label=\"Reply to M Myers\">Reply<\/a><\/div>\n<\/article>\n<ul class=\"children\">\n<li id=\"comment-26775\" class=\"comment even depth-2\">\n<article id=\"article-comment-26775\"><header class=\"comment-header\">\n<p class=\"comment-author\"><span class=\"comment-author-name\">Harry Sit<\/span>\u00a0<span class=\"says\">says<\/span><\/p>\n<p class=\"comment-meta\"><time class=\"comment-time\"><a class=\"comment-time-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-26775\">March 7, 2021 at 6:26 pm<\/a><\/time><\/p>\n<\/header>\n<div class=\"comment-content\">\n<p>News reports said the forthcoming stimulus law will make $10,000 in unemployment benefits in 2020 not taxable. After taking that into account, if your actual income is still higher than your estimate, you will pay back part of the subsidy, subject to the cap.<\/p>\n<\/div>\n<\/article>\n<\/li>\n<li id=\"comment-26776\" class=\"comment odd alt depth-2\">\n<article id=\"article-comment-26776\"><header class=\"comment-header\">\n<p class=\"comment-author\"><span class=\"comment-author-name\">Harry Sit<\/span>\u00a0<span class=\"says\">says<\/span><\/p>\n<p class=\"comment-meta\"><time class=\"comment-time\"><a class=\"comment-time-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-26776\">March 7, 2021 at 7:46 pm<\/a><\/time><\/p>\n<\/header>\n<div class=\"comment-content\">\n<p>Oh, wait. It looks like the entire repayment requirement will be waived for everyone for 2020. You keep whatever advance subsidy you already received no matter how high your income is. If you qualify for more subsidy because your income is less than you originally estimated, you can still get more. Hang in there for another week until the official text of the law comes out to know for sure.<\/p>\n<\/div>\n<\/article>\n<\/li>\n<\/ul>\n<\/li>\n<li id=\"comment-26777\" class=\"comment even thread-even depth-1\">\n<article id=\"article-comment-26777\"><header class=\"comment-header\">\n<p class=\"comment-author\"><span class=\"comment-author-name\">Cindy<\/span>\u00a0<span class=\"says\">says<\/span><\/p>\n<p class=\"comment-meta\"><time class=\"comment-time\"><a class=\"comment-time-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-26777\">March 8, 2021 at 11:02 am<\/a><\/time><\/p>\n<\/header>\n<div class=\"comment-content\">\n<p>We are a family of 4 with AGI of about $57,000 (2 married adults &amp; 2 children).<br \/>We co-own a small business.<br \/>I\u2019m always afraid that our business will show a larger profit (s-Corp) &amp; we will have to repay the subsidy.<br \/>Is there a chart or slide scale that shows what a family of 4 qualifies for before repayment in each tier?<br \/>It worries me to the point I think of dropping insurance. Of course, I\u2019d like to make more money in my business, but not if it ends up costing me in the end.<\/p>\n<\/div>\n<div class=\"comment-reply\"><a class=\"comment-reply-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-26777\" rel=\"nofollow\" data-commentid=\"26777\" data-postid=\"7125\" data-belowelement=\"article-comment-26777\" data-respondelement=\"respond\" data-replyto=\"Reply to Cindy\" aria-label=\"Reply to Cindy\">Reply<\/a><\/div>\n<\/article>\n<ul class=\"children\">\n<li id=\"comment-26783\" class=\"comment odd alt depth-2\">\n<article id=\"article-comment-26783\"><header class=\"comment-header\">\n<p class=\"comment-author\"><span class=\"comment-author-name\">Harry Sit<\/span>\u00a0<span class=\"says\">says<\/span><\/p>\n<p class=\"comment-meta\"><time class=\"comment-time\"><a class=\"comment-time-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-26783\">March 8, 2021 at 6:04 pm<\/a><\/time><\/p>\n<\/header>\n<div class=\"comment-content\">\n<p>This calculator shows your estimated subsidy:<\/p>\n<p><a href=\"https:\/\/www.kff.org\/interactive\/subsidy-calculator\/\" rel=\"nofollow ugc\">https:\/\/www.kff.org\/interactive\/subsidy-calculator\/<\/a><\/p>\n<p>You give your estimated income first, say $57,000. Then you enter a higher income, say $67,000. The difference between the two results is the amount you\u2019ll need to pay back when your business makes more money.<\/p>\n<p>That said, it looks like the payback requirement will be waived for 2020 and the subsidy formula will change for 2021 and 2022. The calculator will have to be updated to the new law, but it still gives you a general idea.<\/p>\n<\/div>\n<\/article>\n<\/li>\n<\/ul>\n<\/li>\n<\/ol>\n<\/li>\n<\/ol>\n<ol class=\"comment-list\">\n<li style=\"list-style-type: none;\">\n<ol class=\"comment-list\">\n<li id=\"comment-26820\" class=\"comment even thread-odd thread-alt depth-1\">\n<article id=\"article-comment-26820\"><header class=\"comment-header\">\n<p class=\"comment-author\"><span class=\"comment-author-name\">Keith<\/span>\u00a0<span class=\"says\">says<\/span><\/p>\n<p class=\"comment-meta\"><time class=\"comment-time\"><a class=\"comment-time-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-26820\">March 14, 2021 at 8:59 am<\/a><\/time><\/p>\n<\/header>\n<div class=\"comment-content\">\n<p>Good information Harry. My problem is I retired in March 2020 and didn\u2019t include this income when calculating my years income. Earlier you talked about your income is durning the time frame when recieving your ACA insurance. As of now I would pay back all my subsidies 8000. Should my tax man know what to file? Also sounds like we may not have to pay any back which is great news if it is true. Our tax office did let me know this news yesterday.<\/p>\n<\/div>\n<div class=\"comment-reply\"><a class=\"comment-reply-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-26820\" rel=\"nofollow\" data-commentid=\"26820\" data-postid=\"7125\" data-belowelement=\"article-comment-26820\" data-respondelement=\"respond\" data-replyto=\"Reply to Keith\" aria-label=\"Reply to Keith\">Reply<\/a><\/div>\n<\/article>\n<ul class=\"children\">\n<li id=\"comment-26822\" class=\"comment odd alt depth-2\">\n<article id=\"article-comment-26822\"><header class=\"comment-header\">\n<p class=\"comment-author\"><span class=\"comment-author-name\">Harry Sit<\/span>\u00a0<span class=\"says\">says<\/span><\/p>\n<p class=\"comment-meta\"><time class=\"comment-time\"><a class=\"comment-time-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-26822\">March 14, 2021 at 4:15 pm<\/a><\/time><\/p>\n<\/header>\n<div class=\"comment-content\">\n<p>It\u2019s true. You keep whatever advance subsidy you already received no matter how high your income was in 2020. If you qualify for more subsidy because your 2020 income was less than you originally estimated, you can still get more. Because the law is only a few days old, the IRS and the tax software vendors still need time to update their systems. Once that\u2019s done, you can file your 2020 tax return and not have to pay back the subsidy.<\/p>\n<\/div>\n<\/article>\n<\/li>\n<\/ul>\n<\/li>\n<li id=\"comment-26901\" class=\"comment even thread-even depth-1\">\n<article id=\"article-comment-26901\"><header class=\"comment-header\">\n<p class=\"comment-author\"><span class=\"comment-author-name\">Margi Sirovatka<\/span>\u00a0<span class=\"says\">says<\/span><\/p>\n<p class=\"comment-meta\"><time class=\"comment-time\"><a class=\"comment-time-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-26901\">April 5, 2021 at 10:45 am<\/a><\/time><\/p>\n<\/header>\n<div class=\"comment-content\">\n<p>If you overestimate your AGI, I understand that the government refunds the premium tax credit \u2013 however it is my understanding that they do not refund any of the CSRs. For example, you may have paid an OOP of $9,000 (versus $1,000 if you had estimated your AGI accurately). You will never get back the $8,000 difference if you had indeed paid\/met your OOP. Is my understanding correct?<\/p>\n<\/div>\n<div class=\"comment-reply\"><a class=\"comment-reply-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-26901\" rel=\"nofollow\" data-commentid=\"26901\" data-postid=\"7125\" data-belowelement=\"article-comment-26901\" data-respondelement=\"respond\" data-replyto=\"Reply to Margi Sirovatka\" aria-label=\"Reply to Margi Sirovatka\">Reply<\/a><\/div>\n<\/article>\n<ul class=\"children\">\n<li id=\"comment-26903\" class=\"comment odd alt depth-2\">\n<article id=\"article-comment-26903\"><header class=\"comment-header\">\n<p class=\"comment-author\"><span class=\"comment-author-name\">Harry Sit<\/span>\u00a0<span class=\"says\">says<\/span><\/p>\n<p class=\"comment-meta\"><time class=\"comment-time\"><a class=\"comment-time-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-26903\">April 5, 2021 at 5:08 pm<\/a><\/time><\/p>\n<\/header>\n<div class=\"comment-content\">\n<p>That\u2019s correct. If you have a shot in qualifying for the CSR, you should try to justify your lower income estimate and get it upfront. If your estimate turns out too low you\u2019ll keep the CSR. If it\u2019s too high you won\u2019t get CSR retroactively.<\/p>\n<\/div>\n<\/article>\n<\/li>\n<\/ul>\n<\/li>\n<\/ol>\n<\/li>\n<\/ol>\n<ol class=\"comment-list\">\n<li id=\"comment-26996\" class=\"comment even thread-odd thread-alt depth-1\">\n<article id=\"article-comment-26996\"><header class=\"comment-header\">\n<p class=\"comment-author\"><span class=\"comment-author-name\">Justin<\/span>\u00a0<span class=\"says\">says<\/span><\/p>\n<p class=\"comment-meta\"><time class=\"comment-time\"><a class=\"comment-time-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-26996\">April 29, 2021 at 1:41 pm<\/a><\/time><\/p>\n<\/header>\n<div class=\"comment-content\">\n<p>What would happen if i\u2019m in a state that didn\u2019t adopt the medicaid expansion and my income fell below the poverty level to receive a subsidy. In other words, I am on the line of making too little for a subsidy but i go ahead and claim the subsidy throughout the year. Will I have to repay the subsidy if my income drops too low?<\/p>\n<\/div>\n<div class=\"comment-reply\"><a class=\"comment-reply-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-26996\" rel=\"nofollow\" data-commentid=\"26996\" data-postid=\"7125\" data-belowelement=\"article-comment-26996\" data-respondelement=\"respond\" data-replyto=\"Reply to Justin\" aria-label=\"Reply to Justin\">Reply<\/a><\/div>\n<\/article>\n<ul class=\"children\">\n<li id=\"comment-26998\" class=\"comment odd alt depth-2\">\n<article id=\"article-comment-26998\"><header class=\"comment-header\">\n<p class=\"comment-author\"><span class=\"comment-author-name\">Harry Sit<\/span>\u00a0<span class=\"says\">says<\/span><\/p>\n<p class=\"comment-meta\"><time class=\"comment-time\"><a class=\"comment-time-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-26998\">April 30, 2021 at 6:01 am<\/a><\/time><\/p>\n<\/header>\n<div class=\"comment-content\">\n<p>If the ACA exchange accepted you at the time of enrollment and they paid the subsidy upfront to the insurance company and then your income unexpectedly falls below the minimum, you\u2019ll still qualify for the premium tax credit. If you didn\u2019t get accepted upfront at the time of enrollment, you won\u2019t qualify for the premium tax credit on the tax return when your income is below the minimum threshold.<\/p>\n<\/div>\n<\/article>\n<\/li>\n<\/ul>\n<\/li>\n<li id=\"comment-27187\" class=\"comment even thread-even depth-1\">\n<article id=\"article-comment-27187\"><header class=\"comment-header\">\n<p class=\"comment-author\"><span class=\"comment-author-name\">Peg Sas<\/span>\u00a0<span class=\"says\">says<\/span><\/p>\n<p class=\"comment-meta\"><time class=\"comment-time\"><a class=\"comment-time-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-27187\">June 14, 2021 at 4:21 pm<\/a><\/time><\/p>\n<\/header>\n<div class=\"comment-content\">\n<p>Need advice for 2021 taxes with unemployment and Obamacare. Husband lost job Dec 2020, been on unemployment ever since but with his severance pkg he received 28 weeks of insurance thru former employer so it wasn\u2019t until this month, June, that he signed up for Obamacare. We estimated our income (I work part-time an only cover myself for insurance) but I was reading something about \u201cIf someone receives unemployment benefits during 2021, their income will be treated as no higher than 133 percent of the FPL. (married file jointly I guess this is $23,169) This means that those who receive unemployment benefits can receive maximal subsidies for ACA coverage, including no-premium coverage.\u201d<br \/>So if I said my income might be $26,500 and his 13,700 for a total of $40,200 what would that mean? And also another HUGE mistake I made was take out money accidently on margin in 2020 and had to repay Feb 2021 with $38,922 capital gains. We can put money in traditional IRA but how much will we need to in order to be under the 400% of $69,680.<\/p>\n<\/div>\n<div class=\"comment-reply\"><a class=\"comment-reply-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-27187\" rel=\"nofollow\" data-commentid=\"27187\" data-postid=\"7125\" data-belowelement=\"article-comment-27187\" data-respondelement=\"respond\" data-replyto=\"Reply to Peg Sas\" aria-label=\"Reply to Peg Sas\">Reply<\/a><\/div>\n<\/article>\n<ul class=\"children\">\n<li id=\"comment-27197\" class=\"comment odd alt depth-2\">\n<article id=\"article-comment-27197\"><header class=\"comment-header\">\n<p class=\"comment-author\"><span class=\"comment-author-name\">Harry Sit<\/span>\u00a0<span class=\"says\">says<\/span><\/p>\n<p class=\"comment-meta\"><time class=\"comment-time\"><a class=\"comment-time-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-27197\">June 16, 2021 at 8:32 am<\/a><\/time><\/p>\n<\/header>\n<div class=\"comment-content\">\n<p>If your job offers coverage for spouse and family members and the insurance meets certain standards, which most employers\u2019 plans do, he\u2019s not eligible for the premium tax credit if he enrolls in a plan through the ACA exchange. The government wants you to add him to your insurance.<\/p>\n<\/div>\n<\/article>\n<\/li>\n<\/ul>\n<\/li>\n<li id=\"comment-27222\" class=\"comment even thread-odd thread-alt depth-1\">\n<article id=\"article-comment-27222\"><header class=\"comment-header\">\n<p class=\"comment-author\"><span class=\"comment-author-name\">Robert Grisham<\/span>\u00a0<span class=\"says\">says<\/span><\/p>\n<p class=\"comment-meta\"><time class=\"comment-time\"><a class=\"comment-time-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-27222\">June 23, 2021 at 4:00 pm<\/a><\/time><\/p>\n<\/header>\n<div class=\"comment-content\">\n<p>Hi. I just discovered your site and have been reading for the last hour. I\u2019ve recently signed up for insurance through the marketplace. My income is commissions only, so I\u2019ve stated my income pretty low. There is a very good chance that my income will be higher than the 400% of FPL (family of 4).<\/p>\n<p>You stated in this article the following: \u201cIf your actual income exceeds 400% of FPL, there\u2019s no repayment cap \u2014 you will have to pay back 100% of the difference between what received and what your income qualifies for.\u201d<\/p>\n<p>I have read in other places that there is a cap of 8.5% of MAGI. I\u2019ve been looking at that as my worst case scenario of payback.<\/p>\n<p>Do you believe that to be the case? As I said, I\u2019ve only been on your site for an hour, but I\u2019ve not seen anything about the 8.5%.<\/p>\n<p>Thanks for the help!<\/p>\n<\/div>\n<div class=\"comment-reply\"><a class=\"comment-reply-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-27222\" rel=\"nofollow\" data-commentid=\"27222\" data-postid=\"7125\" data-belowelement=\"article-comment-27222\" data-respondelement=\"respond\" data-replyto=\"Reply to Robert Grisham\" aria-label=\"Reply to Robert Grisham\">Reply<\/a><\/div>\n<\/article>\n<ul class=\"children\">\n<li id=\"comment-27223\" class=\"comment odd alt depth-2\">\n<article id=\"article-comment-27223\"><header class=\"comment-header\">\n<p class=\"comment-author\"><span class=\"comment-author-name\">Harry Sit<\/span>\u00a0<span class=\"says\">says<\/span><\/p>\n<p class=\"comment-meta\"><time class=\"comment-time\"><a class=\"comment-time-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-27223\">June 23, 2021 at 5:37 pm<\/a><\/time><\/p>\n<\/header>\n<div class=\"comment-content\">\n<p>The 8.5% is part of the formula that determines how much subsidy your actual income qualifies for. It\u2019s the worst case if your low estimate gives you 0% in the formula and your actual income gives you 8.5%. See the example toward the end of this post:<\/p>\n<p><a href=\"https:\/\/thefinancebuff.com\/aca-premium-tax-credit-percentages.html\">2020 2021 2022 ACA Health Insurance Premium Tax Credit Percentages<\/a><\/p>\n<\/div>\n<\/article>\n<\/li>\n<\/ul>\n<\/li>\n<li id=\"comment-27774\" class=\"comment even thread-even depth-1\">\n<article id=\"article-comment-27774\"><header class=\"comment-header\">\n<p class=\"comment-author\"><span class=\"comment-author-name\">Dave C.<\/span>\u00a0<span class=\"says\">says<\/span><\/p>\n<p class=\"comment-meta\"><time class=\"comment-time\"><a class=\"comment-time-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-27774\">November 4, 2021 at 10:47 pm<\/a><\/time><\/p>\n<\/header>\n<div class=\"comment-content\">\n<p>Harry,<br \/>Thanks for this information. I would guess there is a lot in the ACA that people don\u2019t understand about how variations in estimated income can greatly affect what a person pays for a deductible, co-pays, etc. when choosing a silver plan with cost sharing reductions. When insurance agents are assiting low\/moderate income people, they should be aware that modest changes in estimated income can mean large changes in the cost sharing reductions \u2013 especially from year to year since the cost sharing reductions can change significanly on any particular plan and between companies. So there is much more involved than simply having to pay back any advance premium tax credit (or get a refund) if the person\u2019s income changes from what is estimated for the application.<br \/>As you said in response to comment #4, \u201cThe CSRs don\u2019t have to be paid back.\u201d That is, even if the person\u2019s income rises above what is estimated. That is VERY important.<\/p>\n<p>For example, on the Colorado Exchange plan finder (<a href=\"https:\/\/planfinder.connectforhealthco.com\/\" rel=\"nofollow ugc\">https:\/\/planfinder.connectforhealthco.com\/<\/a>), at the lower annual income levels ($20,000 to around $30,000), while the advance premium tax credit is gradually reduced as income increases, there is a huge difference between 2022 silver plan cost sharing reductions over that income range (and also from from 2021 to 2022 plans). With one major carrier silver plan for a single person, deductible going from $100 to $2300, maxium out of pocket from $2000 to $6950, and similar large differences in office visit and procedure copays. So as the estimated income level increases in that range, the cost sharing deductions decrease significantly.<\/p>\n<p>Therfore, with low\/moderate income people, an insurance agent (or person doing the application themselves) would be well served to specify as low an income as is reasonable on the application. For example, a person who had a taxable AGI that varied from $20K to $30K in the past five recent years should specify the lowest level of that range when applying to take full advantage of the cost sharing reductions. (Colorado\u2019s \u201clook back\u201d period in their application actually allows the person to choose from two to five years of annual income.) The repayment of any excess advance premium tax credit may well be totally offset by the savings from the cost sharing reductions at the lower estimated income level.<\/p>\n<\/div>\n<div class=\"comment-reply\"><a class=\"comment-reply-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-27774\" rel=\"nofollow\" data-commentid=\"27774\" data-postid=\"7125\" data-belowelement=\"article-comment-27774\" data-respondelement=\"respond\" data-replyto=\"Reply to Dave C.\" aria-label=\"Reply to Dave C.\">Reply<\/a><\/div>\n<\/article>\n<\/li>\n<li id=\"comment-28199\" class=\"comment odd alt thread-odd thread-alt depth-1\">\n<article id=\"article-comment-28199\"><header class=\"comment-header\">\n<p class=\"comment-author\"><span class=\"comment-author-name\">Anita M<\/span>\u00a0<span class=\"says\">says<\/span><\/p>\n<p class=\"comment-meta\"><time class=\"comment-time\"><a class=\"comment-time-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-28199\">December 22, 2021 at 2:37 pm<\/a><\/time><\/p>\n<\/header>\n<div class=\"comment-content\">\n<p>Harry,<br \/>Can you tell me if I have this correct? When I signed up for ACA for 2021 my subsidy from the government was $1400\/mo. I listed my income as $36000. It is just my husband and I. If I convert an IRA into a Roth and bring my income up to $60,000 and the 400% FPL is $68,960, does that mean I will only have to pay back $2700 of the premium subsidy?<\/p>\n<\/div>\n<div class=\"comment-reply\"><a class=\"comment-reply-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-28199\" rel=\"nofollow\" data-commentid=\"28199\" data-postid=\"7125\" data-belowelement=\"article-comment-28199\" data-respondelement=\"respond\" data-replyto=\"Reply to Anita M\" aria-label=\"Reply to Anita M\">Reply<\/a><\/div>\n<\/article>\n<ul class=\"children\">\n<li id=\"comment-28200\" class=\"comment even depth-2\">\n<article id=\"article-comment-28200\"><header class=\"comment-header\">\n<p class=\"comment-author\"><span class=\"comment-author-name\">Harry Sit<\/span>\u00a0<span class=\"says\">says<\/span><\/p>\n<p class=\"comment-meta\"><time class=\"comment-time\"><a class=\"comment-time-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-28200\">December 22, 2021 at 3:29 pm<\/a><\/time><\/p>\n<\/header>\n<div class=\"comment-content\">\n<p>That\u2019s correct.<\/p>\n<\/div>\n<\/article>\n<\/li>\n<\/ul>\n<\/li>\n<li id=\"comment-28221\" class=\"comment odd alt thread-even depth-1\">\n<article id=\"article-comment-28221\"><header class=\"comment-header\">\n<p class=\"comment-author\"><span class=\"comment-author-name\">John<\/span>\u00a0<span class=\"says\">says<\/span><\/p>\n<p class=\"comment-meta\"><time class=\"comment-time\"><a class=\"comment-time-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-28221\">December 24, 2021 at 11:42 pm<\/a><\/time><\/p>\n<\/header>\n<div class=\"comment-content\">\n<p>Harry,<br \/>1) I assume the 400% FPL cliff is calculated after Standard deduction, IRA contributions and capital losses ($3K) are all factored in?<br \/>2) If ACA income declared was $40K and it now is $45,500; what are the pros and cons of doing IRA to Roth conversions to reach the $51,520 limit. Is the $1,350 repayment cap (single CA filer) the only amount to be paid?<br \/>3) Since interest payments, dividends, etc. are estimates as of now and if the finally tally pushes one above the 400% cliff; can the conversions be reversed next year before April to avoid paying the massive ACA premiums with loss of subsidy?<br \/>4) Any other tax strategies in terms of capitals gains to take advantage of the low income tax bracket am currently in?<\/p>\n<\/div>\n<div class=\"comment-reply\"><a class=\"comment-reply-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-28221\" rel=\"nofollow\" data-commentid=\"28221\" data-postid=\"7125\" data-belowelement=\"article-comment-28221\" data-respondelement=\"respond\" data-replyto=\"Reply to John\" aria-label=\"Reply to John\">Reply<\/a><\/div>\n<\/article>\n<ul class=\"children\">\n<li id=\"comment-28223\" class=\"comment byuser comment-author-tfb bypostauthor even depth-2\">\n<article id=\"article-comment-28223\"><header class=\"comment-header\">\n<p class=\"comment-author\"><span class=\"comment-author-name\">Harry Sit<\/span>\u00a0<span class=\"says\">says<\/span><\/p>\n<p class=\"comment-meta\"><time class=\"comment-time\"><a class=\"comment-time-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-28223\">December 25, 2021 at 6:10 am<\/a><\/time><\/p>\n<\/header>\n<div class=\"comment-content\">\n<p>The 400% FPL cutoff is on MAGI, which is basically AGI plus tax-exempt muni bond interest. It\u2019s before the standard deduction. Use a tool featured in this post to evaluate the impact of additional Roth conversion and\/or realizing capital gains:<\/p>\n<p><a href=\"https:\/\/thefinancebuff.com\/tax-calculator-aca-obamacare-subsidy.html\">Roth Conversion and Capital Gains On ACA Health Insurance<\/a><\/p>\n<p>Roth conversion can\u2019t be reversed.<\/p>\n<\/div>\n<\/article>\n<\/li>\n<\/ul>\n<\/li>\n<li id=\"comment-28494\" class=\"comment odd alt thread-odd thread-alt depth-1\">\n<article id=\"article-comment-28494\"><header class=\"comment-header\">\n<p class=\"comment-author\"><span class=\"comment-author-name\">Teresa<\/span>\u00a0<span class=\"says\">says<\/span><\/p>\n<p class=\"comment-meta\"><time class=\"comment-time\"><a class=\"comment-time-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-28494\">January 14, 2022 at 8:35 pm<\/a><\/time><\/p>\n<\/header>\n<div class=\"comment-content\">\n<p>Harry,<br \/>I was not aware of the 8.5% of MAGI cap on premiums that was added mid-year. My husband and I purchased health insurance on Washington\u2019s marketplace (WAHealthplanfinder.org) and paid well over 8.5% of our MAGI on premiums. However, since our income is well above 400% of the FPL, I failed to check the box that said I wanted to be considered for credits when we originally enrolled for our plan. IRS Form 8962 does not appear to have any reference to the cap. Does this mean it\u2019s too late to apply for this credit when filing my tax return?<\/p>\n<\/div>\n<div class=\"comment-reply\"><a class=\"comment-reply-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-28494\" rel=\"nofollow\" data-commentid=\"28494\" data-postid=\"7125\" data-belowelement=\"article-comment-28494\" data-respondelement=\"respond\" data-replyto=\"Reply to Teresa\" aria-label=\"Reply to Teresa\">Reply<\/a><\/div>\n<\/article>\n<ul class=\"children\">\n<li id=\"comment-28495\" class=\"comment even depth-2\">\n<article id=\"article-comment-28495\"><header class=\"comment-header\">\n<p class=\"comment-author\"><span class=\"comment-author-name\">Harry Sit<\/span>\u00a0<span class=\"says\">says<\/span><\/p>\n<p class=\"comment-meta\"><time class=\"comment-time\"><a class=\"comment-time-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-28495\">January 14, 2022 at 10:10 pm<\/a><\/time><\/p>\n<\/header>\n<div class=\"comment-content\">\n<p>Form 8962 references it on Line 7, which points you to Table 2 in the Form 8962 Instructions (page 9). If you use tax software or a tax preparer, the software will automatically calculate your eligible credit.<\/p>\n<\/div>\n<\/article>\n<\/li>\n<\/ul>\n<\/li>\n<li id=\"comment-28990\" class=\"comment odd alt thread-even depth-1\">\n<article id=\"article-comment-28990\"><header class=\"comment-header\">\n<p class=\"comment-author\"><span class=\"comment-author-name\">Teresa<\/span>\u00a0<span class=\"says\">says<\/span><\/p>\n<p class=\"comment-meta\"><time class=\"comment-time\"><a class=\"comment-time-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-28990\">March 9, 2022 at 12:40 pm<\/a><\/time><\/p>\n<\/header>\n<div class=\"comment-content\">\n<p>Thanks for the tip. I was able to easily complete this form and get the credit on my return. Hopefully they\u2019ll extend this cliff negation in future years, especially since I know how to fill out the form now!<\/p>\n<\/div>\n<div class=\"comment-reply\"><a class=\"comment-reply-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-28990\" rel=\"nofollow\" data-commentid=\"28990\" data-postid=\"7125\" data-belowelement=\"article-comment-28990\" data-respondelement=\"respond\" data-replyto=\"Reply to Teresa\" aria-label=\"Reply to Teresa\">Reply<\/a><\/div>\n<\/article>\n<\/li>\n<li id=\"comment-31770\" class=\"comment even thread-odd thread-alt depth-1\">\n<article id=\"article-comment-31770\"><header class=\"comment-header\">\n<p class=\"comment-author\"><span class=\"comment-author-name\">Toli<\/span>\u00a0<span class=\"says\">says<\/span><\/p>\n<p class=\"comment-meta\"><time class=\"comment-time\"><a class=\"comment-time-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-31770\">December 30, 2022 at 5:28 am<\/a><\/time><\/p>\n<\/header>\n<div class=\"comment-content\">\n<p>Very thorough work. Two minor remarks: (a) the repayment caps predated TY 2020, and have been available since the early days of the ACA (the post could be misunderstood as suggesting they came about in TY 2020); (b) it is indeed best to estimate income conservatively and maximize the advance PTC payment, but if you experience an income surge at the end of the year (and esp. if your actual income may end up at or above 400% FPL), do estimate your repayment amount before the end of the year. That way, you\u2019ll have more mechanisms at your disposal to offset the surge (i.e., beyond deductible retirement or HSA contributions which can wait until Apr 15) (e.g., realizing an unrealized capital loss by Dec 31); or, if you cannot bring your income back down, make an estimated tax payment by Jan 15 to avoid underpayment penalties and a cash crunch at filing time.<\/p>\n<\/div>\n<div class=\"comment-reply\"><a class=\"comment-reply-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-31770\" rel=\"nofollow\" data-commentid=\"31770\" data-postid=\"7125\" data-belowelement=\"article-comment-31770\" data-respondelement=\"respond\" data-replyto=\"Reply to Toli\" aria-label=\"Reply to Toli\">Reply<\/a><\/div>\n<\/article>\n<ul class=\"children\">\n<li id=\"comment-35460\" class=\"comment odd alt depth-2\">\n<article id=\"article-comment-35460\"><header class=\"comment-header\">\n<p class=\"comment-author\"><span class=\"comment-author-name\">john<\/span>\u00a0<span class=\"says\">says<\/span><\/p>\n<p class=\"comment-meta\"><time class=\"comment-time\"><a class=\"comment-time-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-35460\">November 12, 2024 at 12:12 pm<\/a><\/time><\/p>\n<\/header>\n<div class=\"comment-content\">\n<p>for FY 2024\/25 does the repayment cap STILL apply for those whose MAGI is &gt; 400% FPL?<\/p>\n<p>2) is there any penalty if multiple years one\u2019s estimate of MAGI were say $30k when it ends up being $50-60k from the sale of something in early December?<\/p>\n<p>possibly penalty for under-payment of estiamted taxes, or not being allowed to use the APTC for following years , or ? (I\u2019m inclined to just allow my ACA plan to rollover, and not touch the ACA website, from past bad experiences.<\/p>\n<\/div>\n<\/article>\n<\/li>\n<li id=\"comment-35461\" class=\"comment byuser comment-author-tfb bypostauthor even depth-2\">\n<article id=\"article-comment-35461\"><header class=\"comment-header\">\n<p class=\"comment-author\"><span class=\"comment-author-name\">Harry Sit<\/span>\u00a0<span class=\"says\">says<\/span><\/p>\n<p class=\"comment-meta\"><time class=\"comment-time\"><a class=\"comment-time-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-35461\">November 12, 2024 at 2:24 pm<\/a><\/time><\/p>\n<\/header>\n<div class=\"comment-content\">\n<p>There was never a repayment cap for MAGI above 400% FPL. I don\u2019t know what the penalty is when you consistently exceed the income estimate you gave at the time of enrollment by a large amount or a large percentage. You should update your income after you realize a large capital gain. If you don\u2019t want to use the website, you can call the toll free number or have a broker update the income for you.<\/p>\n<\/div>\n<\/article>\n<\/li>\n<li id=\"comment-35462\" class=\"comment odd alt depth-2\">\n<article id=\"article-comment-35462\"><header class=\"comment-header\">\n<p class=\"comment-author\"><span class=\"comment-author-name\">john<\/span>\u00a0<span class=\"says\">says<\/span><\/p>\n<p class=\"comment-meta\"><time class=\"comment-time\"><a class=\"comment-time-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-35462\">November 12, 2024 at 2:57 pm<\/a><\/time><\/p>\n<\/header>\n<div class=\"comment-content\">\n<p>thanks for the reply, I had meant to ask, if for 2024\/25 one is above 400% FPL, is there a repayment cap, or only for those below 400% FPL.<\/p>\n<p>I\u2019m wondering if the large capital gain, were in December, is that somehow different than doing it in January, with regard, to needing to register a \u201cchange in life circumstances\u201d ?<\/p>\n<p>re: the website, was referring more to the annual open enrollment period, where one declares income then picks a plan, one year, while doing that, I was surprised that all the sudden, my plan immediately changed, despite, it ostensbily being something I was declareing for NEXT year \u2026<\/p>\n<\/div>\n<\/article>\n<\/li>\n<li id=\"comment-35463\" class=\"comment byuser comment-author-tfb bypostauthor even depth-2\">\n<article id=\"article-comment-35463\"><header class=\"comment-header\">\n<p class=\"comment-author\"><span class=\"comment-author-name\">Harry Sit<\/span>\u00a0<span class=\"says\">says<\/span><\/p>\n<p class=\"comment-meta\"><time class=\"comment-time\"><a class=\"comment-time-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-35463\">November 13, 2024 at 12:42 pm<\/a><\/time><\/p>\n<\/header>\n<div class=\"comment-content\">\n<p>No repayment cap for income above 400% FPL. That\u2019s the case in the past, present, and the foreseeable future.<\/p>\n<p>No difference in when your income increases above your estimate, whether it\u2019s in January, December, or any other month.<\/p>\n<p>No difference in when you don\u2019t want to use the website either, whether during open enrollment or outside open enrollment. You can call the toll free number or go through a broker.<\/p>\n<\/div>\n<\/article>\n<\/li>\n<li id=\"comment-35469\" class=\"comment odd alt depth-2\">\n<article id=\"article-comment-35469\"><header class=\"comment-header\">\n<p class=\"comment-author\"><span class=\"comment-author-name\">John<\/span>\u00a0<span class=\"says\">says<\/span><\/p>\n<p class=\"comment-meta\"><time class=\"comment-time\"><a class=\"comment-time-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-35469\">November 14, 2024 at 11:21 am<\/a><\/time><\/p>\n<\/header>\n<div class=\"comment-content\">\n<p>during open enrollment, when one estimates their income for the following year (2025), is that the same as registering a \u201cchange in income\u201d for 2024 if it done Nov 1 through Dec 15 2024? I believe this happened to me years past, when I was immediately changed to a Medicaid program for the final month of the year, while doing what I thought was an estimate for the following year.<\/p>\n<p>If so, and I\u2019m doing an update to my 2024 income, in Dec, 2024, and it is also doubling as my income estimate for 2025, when it is meant only for 2024, when would I put in an a new estimate of income for 2025 or call it a \u201cchange in lifestyle\u201d ?<\/p>\n<p>And then possibly do the same thing in Dec, 2025, when I may or may not realize a lump extra income of $10-$20k ?<\/p>\n<p>I wish it was less confusing. I\u2019m trying to make a plan to get me to Medicare age.<\/p>\n<\/div>\n<\/article>\n<\/li>\n<li id=\"comment-35477\" class=\"comment byuser comment-author-tfb bypostauthor even depth-2\">\n<article id=\"article-comment-35477\"><header class=\"comment-header\">\n<p class=\"comment-author\"><span class=\"comment-author-name\">Harry Sit<\/span>\u00a0<span class=\"says\">says<\/span><\/p>\n<p class=\"comment-meta\"><time class=\"comment-time\"><a class=\"comment-time-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-35477\">November 17, 2024 at 3:02 am<\/a><\/time><\/p>\n<\/header>\n<div class=\"comment-content\">\n<p>When your income changes by a large amount between one year and another, call the marketplace customer service and tell them the two numbers. They can make sure to differentiate which income applies to which year.<\/p>\n<\/div>\n<\/article>\n<\/li>\n<\/ul>\n<\/li>\n<li id=\"comment-33438\" class=\"comment odd alt thread-even depth-1\">\n<article id=\"article-comment-33438\"><header class=\"comment-header\">\n<p class=\"comment-author\"><span class=\"comment-author-name\">Larry S<\/span>\u00a0<span class=\"says\">says<\/span><\/p>\n<p class=\"comment-meta\"><time class=\"comment-time\"><a class=\"comment-time-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-33438\">November 15, 2023 at 6:48 pm<\/a><\/time><\/p>\n<\/header>\n<div class=\"comment-content\">\n<p>Hi Harry,<br \/>Thanks for the informative and well-written discussion of repayment limits on PTC credits. It\u2019s a subject that I have seen very little written about and none with the clarity you provide.<\/p>\n<p>Your articles have saved me a good deal of money. In my situation my final YE MAGI income for 2023 was about $30K more than I initially projected. The calculated overpayment of my subsidy will be about $6,000 but because of the cap my repayment will be limited to $3,000. Nice.<\/p>\n<\/div>\n<div class=\"comment-reply\"><a class=\"comment-reply-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-33438\" rel=\"nofollow\" data-commentid=\"33438\" data-postid=\"7125\" data-belowelement=\"article-comment-33438\" data-respondelement=\"respond\" data-replyto=\"Reply to Larry S\" aria-label=\"Reply to Larry S\">Reply<\/a><\/div>\n<\/article>\n<\/li>\n<li id=\"comment-35285\" class=\"comment even thread-odd thread-alt depth-1\">\n<article id=\"article-comment-35285\"><header class=\"comment-header\">\n<p class=\"comment-author\"><span class=\"comment-author-name\">Larry<\/span>\u00a0<span class=\"says\">says<\/span><\/p>\n<p class=\"comment-meta\"><time class=\"comment-time\"><a class=\"comment-time-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-35285\">October 27, 2024 at 5:16 pm<\/a><\/time><\/p>\n<\/header>\n<div class=\"comment-content\">\n<p>Hi Harry,<br \/>Is there a way I can determine what the cost of the SLCSP in my area is before receiving my 1095?<br \/>Could I review the ACA website for all (non-dental\/vision) silver plans offered and just take the list price for whichever is the second lowest cost offered? That seems like an obvious answer, but I want to make sure that I am not missing something in the calculation.<\/p>\n<p>Thanks for all you do to keep this information updated. I find this and other columns you post extremely helpful and make my financial life so much easier. Awesome.<\/p>\n<\/div>\n<div class=\"comment-reply\"><a class=\"comment-reply-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-35285\" rel=\"nofollow\" data-commentid=\"35285\" data-postid=\"7125\" data-belowelement=\"article-comment-35285\" data-respondelement=\"respond\" data-replyto=\"Reply to Larry\" aria-label=\"Reply to Larry\">Reply<\/a><\/div>\n<\/article>\n<ul class=\"children\">\n<li id=\"comment-35292\" class=\"comment byuser comment-author-tfb bypostauthor odd alt depth-2\">\n<article id=\"article-comment-35292\"><header class=\"comment-header\">\n<p class=\"comment-author\"><span class=\"comment-author-name\">Harry Sit<\/span>\u00a0<span class=\"says\">says<\/span><\/p>\n<p class=\"comment-meta\"><time class=\"comment-time\"><a class=\"comment-time-link\" href=\"https:\/\/thefinancebuff.com\/pay-back-aca-health-insurance-subsidy-tax-credit-cap.html#comment-35292\">October 27, 2024 at 8:29 pm<\/a><\/time><\/p>\n<\/header>\n<div class=\"comment-content\">\n<p>That works. KFF\u2019s\u00a0<a href=\"https:\/\/www.kff.org\/interactive\/subsidy-calculator\/\" target=\"_blank\" rel=\"noopener nofollow ugc\">Health Insurance Marketplace Calculator<\/a>\u00a0also works when you set a high household income (say $500,000). The displayed \u201cYour cost for a silver plan\u201d is the cost of the SLCSP. Both get you close but it may not be to the exact dollar. The exact cost only comes in the 1095 form.<\/p>\n<\/div>\n<\/article>\n<p>\u00a0<\/p>\n<\/li>\n<\/ul>\n<\/li>\n<\/ol>\n<\/div>\n<h1>What happened to the &#8220;Family Glitch&#8221; that prevented dependents of employees with employee-only company coverage from accessing APTCs?<\/h1>\n<p>\u00a0<\/p>\n<div class=\"hero-intro\">\n<div class=\"facts\">\n<div class=\"articles-box-slider-wrapper\">\n<div class=\"title\">\n<h1 class=\"\">IRS regulations fix the ACA\u2019s \u2018family glitch\u2019 as of 2023<\/h1>\n<h2>With new IRS rule, some families are newly eligible for premium subsidies<\/h2>\n<small class=\"post_author_and_date\">Author:\u00a0<a href=\"https:\/\/www.healthinsurance.org\/authors\/louise-norris\/\">Louise Norris<\/a>\u00a0| Date Posted: April 19, 2023<\/small><\/div>\n<\/div>\n<\/div>\n<div class=\"hero-img-container\"><img class=\"hero-img responsive-image\" src=\"https:\/\/www.healthinsurance.org\/wp-content\/uploads\/2022\/10\/family-glitch-fix.jpg\" alt=\"Family glitch fix 2022\" \/><\/div>\n<\/div>\n<div class=\"copy-section\">\n<div class=\"copy-section-content\">\n<div class=\"takeaway\">\n<h3>In this article<\/h3>\n<ul>\n<li><a href=\"https:\/\/www.healthinsurance.org\/obamacare\/irs-regulations-fix-the-acas-family-glitch-as-of-2023\/#affordability\">What was the ACA\u2019s \u2018family glitch?\u2019<\/a><\/li>\n<li><a href=\"https:\/\/www.healthinsurance.org\/obamacare\/irs-regulations-fix-the-acas-family-glitch-as-of-2023\/#Biden\">Biden administration rule change fixed the family glitch<\/a><\/li>\n<li><a href=\"https:\/\/www.healthinsurance.org\/obamacare\/irs-regulations-fix-the-acas-family-glitch-as-of-2023\/#affected\">Who was affected by the \u2018family glitch?\u2019<\/a><\/li>\n<li><a href=\"https:\/\/www.healthinsurance.org\/obamacare\/irs-regulations-fix-the-acas-family-glitch-as-of-2023\/#mandate\">The \u2018glitch\u2019 and employer-sponsored plans<\/a><\/li>\n<li><a href=\"https:\/\/www.healthinsurance.org\/obamacare\/irs-regulations-fix-the-acas-family-glitch-as-of-2023\/#costs\">How was the family glitch created?<\/a><\/li>\n<li><a href=\"https:\/\/www.healthinsurance.org\/obamacare\/irs-regulations-fix-the-acas-family-glitch-as-of-2023\/#Dems\">Previous (failed) legislative efforts to fix the \u2018family glitch\u2019<\/a><\/li>\n<li><a href=\"https:\/\/www.healthinsurance.org\/obamacare\/irs-regulations-fix-the-acas-family-glitch-as-of-2023\/#fixing\">How does fixing the \u2018family glitch\u2019 help families?<\/a><\/li>\n<\/ul>\n<\/div>\n<p>Most employers that offer health insurance tend to be quite generous when it comes to subsidizing the cost of their employees\u2019 premiums. And although many also pay a large portion of the cost to add dependents to the plan, it\u2019s not uncommon to see a plan that requires significant employee contributions to cover dependents. The IRS\u00a0<a href=\"https:\/\/public-inspection.federalregister.gov\/2022-22184.pdf\" target=\"_blank\" rel=\"noopener\">notes<\/a>\u00a0that 12% of workers pay more than $10,000\/year in premiums for employer-sponsored family health coverage.<\/p>\n<p>From 2014 through 2022, these families were generally ineligible for financial assistance if they wanted to purchase their own health coverage instead, through the exchange\/marketplace. But that changed as of 2023. The\u00a0<a href=\"https:\/\/public-inspection.federalregister.gov\/2022-22184.pdf\" target=\"_blank\" rel=\"noopener\">IRS finalized a new regulation<\/a>\u00a0to replace a 2013 IRS regulation that created the \u201cfamily glitch.\u201d Under the new rules, some families became newly eligible for marketplace premium subsidies as of 2023.<br \/><a name=\"affordability\"><\/a><\/p>\n<div class=\"hio_question\">\n<h3>What is the ACA&#8217;s &#8216;family glitch?&#8217;<\/h3>\n<p>The \u201cfamily glitch\u201d refers to the fact that from 2014 through 2022, when the\u00a0<a href=\"https:\/\/www.healthinsurance.org\/special-enrollment-guide\/an-sep-if-your-employer-sponsored-plan-is-unaffordable-or-stops-providing-mininum-value\/#affordable\">affordability of an employer-sponsored health plan<\/a>\u00a0was determined, it was based on<em>\u00a0just the cost for the employee<\/em>. The cost to add family members was not taken into consideration. But the affordability determination was then applied to all members of the family who could be added to the employer-sponsored health plan.<\/p>\n<p>A person is only eligible for\u00a0<a href=\"https:\/\/www.healthinsurance.org\/faqs\/tag\/premium-subsidies\/\">premium subsidies<\/a>\u00a0in the exchange if they are not eligible for affordable employer-sponsored health insurance. So if a family\u2019s employer-sponsored coverage offer was considered \u201caffordable\u201d (based on the cost to cover just the employee) and\u00a0<a href=\"https:\/\/www.healthinsurance.org\/special-enrollment-guide\/an-sep-if-your-employer-sponsored-plan-is-unaffordable-or-stops-providing-mininum-value\/#MV\">provided minimum value<\/a>, the entire family was ineligible for subsidies in the exchange.<\/p>\n<p>It didn\u2019t matter how much the employee would have had to pay to purchase\u00a0<em>family<\/em>\u00a0coverage. The family members were not eligible for exchange subsidies if the employee could get employer-sponsored coverage\u00a0<em>just for him or herself<\/em>, for less than 9.61% of the household\u2019s income in 2022 (this threshold is indexed annually; it\u2019s 9.12% in 2023). As long as the employee\u2019s portion of the premium is affordable, the cost for the family could have ended up being 25% \u2014 or more \u2014 of their household income and they still had no access to premium subsidies. They could either pay full price in the individual market, or pay whatever the employer required to cover the family on the employer\u2019s plan, despite both options being financially unrealistic.<\/p>\n<\/div>\n<a class=\"takeaways-back-to-top\" href=\"https:\/\/www.healthinsurance.org\/obamacare\/irs-regulations-fix-the-acas-family-glitch-as-of-2023\/#\">Back to top<\/a>\n<p>\u00a0<\/p>\n<p>(In 2023, employer-sponsored coverage is deemed \u201caffordable\u201d if it costs less than\u00a0<a href=\"https:\/\/www.irs.gov\/pub\/irs-drop\/rp-22-34.pdf\" target=\"_blank\" rel=\"noopener\">9.12% of household income<\/a>. The\u00a0<a href=\"https:\/\/www.healthinsurance.org\/blog\/how-the-build-back-better-legislation-might-affect-your-coverage\/\">Build Back Better Act<\/a>\u00a0called for the affordability threshold to be reset to 8.5% of household income, but that legislation stalled in the Senate after passing the House in November 2021. Although some parts of the Build Back Better Act were ultimately included in the\u00a0<a href=\"https:\/\/www.healthinsurance.org\/blog\/how-will-the-inflation-reduction-act-help-marketplace-enrollees\/\">Inflation Reduction Act<\/a>\u00a0that was enacted in August 2022, this provision was not among them.)<\/p>\n<div class=\"calculator-section aca_affordability_calc\">\n<div id=\"calculator_wrapper\" class=\"calculator_wrapper_cs\">\n<div class=\"title\">\n<h3>Employer Health Plan Affordability Calculator<\/h3>\n<\/div>\n<div id=\"calculator\"><form id=\"healthInsCalcForm\" action=\"https:\/\/www.healthinsurance.org\/obamacare\/irs-regulations-fix-the-acas-family-glitch-as-of-2023\/\" method=\"post\">\n<div class=\"calc_columns\">\n<div class=\"calc_column\">\n<div class=\"calc_row magi\">\n<div class=\"calc_block vertical\">\n<div class=\"calc_block_row_title\">Modified Adjusted Gross Income\u00a0(<a href=\"https:\/\/www.healthcare.gov\/income-and-household-information\/income\/\" target=\"_blank\" rel=\"noopener\">MAGI<\/a>)<\/div>\n<p>For most taxpayers, your MAGI is close to AGI (Line 11 of your Form 1040).<\/p>\n<div id=\"sliderWrapper\">\n<div id=\"incomeSlider\" class=\"acaAaffordabilityIncomeSlider ui-slider ui-corner-all ui-slider-horizontal ui-widget ui-widget-content\">\n<div class=\"ui-slider-range ui-corner-all ui-widget-header ui-slider-range-min\">\u00a0<\/div>\n<\/div>\n<div id=\"incomeSliderValueWrapper\">\n<div class=\"magi_limit min_limit\">$0<\/div>\n<div id=\"incomeSliderValue\"><input id=\"taxableIncome\" class=\"acaAaffordabilityTaxableIncome\" autocomplete=\"off\" max=\"150000\" min=\"0\" name=\"taxableIncome\" step=\"1000\" type=\"text\" value=\"75000\" \/><\/div>\n<div class=\"magi_limit max_limit\">$150,000<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<div class=\"calc_row coverage_cost_row\">\n<div class=\"coverage_cost_inner_wrapper\">\n<div class=\"coverage_cost_value_section_wrapper\">\n<div class=\"calc_block horizontal\"><label for=\"employeeCoverage\">Cost of employee only coverage<\/label>\n<div class=\"coverage_cost_wrapper\"><input id=\"employeeCoverage\" name=\"employeeCoverage\" pattern=\"[0-9]*\" type=\"text\" value=\"\" placeholder=\"$0\" \/><\/div>\n<\/div>\n<span class=\"tooltip\" data-tooltip=\"This information is typically available through your employers HR department or workplace portal, and should be based on the lowest-cost plan your employer offers.\">?<\/span><\/div>\n<div class=\"coverage_cost_payment_frequency_wrapper\"><select id=\"paymentFrequency\" name=\"paymentFrequency\" data-inline=\"true\">\u00a0 \u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\n<option disabled=\"disabled\" selected=\"selected\" value=\"notSelected\">Payment frequency<\/option>\n\u00a0 \u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\n<option value=\"biweekly\">Bi-weekly<\/option>\n\u00a0 \u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\n<option value=\"monthly\">Monthly<\/option>\n\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0 \u00a0<\/select><\/div>\n<\/div>\n<\/div>\n<div class=\"calc_row coverage_cost_row\">\n<div class=\"calc_block horizontal\"><label for=\"familyCoverage\">Cost of family member coverage<\/label>\n<div class=\"coverage_cost_wrapper\"><input id=\"familyCoverage\" name=\"familyCoverage\" pattern=\"[0-9]*\" type=\"text\" value=\"\" placeholder=\"$0\" \/><\/div>\n<\/div>\n<span class=\"tooltip\" data-tooltip=\"This information is typically available through your employers HR department or workplace portal, and should be based on the lowest-cost plan your employer offers.\">?<\/span>\n<div class=\"familyCoverageSubheader\">Includes your spouse, and children claimed as dependents on your taxes. To calculate this value subtract the cost of employee coverage from the cost of family coverage.<\/div>\n<\/div>\n<p class=\"call_to_action calculate_aca_affordability_btn_wrapper\"><a id=\"calculate_aca_affordability\" class=\"major_button calculate_aca_affordability_btn\" data-gacategory=\"Employer Health Plan Affordability Calculator\" data-gaevent=\"Click\" data-galabel=\"\/obamacare\/irs-regulations-fix-the-acas-family-glitch-as-of-2023\/\"><\/a>Calculate<\/p>\n<\/div>\n<\/div>\n<\/form><\/div>\n<\/div>\n<\/div>\n<br \/><a name=\"Biden\"><\/a>\n<p>\u00a0<\/p>\n<h3>Biden administration rule change fixes the family glitch<\/h3>\n<p>Soon after taking office, President Biden issued\u00a0<a href=\"https:\/\/www.whitehouse.gov\/briefing-room\/presidential-actions\/2021\/01\/28\/executive-order-on-strengthening-medicaid-and-the-affordable-care-act\/\" target=\"_blank\" rel=\"noopener\">an executive order to protect and strengthen Medicaid and the ACA<\/a>. It called for \u201c<em>policies or practices that may reduce the affordability of coverage or financial assistance for coverage, including for dependents,<\/em>\u201d which hinted that the Biden administration would be open to a regulatory approach to fixing the family glitch.<\/p>\n<p>In the fall of 2021, the Office of Management and Budget (OMB)\u00a0<a href=\"https:\/\/www.reginfo.gov\/public\/do\/eAgendaViewRule?pubId=202110&amp;RIN=1545-BQ16\" target=\"_blank\" rel=\"noopener\">noted<\/a>\u00a0that the Treasury Department and IRS were proposing regulatory changes related to that executive order. As of March 2022,\u00a0<a href=\"https:\/\/www.reginfo.gov\/public\/do\/eoDetails?rrid=231063\" target=\"_blank\" rel=\"noopener\">a proposed rule was under review by OMB<\/a>, and the\u00a0<a href=\"https:\/\/public-inspection.federalregister.gov\/2022-07158.pdf\" target=\"_blank\" rel=\"noopener\">details of the proposed fix<\/a>\u00a0were published in early April.<\/p>\n<p>The\u00a0<a href=\"https:\/\/public-inspection.federalregister.gov\/2022-22184.pdf\" target=\"_blank\" rel=\"noopener\">IRS finalized the rule change<\/a>\u00a0in October 2022, a few weeks before the start of the open enrollment period for 2023 individual\/family health coverage.<\/p>\n<p>The rule change is fairly simple and straightforward: Instead of basing the affordability determination for a family\u2019s employer-sponsored health insurance on just the cost to cover the employee, the determination will now be made based on the cost to cover the employee plus family members, if applicable. Here are the important points to understand about this:<\/p>\n<ul>\n<li>The family glitch fix is in effect as of 2023. So when families applied for 2023 coverage during the open enrollment period in the fall of 2022, the new rules were used to determine whether anyone in the household qualified for a premium subsidy.<\/li>\n<li>If a family has to pay more than a certain percentage of household income (9.12% in 2023) for the employer-sponsored plan, they will potentially be eligible for premium tax credits in the marketplace. The same would also be true if the coverage offered to the family does not\u00a0<a href=\"https:\/\/www.healthinsurance.org\/special-enrollment-guide\/an-sep-if-your-employer-sponsored-plan-is-unaffordable-or-stops-providing-mininum-value\/#MV\">provide minimum value<\/a>. So if an employer offers, for example, separate coverage to family members that is affordable but that doesn\u2019t provide minimum value, the family members would potentially still be eligible for a subsidy to buy a marketplace plan.<\/li>\n<li>There is a separate affordability determination for the employee (based on self-only coverage), and for family members (based on the total cost of family coverage). So depending on how an employer subsidizes the cost of family coverage, it\u2019s possible that coverage could be considered affordable for the employee but not for family members. In that case, the family members would potentially be eligible for a premium tax credit in the marketplace, but the employee would not.<\/li>\n<li>Nothing has changed about the ACA\u2019s employer mandate. Large employers still have to provide affordable,\u00a0<a href=\"https:\/\/www.healthinsurance.org\/special-enrollment-guide\/an-sep-if-your-employer-sponsored-plan-is-unaffordable-or-stops-providing-mininum-value\/#MV\">minimum-value<\/a>\u00a0coverage to their full-time employees, and offer coverage to those employees\u2019 dependents (offering coverage to spouses is optional). But there continue to be no affordability requirements as far as the coverage that\u2019s offered to dependents. The employer mandate penalty is only triggered if an\u00a0<em>employee\u2019s<\/em>\u00a0coverage is unaffordable and they receive a premium tax credit in the marketplace. There is no mechanism for triggering the penalty based on an employee\u2019s family members receiving premium tax credits in the marketplace.<\/li>\n<li>If a family has some members on a marketplace plan and others covered under one or more employer-sponsored plans and\/or Medicare, the family\u2019s\u00a0<em>total<\/em>\u00a0premium costs could still be somewhat unaffordable. Premium tax credits currently ensure that households don\u2019t have to spend more than 8.5% of household income to buy the\u00a0<a href=\"https:\/\/www.healthinsurance.org\/glossary\/benchmark-plan\/\">benchmark plan<\/a>, but that\u2019s only applicable to the marketplace premiums. Premiums for other coverage are not factored in,\u00a0<a href=\"https:\/\/www.healthinsurancecolorado.net\/fixing-the-acas-medicare-glitch\/\" target=\"_blank\" rel=\"noopener\">as described here with regards to households with one spouse on Medicare and the other on a marketplace plan<\/a>. This is discussed in more detail below.<\/li>\n<li>The cost to cover non-dependent family members is not taken into consideration. So for example, young adults can remain on a parent\u2019s health plan until they turn 26, but are generally not considered a tax dependent for the last few years of that window. So if they enroll in the family plan, the cost to cover them is not counted when the affordability of the family plan is determined. (Young adults in this situation can already apply for premium subsidies in the marketplace based on their own income, and the fact that they have the option to be added to a parent\u2019s employer-sponsored health insurance is not taken into consideration.)<\/li>\n<li>In the final rule change, the IRS notes that \u201c<em>new take-up of Exchange coverage may be modest relative to the size of the newly eligible population<\/em>\u201d even with the family glitch fix in place. This is due to a variety of factors, including the way subsidies are determined with respect to household income (described in more detail below), the multiple deductibles and out-of-pocket maximums that a family would have if they keep the employee on an employer-sponsored plan and enroll the rest of the family in a marketplace plan, and the fact that families might want to keep the benefits and provider network offered by the employer, instead of switching to individual market coverage.<\/li>\n<li>Historically, there have been\u00a0<a href=\"https:\/\/www.kff.org\/health-reform\/issue-brief\/the-aca-family-glitch-and-affordability-of-employer-coverage\/\" target=\"_blank\" rel=\"noopener\">roughly 5 million people<\/a>\u00a0affected by the family glitch. When the rule change was proposed, the\u00a0<a href=\"https:\/\/www.whitehouse.gov\/briefing-room\/statements-releases\/2022\/04\/05\/fact-sheet-biden-harris-administration-proposes-rule-to-fix-family-glitch-and-lower-health-care-costs\/\" target=\"_blank\" rel=\"noopener\">White House published a statement<\/a>\u00a0indicating that they expected about 200,000 uninsured people to gain coverage as a result of the proposed family glitch fix. And they anticipated that \u201c<em>nearly 1 million Americans would see their coverage become more affordable<\/em>\u201d under the new rules. (As described below, fixing the family glitch does not result in subsidies for everyone who was caught by the family glitch; some will still find coverage to be unaffordable.) In\u00a0<a href=\"https:\/\/public-inspection.federalregister.gov\/2022-22184.pdf\" target=\"_blank\" rel=\"noopener\">the final rule<\/a>, the IRS noted some wide variability in the projections for how this rule will impact enrollment: Somewhere between 600,000 and 2.3 million newly-eligible people are expected to enroll in coverage through the exchange\/marketplace, and somewhere between 80,000 and 700,000 uninsured people are expected to gain coverage.<\/li>\n<\/ul>\n<p>The family glitch relied on minuscule bits of text within the ACA rather than the broad scope and intent of the law. The overarching goal of\u00a0<a href=\"https:\/\/www.healthinsurance.org\/obamacare\/\">Obamacare<\/a>\u00a0was to expand access to health insurance, and to make it affordable. Yet the 2013 rule (used for coverage effective from 2014 through 2022) on what constitutes \u201caffordable\u201d employer-sponsored coverage did nothing to make health insurance affordable or accessible for low- and moderate-income families whose employers didn\u2019t subsidize a significant portion of dependents\u2019 coverage. The Biden administration\u2019s goal was to change that. The new IRS rule change highlights the fact that the goal of the ACA is to make coverage more accessible and affordable, and that the new rules are necessary in order to make that happen.<br \/><a name=\"costs\"><\/a><\/p>\n<a class=\"takeaways-back-to-top\" href=\"https:\/\/www.healthinsurance.org\/obamacare\/irs-regulations-fix-the-acas-family-glitch-as-of-2023\/#\">Back to top<\/a>\n<div class=\"hio_question\">\n<h3>How was the family glitch created?<\/h3>\n<p>The \u201cfamily glitch\u201d was clarified by the IRS in a\u00a0<a href=\"https:\/\/www.gpo.gov\/fdsys\/pkg\/FR-2013-02-01\/pdf\/2013-02136.pdf\" target=\"_blank\" rel=\"desktop_external noopener\">final rule<\/a>\u00a0published in early 2013, based on the language of the ACA. There are two main sections of the law that were involved:\u00a0<a href=\"https:\/\/www.law.cornell.edu\/uscode\/text\/26\/36B\" target=\"_blank\" rel=\"desktop_external noopener\">36B<\/a>\u00a0deals with subsidies, and\u00a0<a href=\"https:\/\/www.law.cornell.edu\/uscode\/text\/26\/5000A\" target=\"_blank\" rel=\"desktop_external noopener\">5000A<\/a>\u00a0deals with the individual mandate and penalty.<\/p>\n<p>In 36B, the law states that an employer plan is affordable as long as the employee\u2019s required contribution doesn\u2019t exceed 9.5% of income (that\u2019s indexed annually; it\u2019s 9.12% in 2023). And to clarify \u201crequired contribution\u201d the statute refers us to the\u00a0<a href=\"https:\/\/www.law.cornell.edu\/uscode\/text\/26\/5000A#e_1_B\" target=\"_blank\" rel=\"desktop_external noopener\">definition in 5000A<\/a>, which states that it\u2019s the amount that must be paid for\u00a0<em>self-only<\/em>\u00a0coverage.<\/p>\n<p>When the IRS issued its rule in 2013, the agency noted that some commenters had suggested that the earlier proposed regulation be modified to define the employee\u2019s contribution as the total amount the employee must pay for family coverage. But ultimately the rule was issued without changing the definition of the employee\u2019s required contribution.<\/p>\n<p>Health Affairs\u00a0<a href=\"https:\/\/www.healthaffairs.org\/do\/10.1377\/hpb20141110.62257\/full\/\" target=\"_blank\" rel=\"desktop_external noopener\">explains<\/a>\u00a0that this was not an accident or oversight \u2014 it was carefully considered and the final regulation was delayed while the Government Accountability Office and the IRS analyzed the impact of the decision. There were concerns that employers would increase the contributions required to enroll family members, which would push more people off employer plans and into the exchanges, driving up the total cost of subsidies. Ultimately, those concerns prevailed and the \u201cfamily glitch\u201d was born.<\/p>\n<p>But even at the time, it was clear that there was a lot of ambiguity in terms of how affordability of employer-sponsored plan should be determined. In the proposed fix that was published in 2022 (<a href=\"https:\/\/public-inspection.federalregister.gov\/2022-07158.pdf\" target=\"_blank\" rel=\"noopener\">see page 11<\/a>), the IRS notes that a Joint Committee on Taxation report in 2010 initially indicated that affordability would be based on the cost for the type of coverage that was applicable to a particular employee (ie, self-only, family, etc.) but that the wording was later changed to indicate that the cost of self-only coverage would be used regardless of the employee\u2019s circumstances.<\/p>\n<p>And in the final rule that the IRS published in 2022, fixing the family glitch, they note that original (2010) projections on the cost of premium tax credits had been too high, based on what proved to be incorrect assumptions about \u201c<em>how the economy would change and how people and employers would respond to the law, and that, to a lesser extent, the differences were caused by judicial decisions, statutory changes, and administrative actions that followed the ACA\u2019s enactment<\/em>.\u201d In other words, exchange enrollment and premium tax credit costs have been lower than expected.<\/p>\n<\/div>\n<a class=\"takeaways-back-to-top\" href=\"https:\/\/www.healthinsurance.org\/obamacare\/irs-regulations-fix-the-acas-family-glitch-as-of-2023\/#\">Back to top<\/a><br \/><a name=\"mandate\"><\/a>\n<p>\u00a0<\/p>\n<h3>The \u2018glitch\u2019 and employer-sponsored plans<\/h3>\n<p>Under the ACA, employers with 50 or more\u00a0<a href=\"https:\/\/www.healthinsurance.org\/glossary\/full-time-equivalent\/\">full-time equivalent<\/a>\u00a0employees are required to offer coverage to their employees and to their employees\u2019 children, but\u00a0<a href=\"https:\/\/www.motherjones.com\/mojo\/2013\/05\/obamacare-healthcare-coverage-spouses\" target=\"_blank\" rel=\"desktop_external noopener\">not to spouses<\/a>\u00a0\u2013 although it\u2019s still relatively rare for companies to exclude spouses. If an employer plan doesn\u2019t cover spouses at all, the spouse was already eligible to get subsidies in the exchange based on income. There was no \u201cglitch\u201d for the spouse if the employer coverage simply wasn\u2019t available to the spouse.<\/p>\n<p>(But it should be noted that the spouse\u2019s premium subsidy eligibility would still be based on the entire household\u2019s income, which we\u2019ll address in an example in a moment \u2014 the short story is that the spouse, applying for coverage on their own, might not end up being eligible for subsidies even with a fairly modest household income.)<\/p>\n<p>If large employers don\u2019t make the coverage affordable for the employee (self-only coverage) and the employee then obtains a subsidy in the exchange, the employer is subject to a penalty. So there is an incentive for employers to make sure that they are subsidizing a good chunk of the employee\u2019s premium.<\/p>\n<p>But while large employers are required to\u00a0<em>offer<\/em>\u00a0health coverage to employees\u2019 children (and most also do so for spouses), there is no requirement that the employer\u00a0<em>pay for<\/em>\u00a0that coverage, because the cost of the dependents\u2019 coverage is not factored into the \u201caffordable\u201d calculation. Many companies go above and beyond, subsidizing a large portion of dependents\u2019 health insurance premiums (in 2022, the average employer paid\u00a0<a href=\"https:\/\/files.kff.org\/attachment\/Report-Employer-Health-Benefits-2022-Annual-Survey.pdf\" target=\"_blank\" rel=\"noopener\">about 73%<\/a>\u00a0of total family premiums). But not all of them do.<\/p>\n<p>And in conjunction with the family glitch fix, the IRS has\u00a0<a href=\"https:\/\/www.irs.gov\/pub\/irs-drop\/n-22-41.pdf\" target=\"_blank\" rel=\"noopener\">clarified<\/a>\u00a0that employers could allow employees to make a cafeteria plan coverage election change to remove family members from an employer-sponsored plan as of January 2023, so that they could take advantage of newly-available premium subsidies in the marketplace. But it\u2019s important to note that although the final rule on the family glitch fix indicates that \u201c<em>employees will be permitted\u00a0<\/em><em>under the notice to revoke coverage in an employer plan associated with a cafeteria plan beginning in 2023<\/em>,\u201d Notice 2022-41 actually just permits employers to allow this, but does not require them to do so.<\/p>\n<p>But if your employer adopted the provisions in IRS Notice 2022-41 and the employer\u2019s plan doesn\u2019t follow the calendar year (so you normally would not be able to make a change to your coverage on January 1), you had the option to switch your family members to a plan purchased in the exchange during open enrollment in the fall of 2022, and remove them from your employer\u2019s plan when the exchange plan took effect in January 2023.<br \/><a name=\"affected\"><\/a><\/p>\n<a class=\"takeaways-back-to-top\" href=\"https:\/\/www.healthinsurance.org\/obamacare\/irs-regulations-fix-the-acas-family-glitch-as-of-2023\/#\">Back to top<\/a>\n<div class=\"hio_question\">\n<h3>Who&#8217;s affected by the &#8216;family glitch?&#8217;<\/h3>\n<p>Somewhere between\u00a0<a href=\"https:\/\/www.healthaffairs.org\/do\/10.1377\/hpb20141110.62257\/full\/\" target=\"_blank\" rel=\"desktop_external noopener\">two million<\/a>\u00a0and\u00a0<a href=\"https:\/\/khn.org\/news\/fixing-obamacares-family-glitch-hinges-on-outcome-of-november-elections\/\" target=\"_blank\" rel=\"noopener\">six million<\/a>\u00a0people have historically been impacted by the family glitch (a recent KFF analysis estimated that it was\u00a0<a href=\"https:\/\/www.kff.org\/health-reform\/issue-brief\/the-aca-family-glitch-and-affordability-of-employer-coverage\/\" target=\"_blank\" rel=\"noopener\">5.1 million<\/a>). They were disproportionately lower-income, because lower-wage workers have to spend a larger percentage of their income to pay for health insurance if subsidies aren\u2019t available, and because higher-income workers are more likely to work for companies that heavily subsidize coverage for dependents.<\/p>\n<\/div>\n<a class=\"takeaways-back-to-top\" href=\"https:\/\/www.healthinsurance.org\/obamacare\/irs-regulations-fix-the-acas-family-glitch-as-of-2023\/#\">Back to top<\/a>\n<p>\u00a0<\/p>\n<p>Fortunately for many of the families caught by the glitch, the Children\u2019s Health Insurance Program (CHIP) provides coverage for children with household incomes\u00a0<a href=\"https:\/\/www.medicaid.gov\/medicaid\/national-medicaid-chip-program-information\/medicaid-childrens-health-insurance-program-basic-health-program-eligibility-levels\/index.html\" target=\"_blank\" rel=\"desktop_external noopener\">well over 200% of poverty<\/a>\u00a0in most states. But the KFF analysis notes that more than half of the people caught by the family glitch were children under the age of 18 who were\u00a0<em>not<\/em>\u00a0eligible for Medicaid or CHIP. So while Medicaid and CHIP provide a good safety net for many families (leaving just the spouse without affordable coverage), that was certainly not the case for all families caught by the family glitch.<br \/><a name=\"Dems\"><\/a><\/p>\n<div class=\"hio_question\">\n<h3>Have there been legislative efforts to fix the &#8216;family glitch?&#8217;<\/h3>\n<p>In 2014, then-Senator Al Franken introduced the\u00a0<a href=\"https:\/\/www.congress.gov\/bill\/115th-congress\/senate-bill\/2132\" target=\"_blank\" rel=\"noopener\">Family Coverage Act<\/a>, which would have adjusted the law so that the affordability test would be applied to the entire premium that a worker must pay for family coverage, not just employee-only coverage. The bill never progressed beyond committees though, and lawmakers seemed hesitant to fix the family glitch, given the additional burden it would place on the taxpayer-funded subsidy program.<\/p>\n<p>Hillary Clinton\u00a0<a href=\"https:\/\/www.commonwealthfund.org\/sites\/default\/files\/documents\/___media_files_publications_issue_brief_2016_sep_1904_eibner_clinton_hlt_care_reform_proposals_ib_v4.pdf\" target=\"_blank\" rel=\"noopener\">proposed fixing the family glitch as part of her 2016 presidential campaign<\/a>, but she lost the election and Congress remained under GOP control after the 2016 elections. Various pieces of legislation have been introduced in Congress in the last few years to fix the family glitch, but none of them have been enacted.<\/p>\n<p>However, the Biden administration has fixed the family glitch via the rulemaking process, as described above. The downside to this approach is that it could be undone by a future administration via another round of rulemaking, without input from Congress.<\/p>\n<\/div>\n<a class=\"takeaways-back-to-top\" href=\"https:\/\/www.healthinsurance.org\/obamacare\/irs-regulations-fix-the-acas-family-glitch-as-of-2023\/#\">Back to top<\/a><br \/><a name=\"fixing\"><\/a><br \/>\n<div class=\"hio_question\">\n<h3>How does fixing the &#8216;family glitch&#8217; help families?<\/h3>\n<p>Although the new IRS rules have helped to make coverage more affordable for some families, they don\u2019t help everyone. It\u2019s important to understand that the rule change has resulted in some employees\u2019 family members becoming newly eligible for premium subsidies, but not the employees themselves.<\/p>\n<p>That would mean the family has two different plans: The employer-sponsored coverage for the employee, and exchange\/marketplace coverage for the rest of the family (alternatively, the employee could decline the employer\u2019s plan and join the family on the marketplace plan, but without a subsidy).<\/p>\n<p>Since the family glitch fix only makes the spouse and dependents eligible for subsidies, some families won\u2019t see much in the way of relief, because of the way premium subsidies are calculated. As described above, the rule change finalized by the IRS calls for a multi-step approach: Affordability determinations will continue to be made for employee-only coverage, and also for family coverage. If the employee\u2019s coverage is considered affordable, the employee will not be eligible for subsidies in the marketplace, even if the rest of their family is.<\/p>\n<p>This leaves some families with difficult decisions in terms of their coverage options. For example, consider a household in Chicago with two 40-year-old parents and two young children (we\u2019ll use 2022 premium amounts, since they\u2019re available, even though the glitch fix doesn\u2019t take effect until 2023). Let\u2019s say they earn $85,000, so about 306% of the\u00a0<a href=\"https:\/\/www.healthinsurance.org\/glossary\/federal-poverty-level\/\">federal poverty level<\/a>\u00a0(FPL) for 2023 health coverage (the\u00a0<a href=\"https:\/\/aspe.hhs.gov\/sites\/default\/files\/documents\/4b515876c4674466423975826ac57583\/Guidelines-2022.pdf\" target=\"_blank\" rel=\"noopener\">2022 FPL numbers<\/a>\u00a0are used to determine 2023 subsidy amounts). The kids are\u00a0<a href=\"https:\/\/www.medicaid.gov\/medicaid\/national-medicaid-chip-program-information\/medicaid-childrens-health-insurance-program-basic-health-program-eligibility-levels\/index.html\" target=\"_blank\" rel=\"noopener\">CHIP-eligible in Illinois<\/a>, and we\u2019ll assume that one parent has access to affordable coverage from an employer. But we\u2019ll assume that the\u00a0<span class=\"il\">family<\/span>\u00a0has to pay the full cost of adding the other parent to the employer\u2019s plan, and that it\u2019s not affordable for them to do that.<\/p>\n<p>With the rules changed to allow that spouse to have access to premium subsidies due to the employer-sponsored plan being unaffordable for the spouse (which is what the new IRS regulations allow),\u00a0<i>they still don\u2019t qualify for a premium subsidy in the exchange, even with the\u00a0<a href=\"https:\/\/www.healthinsurance.org\/blog\/how-the-american-rescue-plan-act-would-boost-marketplace-premium-subsidies\/\">American Rescue Plan\u2019s premium subsidy enhancements<\/a><\/i>. That\u2019s because their expected contribution amount for the benchmark plan is roughly $5,228 (<a href=\"https:\/\/www.healthinsurance.org\/faqs\/is-the-irs-saying-ill-have-to-pay-more-for-my-health-insurance-next-year\/\">that\u2019s 6.15% of their $85,000 household income<\/a>). And the benchmark premium, in this case, is only about $4,532 in annual premiums, which is 5.3% of their household income. So the spouse can buy a plan in the exchange, but they aren\u2019t going to get any subsidies.<\/p>\n<p>This would also be the case if the employer just didn\u2019t offer coverage to spouses at all, which has often been proposed as a potential solution to the family glitch. It\u2019s widely assumed that if the spouse isn\u2019t eligible to participate in the employer\u2019s plan and the family\u2019s household income is in the subsidy-eligible range, the spouse would automatically be eligible for subsidies in the exchange. But oftentimes, that\u2019s not going to be the case.<\/p>\n<p>That\u2019s because the exchange is going to be looking at\u00a0<em>the premium for just the spouse on their own<\/em>, and comparing it with\u00a0<a href=\"https:\/\/www.healthinsurance.org\/faqs\/is-the-irs-saying-ill-have-to-pay-more-for-my-health-insurance-next-year\/\">the applicable percentage<\/a>\u00a0of\u00a0<em>the whole household\u2019s income<\/em>. Depending on where they live and how old they are, they may not be eligible for a subsidy at all, even if the family\u2019s income is modest. This is similar to what happens when one spouse moves onto Medicare and the other remains on a marketplace plan (<a href=\"https:\/\/www.healthinsurancecolorado.net\/fixing-the-acas-medicare-glitch\/\" target=\"_blank\" rel=\"noopener\">which could be called the \u201cMedicare glitch\u201d<\/a>).<\/p>\n<p>This is in contrast to a situation in which the spouse was a single individual, age 40, earning 306% of the poverty level for a single person \u2014 about $41,585 when we\u2019re considering 2023 coverage \u2014 and thus eligible for a subsidy of about $164\/month. This is most likely what people are picturing when they assume that the spouse would be eligible for a subsidy in this case, but we have to keep in mind that the subsidy is going to be calculated based on the household\u2019s income.<\/p>\n<p>But on the other hand, consider the same scenario but the parents are both 60. Because the spouse\u2019s individual market plan is much more expensive (since they\u2019re 60 instead of 40), the spouse would get a subsidy of about $365\/month in 2023 (this is larger than it used to be, due to the American Rescue Plan\u2019s subsidy increases, which will continue to be in effect through at least 2025). This is because the full-price premium for the spouse, on their own, would be well over 6.15% of the household\u2019s income.<\/p>\n<\/div>\n<a class=\"takeaways-back-to-top\" href=\"https:\/\/www.healthinsurance.org\/obamacare\/irs-regulations-fix-the-acas-family-glitch-as-of-2023\/#\">Back to top<\/a>\n<p>\u00a0<\/p>\n<p>And the impact of the family glitch fix will also vary from state to state, since the cost of health coverage varies by area. A recent multi-state\u00a0<a href=\"https:\/\/www.thirdway.org\/report\/capping-families-health-care-costs-savings-by-state\" target=\"_blank\" rel=\"noopener\">analysis by Third Way<\/a>\u00a0found that in most states, total premium savings would be significant for a household earning 200% of the poverty level, and much less significant at 300% of the poverty level. And at 400% of the poverty level, none of the scenarios they examined would result in an overall premium savings under the proposed fix.<\/p>\n<p>Clearly, there is no one-size-fits-all solution. As with other aspects of health care reform, it\u2019s complicated.<\/p>\n<hr \/>\n<p><em>Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org.<\/em><\/p>\n<\/div>\n<\/div>\n\n\n<p><div class=\"leform-input leform-icon-left\"><div class=\"after-entry widget-area\"><section id=\"custom_html-5\" class=\"widget_text widget widget_custom_html\"><div class=\"widget_text widget-wrap\"><div class=\"textwidget custom-html-widget\"><div class=\"leform-inline leform-container\"><div class=\"leform-form leform-form-2 leform-form-IlwJcDCN9NjRkdlun leform-form-input-medium leform-form-icon-inside leform-form-description-bottom\" data-session=\"0\" data-collapse=\"480\" data-id=\"IlwJcDCN9NjRkdlun\" data-form-id=\"2\" data-title=\"Subscribe\" data-page=\"1\" data-xd=\"off\" data-tooltip-theme=\"dark\"><div class=\"leform-form-inner\"><div class=\"leform-row leform-element leform-element-6\" data-type=\"columns\"><div class=\"leform-col leform-col-6\"><div class=\"leform-elements\"><div class=\"leform-element leform-element-7 leform-element-label-none\" data-type=\"email\" data-id=\"7\" data-deps=\"\"><div class=\"leform-column-input\"><\/div><\/div><\/div><\/div><\/div><\/div><\/div><\/div><\/div><\/section><\/div><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The following is an announcement from The Finance Buff: 2024 2025 Cap on Paying Back ACA Health Insurance Subsidy August 30, 2024\u00a0by\u00a0Harry Sit\u00a0in\u00a0Healthcare\u00a058 CommentsKeywords:\u00a0ACA,\u00a0health insurance,\u00a0Obamacare,\u00a0tax credits,\u00a0tax prep [Updated on August 30, 2024.] \u00a0 The ACA health insurance subsidy, aka the premium tax credit, is set up such that, for the most part, it doesn\u2019t matter<\/p>\n<p class=\"more-link\"><a href=\"http:\/\/obamacare-professor.com\/?p=30\" class=\"themebutton2\">Read More<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[8],"tags":[],"_links":{"self":[{"href":"http:\/\/obamacare-professor.com\/index.php?rest_route=\/wp\/v2\/posts\/30"}],"collection":[{"href":"http:\/\/obamacare-professor.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/obamacare-professor.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/obamacare-professor.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/obamacare-professor.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=30"}],"version-history":[{"count":5,"href":"http:\/\/obamacare-professor.com\/index.php?rest_route=\/wp\/v2\/posts\/30\/revisions"}],"predecessor-version":[{"id":431,"href":"http:\/\/obamacare-professor.com\/index.php?rest_route=\/wp\/v2\/posts\/30\/revisions\/431"}],"wp:attachment":[{"href":"http:\/\/obamacare-professor.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=30"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/obamacare-professor.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=30"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/obamacare-professor.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=30"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}