How Income Changes Affect Your Marketplace Subsidies

Last updated 3 months ago. Our resources are updated regularly but please keep in mind that links, programs, policies, and contact information do change.

Your household income is one of the most important factors determining how much financial help you can get to pay for your Health Insurance Marketplace® health plan. These savings, often called subsidies, come in two forms: the Premium Tax Credit, which lowers your monthly bill, and Cost-Sharing Reductions, which lower your out-of-pocket costs when you get care.

Because these savings are tied directly to your income, any changes to your expected household income during the year can significantly impact the amount of help you qualify for.

This guide explains Marketplace subsidies, how your income affects them, why it’s essential to report income changes promptly, steps for reporting changes, and what happens when you file your federal income taxes. Understanding this relationship is key to keeping your coverage affordable and avoiding unexpected tax bills or missed savings opportunities.

Understanding Your Marketplace Subsidies

When you apply for coverage through the Health Insurance Marketplace® or your state’s equivalent website, you may qualify for financial assistance based primarily on your estimated household income for the year you need coverage. There are two types of subsidies available:

• The Premium Tax Credit (PTC): Helps lower your monthly health insurance payment (premium)
• Cost-Sharing Reductions (CSRs): Provide extra savings on your out-of-pocket costs like deductibles, copayments, and coinsurance, but only if you enroll in a specific type of plan

Premium Tax Credit (PTC): Lowering Your Monthly Bill

The Premium Tax Credit is a refundable tax credit created under the Affordable Care Act (ACA) to help eligible individuals and families with low to moderate incomes afford the premiums for health insurance purchased through the Marketplace.

Most people choose to receive the PTC in advance throughout the year. When you apply for coverage, the Marketplace estimates the total PTC amount you qualify for based on your application details (like your projected income and household size). You can then choose to have some or all of this estimated credit paid directly to your insurance company each month. These monthly payments are called Advance Premium Tax Credits (APTC). The APTC is subtracted from your plan’s full premium, reducing the amount you have to pay out-of-pocket each month.

Alternatively, you have the option to pay the full monthly premium for your Marketplace plan yourself throughout the year and then claim the entire PTC you are eligible for when you file your federal income tax return for that year.

The PTC is “refundable,” which is an important feature. It means that even if the amount of the credit you’re eligible for is more than the total amount of federal income tax you owe, you can still receive the full credit amount. If the credit is larger than your tax liability, the difference will be added to your tax refund. If you owe no income tax, you can get the entire PTC amount back as a refund.

Cost-Sharing Reductions (CSR): Saving on Out-of-Pocket Costs

Cost-Sharing Reductions, often referred to as “extra savings” on HealthCare.gov, are a different type of subsidy that helps lower the amount you have to pay out-of-pocket when you actually use your health insurance for covered services. These reductions apply to your deductible (the amount you pay before insurance starts paying), copayments (fixed amounts you pay per visit or service), and coinsurance (your share of costs after meeting the deductible). CSRs are separate from and in addition to the premium savings provided by the PTC.

Eligibility for CSRs is based on having a household income within a specific range, generally between 100% and 250% of the Federal Poverty Level (FPL). In states that have expanded Medicaid, the lower threshold is effectively above 138% FPL, as those below that level typically qualify for Medicaid. The exact income limits depend on your household size and the FPL guidelines for the year.

Crucially, to receive the benefits of CSRs, you must enroll in a Marketplace plan in the Silver category. Silver plans typically fall in the middle regarding premiums and cost-sharing. If your income qualifies you for CSRs but you enroll in a Bronze, Gold, or Platinum plan, you will not get the extra savings on your out-of-pocket costs, although you can still use the PTC to lower your premiums for those plans.

CSRs work by increasing the “actuarial value” (AV) of the Silver plan you choose. Actuarial value represents the average percentage of total healthcare costs a plan is expected to cover for a standard population. A standard Silver plan typically has an AV around 70%. However, if you qualify for CSRs, you’ll be enrolled in a special version of that Silver plan with a higher AV – potentially 73%, 87%, or even 94%, depending on your income level. A higher AV means the plan covers a larger share of costs, and you pay less out-of-pocket.

Basic Eligibility Check for Subsidies

To qualify for either the Premium Tax Credit or Cost-Sharing Reductions, you generally must meet several core requirements:

• Enroll in a qualified health plan through the Health Insurance Marketplace or your state’s official Marketplace website. Coverage purchased directly from an insurance company outside the Marketplace is not eligible for these subsidies.
• Not be eligible for other “minimum essential coverage” (MEC). This includes most job-based health insurance if it’s considered affordable and provides minimum value, or government programs like Medicare, Medicaid (most types), the Children’s Health Insurance Program (CHIP), or TRICARE. The system is designed to provide assistance to those who lack access to these other forms of coverage, acting as a gap-filler rather than a replacement for existing affordable options.
• Have household income within the eligible range for the subsidy (generally at least 100% FPL for PTC, and 100%-250% FPL for CSRs, with temporary exceptions).
• Not file your federal income taxes using the “Married Filing Separately” status, unless you meet specific exceptions related to domestic abuse or spousal abandonment.
• Not be claimed as a dependent on someone else’s tax return.
• Be a U.S. citizen or lawfully present in the United States.

How Income Determines Your Subsidies

Your household income, compared to the Federal Poverty Level (FPL) for your family size, is the primary factor determining your eligibility for and the amount of Marketplace subsidies.

Federal Poverty Level (FPL): The Starting Point

The Federal Poverty Level is an income measure set annually by the U.S. government. For Marketplace subsidies, your household income is compared to the FPL guidelines to determine eligibility.

Importantly, the FPL guidelines used to determine your eligibility for subsidies in a specific coverage year are typically the ones issued in January of the previous year. For example, eligibility for subsidies for health plans starting in 2025 is based on the 2024 FPL guidelines.

Table 1: 2024 Federal Poverty Level (FPL) Guidelines (Used for 2025 Coverage Eligibility)

(For the 48 Contiguous States and the District of Columbia)

For each additional person, add $5,380 Note: Alaska and Hawaii have higher FPL amounts due to higher costs of living.

This table provides the minimum income threshold (100% FPL) for general PTC eligibility in states that haven’t expanded Medicaid. Different percentages of these FPL amounts (like 138%, 150%, 200%, 250%, 400%) are used to determine specific subsidy amounts and eligibility for CSRs or Medicaid, as detailed later.

What Income Counts? Modified Adjusted Gross Income (MAGI) Explained

The Marketplace doesn’t just look at your gross wages or the Adjusted Gross Income (AGI) reported on your tax return. Instead, it uses a specific income calculation called Modified Adjusted Gross Income (MAGI) to determine eligibility for PTC and CSRs (and also for Medicaid and CHIP).

It’s essential to understand that the MAGI definition used for ACA subsidies is specific to these health programs and may differ slightly from MAGI calculations used for other tax purposes, like determining eligibility for IRA deductions. Using the wrong definition could lead to an incorrect income estimate.

MAGI Calculation for Marketplace Subsidies:

MAGI starts with your Adjusted Gross Income (AGI), which is found on line 11 of your IRS Form 1040. To get your MAGI, you add back certain types of income that are not typically included in your AGI:

MAGI = AGI + Tax-Exempt Interest + Non-Taxable Social Security Benefits + Excluded Foreign Earned Income

MAGI itself does not appear as a specific line item on your tax return. For many individuals, MAGI will be the same as or very close to their AGI, especially if they don’t have the specific types of income listed above.

Common Income Sources Included in MAGI:

• Wages, salaries, tips, commissions, bonuses
• Net income from self-employment or business (profit after expenses)
• Unemployment compensation
• Taxable interest and ordinary dividends
• Capital gains
• Retirement income (pensions, annuities, most IRA/401k withdrawals – excluding qualified Roth distributions)
• Social Security benefits (both taxable and non-taxable portions are added for MAGI)
• Alimony received (only for divorce/separation agreements finalized before January 1, 2019)
• Rental income (net) and royalties

Common Income Sources Excluded from MAGI:

• Child support payments received
• Gifts and inheritances
• Supplemental Security Income (SSI)
• Veterans’ disability payments
• Workers’ compensation benefits
• Proceeds from loans (like student loans or home equity loans)
• Alimony received (for divorce/separation agreements finalized on or after January 1, 2019)
• Federal COVID-19 relief payments (like stimulus checks)

Household Income Calculation:

Your household MAGI includes the MAGI of the primary tax filer, their spouse (if filing jointly), and the MAGI of any dependents who are required to file their own federal income tax return. A dependent generally must file a return if their earned income, unearned income, or combined income exceeds certain thresholds set by the IRS each year. Income of dependents who file only to get a refund of withheld taxes is not included.

How Your Income Translates to PTC Savings

The amount of Premium Tax Credit you qualify for is based on ensuring that a specific “benchmark” health plan is considered affordable for your household income.

The Benchmark Plan

The Marketplace identifies the premium of the second-lowest cost Silver plan (SLCSP) available to your household in your specific geographic area. This plan is called the “benchmark plan”. The premium for this specific plan is used as the reference point for calculating your maximum PTC.

Your Expected Contribution

The ACA determines the maximum amount you are expected to contribute towards the cost of the benchmark plan’s premium, based on your household MAGI as a percentage of the FPL. This “expected contribution” is calculated on a sliding scale – the lower your income relative to the FPL, the lower your expected contribution percentage.

Calculating Your PTC

Your maximum PTC amount is the difference between the premium of your benchmark plan and your calculated expected contribution amount.

Formula: PTC Amount = Benchmark Plan Premium – Expected Contribution

Example: If the benchmark Silver plan for your family costs $10,000 per year, and based on your income (e.g., 200% FPL), your expected contribution is set at 2% of your income (let’s say $1,248 for a family of four at $62,400), your maximum PTC would be $10,000 – $1,248 = $8,752 for the year.

Using the PTC for Other Plans

You can apply this calculated PTC amount ($8,752 in the example) to lower the premium of any Bronze, Silver, Gold, or Platinum plan sold through the Marketplace (but not Catastrophic plans). If you choose a plan that costs more than the benchmark plan, you pay the difference. If you choose a plan that costs less (like a Bronze plan or the lowest-cost Silver plan), the PTC might cover the entire premium, resulting in a zero-premium plan for you.

Table 2: Expected Premium Contribution Percentages (Based on 2025 Coverage Rules)

Based on ARPA/IRA enhanced subsidy structure, effective through 2025.

This table shows the percentage of your income you’re expected to contribute. For example, if your income is 200% FPL, your contribution is capped at 2% of your income towards the benchmark plan premium. If the benchmark plan costs more than that 2%, the PTC covers the difference.

How Your Income Affects Extra Savings (CSR Benefits)

If your income falls within the 100% to 250% FPL range (or 138%-250% FPL in Medicaid expansion states) and you enroll in a Silver plan, you qualify for Cost-Sharing Reductions. The level of these extra savings depends on your specific income tier:

Income Tiers for CSRs:

• 100% up to 150% FPL: Highest level of CSRs
• 151% up to 200% FPL: Medium level of CSRs
• 201% up to 250% FPL: Lowest level of CSRs

Benefit Levels

The lower your income within this range, the more robust the CSR benefits. This means the Silver plan you enroll in will have significantly lower deductibles, copayments, and coinsurance compared to a standard Silver plan. It also lowers your annual out-of-pocket maximum – the most you would have to pay for covered services in a year.

The plans are often categorized by their Actuarial Value (AV): 94% AV for the 100-150% FPL group, 87% AV for the 151-200% FPL group, and 73% AV for the 201-250% FPL group. A standard Silver plan has about 70% AV, while Gold is 80% and Platinum is 90%. This means the strongest CSR plans (94% AV) offer richer coverage than even standard Platinum plans.

Table 3: CSR Income Tiers and Reduced Out-of-Pocket Maximums (2025 Coverage)

Based on 2025 parameters. Requires enrollment in a Silver plan.

This table clearly illustrates the substantial financial protection offered by CSRs. For someone with income up to 200% FPL, the maximum they would pay out-of-pocket in 2025 is capped at $3,050 (individual) or $6,100 (family), compared to the standard maximum of $9,200 / $18,400 for plans without CSRs. This significantly reduces financial risk, especially for those with chronic conditions or unexpected major health events.

Important Temporary Rule: No 400% Income Cap for PTC Through 2025

A significant temporary change affects PTC eligibility. Under the original ACA, PTC eligibility ended sharply for households with income above 400% of the FPL (often called the “subsidy cliff”). However, the American Rescue Plan Act (ARPA) of 2021 eliminated this cap for 2021 and 2022, and the Inflation Reduction Act (IRA) of 2022 extended this elimination through the end of 2025.

This means that through coverage year 2025, households with MAGI above 400% FPL can still qualify for a PTC if the premium for their benchmark Silver plan would cost more than 8.5% of their household income. The PTC covers the portion of the benchmark premium that exceeds this 8.5% threshold.

This temporary enhancement has made Marketplace coverage significantly more affordable for many middle-income individuals and families who were previously ineligible for financial help. However, it’s crucial to remember that this provision is currently set to expire at the end of 2025. Unless Congress takes further action, the 400% FPL income cap for PTC eligibility could return for coverage year 2026, which would likely lead to substantial premium increases and potential coverage losses for those affected.

Reporting Income Changes: Why, What, and How

Life happens, and your income can change unexpectedly during the year. Because your Marketplace savings are based on your estimated annual income, it’s critical to update your application whenever your expected income changes significantly.

Why You MUST Report Income Changes Promptly

Reporting income and household changes to the Marketplace isn’t just about following rules; it’s an essential step in managing your health coverage and finances throughout the year. Here’s why it’s so important:

Ensures Accurate Savings

Reporting changes helps ensure the amount of APTC being paid to your insurer each month accurately reflects the PTC you’re likely eligible for based on your updated income projection. It also ensures you qualify for the correct level of CSRs, if applicable.

Avoids Owing Money Back

If your income increases during the year and you don’t report it, the APTC paid on your behalf might be too high. When you file your federal income tax return, you’ll have to reconcile the APTC you received with the PTC you actually qualify for based on your final MAGI. If you received too much APTC, you’ll likely have to repay some or all of the excess amount. This repayment reduces your tax refund or increases the amount of tax you owe. Reporting the increase promptly allows the Marketplace to adjust your APTC downward for the rest of the year, minimizing this potential tax liability.

Maximizes Potential Savings

Conversely, if your income decreases and you don’t report it, you could be missing out on significant savings. You might qualify for a larger PTC (meaning lower monthly premiums if you adjust your APTC) or become newly eligible for valuable CSRs (lower out-of-pocket costs, if you enroll in a Silver plan). In some cases, a decrease in income could make you eligible for free or low-cost coverage through Medicaid or CHIP. Failing to report the decrease means you might overpay for coverage or miss out on more comprehensive programs.

Protects Future Eligibility

Filing your tax return and reconciling your APTC using Form 8962 is mandatory for anyone who received APTC (except for tax year 2020 due to a temporary pandemic relief measure). Failing to file and reconcile can prevent you from receiving APTC in future years, meaning you would have to pay the full premium for Marketplace coverage.

Think of reporting changes as actively managing your financial assistance. It allows you to adjust your subsidies in near real-time, aligning them more closely with your actual circumstances, which helps optimize your benefits and reduce financial surprises at tax time.

What Changes Require an Update?

You should report changes to the Marketplace as soon as possible, ideally within 30 days of the change. Even if it’s been longer than 30 days, you should still report the change. Key changes to report include:

Changes in Household Income

Report any expected increase or decrease in your total household MAGI for the year. Common reasons for income changes include:

• Getting a raise or losing income from a job
• Starting a new job or losing a job
• Changes in self-employment income or expenses
• Receiving a lump-sum payment (like Social Security back-pay, SSDI, or a taxable retirement account distribution)
• Forgiveness or cancellation of debt (like credit card debt)
• Starting or stopping unemployment compensation
• Changes in investment income

Changes in Household Size or Composition

• Getting married or divorced
• Having a baby, adopting a child, or placing a child for adoption or foster care
• Death of someone in your tax household
• A child included on your application turning 26 (and potentially losing eligibility under your plan)
• Gaining or losing a tax dependent for other reasons (e.g., changes related to custody orders)

Changes in Eligibility for Other Health Coverage

• Someone in your household getting an offer of health insurance through a job (report this even if they don’t enroll in it)
• Someone in your household becoming newly eligible for (or losing eligibility for) Medicare, Medicaid, or CHIP
• Losing existing job-based coverage

Other Important Changes

• Change of primary residence (address)
  • Moving within the same state: Report the address change by updating your application.
  • Moving to a different state: This requires starting a new Marketplace application in the new state and canceling your old plan. You cannot keep your old plan.
• Change in tax filing status (e.g., starting to file as Head of Household instead of Single)
• Change in citizenship or immigration status
• Change in incarceration status (release or start of incarceration)
• Change in disability status
• Change in status as an American Indian or Alaska Native

How to Report Changes via HealthCare.gov

You can report income and other life changes to the Marketplace through several methods:

• Online: Log in to your account at HealthCare.gov. This is often the quickest way.
• By Phone: Contact the Marketplace Call Center at 1-800-318-2596 (TTY: 1-855-889-4325). A representative can help you update your application over the phone.
• In Person: Find local help through the Marketplace website to work with a certified assister or agent in your community.

Reporting changes by mail is not an option.

Steps for Reporting Changes Online:

1. Log In: Access your account on HealthCare.gov.
2. Select Application: Choose your current, active application under “Your Existing Applications.”
3. Start Report: Click “Report a Life Change” from the menu (usually on the left).
4. Identify Change: Select the type of change you need to report (e.g., income, household member, address).
5. Update Application: Carefully navigate through your application screens. You’ll need to review existing information and make edits where necessary to reflect the change(s). Update income figures, add or remove household members, change addresses, etc.
6. Review & Submit: Continue through the application until you reach the end. You will be prompted to review your changes and electronically sign and submit the updated application. This re-submission step is necessary for the changes to be processed and won’t disrupt your current coverage while it’s being reviewed.
7. Check Eligibility Notice: After submitting, you’ll receive a new eligibility determination notice. This notice will explain if your eligibility for PTC or CSRs has changed, or if you qualify for a Special Enrollment Period (SEP) to change plans, or if you might now be eligible for Medicaid/CHIP.
8. Complete To-Do List: Check your account for any items on your “To-Do List.” You must complete all required steps, which might include confirming your plan selection or submitting verification documents, for your changes to fully take effect.

Impact of an Income Increase

If your household income increases during the year, it’s crucial to report it promptly. An unreported income increase can lead to reduced savings and potential tax implications.

Less Help with Premiums (Lower PTC)

Generally, as your household income goes up, the amount of Premium Tax Credit you qualify for goes down. This happens because the “expected contribution” (the percentage of your income you’re expected to pay towards the benchmark plan premium) increases as your income rises relative to the FPL (refer back to Table 2). A higher expected contribution means a smaller difference between the benchmark premium and what you’re expected to pay, resulting in a lower PTC.

If you are receiving Advance Premium Tax Credits each month, reporting the income increase allows the Marketplace to recalculate your eligibility and adjust your monthly APTC downward for the remainder of the year. This helps prevent you from receiving more advance credit than you ultimately qualify for.

Potential Loss of Extra Savings (CSRs)

An income increase can also affect your eligibility for Cost-Sharing Reductions, the extra savings on deductibles and copays available only with Silver plans.

Losing CSR Eligibility

If your income increases above 250% FPL, you will lose eligibility for CSRs entirely. Even if you stay enrolled in the same Silver plan, the plan’s cost-sharing structure will revert to the standard Silver level, meaning you’ll face higher deductibles, copayments, coinsurance, and a higher out-of-pocket maximum.

Reduced CSR Level

Even if your income stays within the 100%-250% FPL range, an increase could move you into a higher income tier, resulting in a lower level of CSR benefits. For example, if your income increases from 180% FPL (qualifying for 87% AV CSRs) to 220% FPL (qualifying for 73% AV CSRs), your deductible and out-of-pocket maximum would increase, although they would still be lower than a standard Silver plan (refer back to Table 3).

Opportunity to Change Plans (SEP Triggered by Losing CSR)

If an income increase causes you to lose eligibility for CSRs (i.e., your income goes above 250% FPL while enrolled in a Silver plan), this change triggers a Special Enrollment Period (SEP).

During this SEP, you have the option to switch to a different Marketplace plan. You might consider switching to a Bronze or Gold plan if the Silver plan, without the CSR benefits, no longer seems like the best value for your needs and budget.

Tax Time: Paying Back Excess Advance Payments

If you received APTC during the year, you must file a federal income tax return and complete Form 8962, Premium Tax Credit (PTC). This form is used to “reconcile” the total APTC paid to your insurer throughout the year with the actual PTC amount you qualify for based on your final household MAGI reported on your tax return.

Repayment Requirement

If the total APTC you received is more than the final PTC amount calculated on Form 8962, the difference is called “excess APTC.” You generally must repay this excess amount when you file your taxes. This repayment will either reduce the amount of your expected tax refund or increase the total amount of tax you owe. This is a common outcome if your income increased during the year and you didn’t report the change to the Marketplace to adjust your APTC.

Repayment Limits (Caps) Below 400% FPL

For households whose final MAGI is less than 400% of the FPL for their family size, the amount of excess APTC they have to repay is capped. These caps vary based on income level and tax filing status.

Table 4: 2024 Excess APTC Repayment Limits

IRS guidance for tax year 2024. Note: These limits apply to the 2024 tax return filed in 2025.

NO Repayment Cap at or Above 400% FPL

This is a critical point. If your final household MAGI for the year is 400% FPL or higher, there is no limit on the amount of excess APTC you must repay. You must repay the entire difference between the APTC received and the PTC allowed (which might be zero if your income is too high for eligibility under normal rules, though the temporary 8.5% rule applies through 2025).

It’s important to understand that the temporary rule allowing PTC eligibility above 400% FPL through 2025 did not change the repayment rules. If your income ends up being 400% FPL or more, you are still subject to full repayment of any excess APTC received. This creates a significant financial risk for individuals whose income fluctuates near the 400% FPL threshold, making accurate income estimation and prompt reporting of increases particularly vital for this group.

Impact of an Income Decrease

If your household income decreases during the year, reporting the change can lead to increased savings and potentially open up eligibility for different types of coverage.

More Help with Premiums (Higher PTC)

A decrease in your household income generally means you will qualify for a larger Premium Tax Credit. This is because your “expected contribution” percentage decreases as your income gets closer to the FPL (refer back to Table 2). A lower expected contribution results in a higher PTC amount.

By reporting the income decrease to the Marketplace, you can potentially have your monthly Advance Premium Tax Credit amount increased for the rest of the year. This would lower the amount you have to pay out-of-pocket for your monthly premium.

Potential for Extra Savings (CSRs) or Increased CSR Level

If your income drops, you might become newly eligible for Cost-Sharing Reductions or eligible for a stronger level of CSRs.

Gaining CSR Eligibility

If your income falls below 250% FPL, you may become eligible for CSRs. Remember, you must be enrolled in a Silver plan to receive these benefits.

Increased CSR Level

If your income was already below 250% FPL but drops into a lower tier (e.g., from 210% FPL down to 180% FPL), you could qualify for a higher level of CSRs (moving from 73% AV to 87% AV in this example). This would further reduce your deductibles, copays, and out-of-pocket maximum (refer back to Table 3).

Opportunity to Change Plans (SEP Triggered by Gaining Subsidy Eligibility)

Becoming newly eligible for PTC or CSRs due to a decrease in income generally triggers a Special Enrollment Period.

Gaining CSR Eligibility

If the income decrease makes you newly eligible for CSRs and you are not currently enrolled in a Silver plan, this SEP allows you to switch to a Silver plan so you can take advantage of the extra savings.

Gaining PTC Eligibility

If the income decrease makes you newly eligible for PTC (perhaps your income was previously too high, even under the temporary rules), the SEP generally allows you to enroll in a plan or switch to a different plan, but typically only within the same metal level as your current plan (with limited exceptions if no other plans are available at that level).

Falling Below the Threshold: Qualifying for Medicaid or CHIP

If your household income decreases significantly, you or your family members might become eligible for Medicaid or the Children’s Health Insurance Program (CHIP). These programs offer free or low-cost comprehensive health coverage.

Eligibility Levels

Medicaid eligibility for adults based on income typically extends up to 138% FPL in states that have expanded Medicaid under the ACA. CHIP eligibility levels for children generally reach higher income levels, but vary significantly by state. Eligibility rules can also depend on factors like pregnancy, disability, or age.

Process

When you report your income decrease to the Marketplace, the system will assess your potential eligibility for Medicaid/CHIP. If it appears you might qualify, the Marketplace will securely transmit your application information to your state’s Medicaid/CHIP agency. The state agency makes the final eligibility determination and will contact you about enrollment.

Avoid Coverage Gaps

It is highly recommended that you do not cancel your Marketplace plan until you receive official confirmation that your Medicaid or CHIP coverage has started. Canceling too early could leave you uninsured.

The “Coverage Gap”

Be aware that in the handful of states that have not expanded Medicaid, adults whose income falls below 100% FPL generally do not qualify for Medicaid (unless they meet other criteria like disability) and they also do not qualify for Marketplace PTCs (which typically start at 100% FPL). This difficult situation is known as the coverage gap.

The potential transition between Marketplace coverage with subsidies and Medicaid/CHIP highlights the interconnectedness of these programs and the importance of state-specific policies like Medicaid expansion. Navigating this transition requires careful attention to reporting and communication with both the Marketplace and the state agency.

Tax Time: Claiming Additional Tax Credits

If you received APTC during the year, but your final income was lower than you estimated, you may be eligible for a larger PTC than the advance amount you received.

When you file your tax return and complete Form 8962, you will calculate your final PTC based on your actual year-end MAGI. If this final PTC amount is greater than the total APTC paid on your behalf during the year, you can claim the difference on your tax return. This additional credit will increase your tax refund or decrease the amount of tax you owe.

Caveat 1 (Premium Amount)

The total PTC you can claim cannot be more than the actual total premiums billed for the Marketplace plan(s) you were enrolled in.

Caveat 2 (Income Below 100% FPL)

Generally, individuals with household income below 100% FPL are not eligible for the PTC. However, if you received APTC based on a reasonable income projection made at the time of enrollment (between 100% and 400% FPL), and your final income unexpectedly falls below 100% FPL, the IRS generally allows you to keep the APTC you received. You typically won’t have to repay it, provided the original enrollment information wasn’t given with intentional or reckless disregard for the facts. You would still need to file Form 8962.

Helpful Tools for Estimation

Estimating your income and potential savings can sometimes be complex, especially if your income fluctuates. Fortunately, there are official tools available to help you get a better idea of your eligibility and potential costs. Keep in mind that these tools provide estimates only; your final eligibility and subsidy amounts are determined when you complete the official Marketplace application and reconcile your taxes.

Healthcare.gov Plan & Savings Estimator

What it does: This tool on HealthCare.gov lets you browse plans available in your area and get estimated premium prices and potential savings (PTC and CSR eligibility) before you fill out a full application.

What it needs: Your ZIP code, estimated household income for the coverage year, and the number of people in your household.

Link: HealthCare.gov Plan Finder (This tool is often referred to as the “window shopping” tool)

Healthcare.gov Income Calculator

What it does: This tool is specifically designed to help you calculate your estimated household MAGI for the year by guiding you through adding up different types of income for each household member. It can be particularly helpful if you have multiple income sources or unpredictable income.

What it needs: Details about various income sources for all relevant household members (wages, self-employment net income, Social Security, etc.).

Link: HealthCare.gov Income Calculator

IRS/TAS Premium Tax Credit Change Estimator

What it does: Developed by the IRS Taxpayer Advocate Service (TAS), this tool specifically estimates how your Premium Tax Credit amount might change if your income or family size changes during the year after you’ve already enrolled. It helps you understand the potential impact of life changes on your final credit and potential tax liability. Important: This tool does not report your changes to the Marketplace; you must still do that separately.

What it needs: Detailed information including tax year, filing status, state/county, monthly income estimate, family size, ages of enrolled members, benchmark plan premium (SLCSP), your plan’s premium, and current APTC received.

Limitations: It only provides an estimate and does not calculate changes resulting from moving to a new ZIP code, getting married, or getting divorced.

Link: IRS Premium Tax Credit Change Estimator

Using these tools can give you valuable insights into how your income affects your potential savings. However, always remember to complete the official Marketplace application for final eligibility results and to report any changes promptly throughout the year to ensure your subsidies are as accurate as possible and to avoid issues at tax time.

Our articles make government information more accessible. Please consult a qualified professional for financial, legal, or health advice specific to your circumstances.