Estimating Income for Obamacare Subsidies—And What Happens If You Get It Wrong — Healthshare

Estimating Income for Obamacare Subsidies—And What Happens If You Get It Wrong

estimating incomeWhen applying for tax credits to help you pay for your health insurance, you must estimate your income for the coming year. If you estimate under 400 percent of the federal poverty level, and the government approves your estimate, you will be granted immediate tax credits. This is money that will be sent to the insurance company by the government, to help cover some or all of your premium.

Read more about understanding subsidies.

Underestimating Your Income Could Cost You at Tax Time

If you estimate your income accurately, you will not owe any additional fees for insurance when you pay your taxes. But for many people, guessing what their income will be for the coming year may not be so easy. Many self-employed people have incomes that vary greatly year to year.

If you underestimate your income, you may receive a higher subsidy than you should have. Since the subsidy amount will have already been paid directly to your insurance company, you will be responsible for paying the IRS the difference in what you received, as opposed to what you should have received, come tax time.

Learn how to apply for an ACA Permium Tax Credit.

An Example of How Underestimating Can Cause Financial Problems

Here is an example. If your estimated Modified Adjusted Gross Income (MAGI) is $46,123, this is 200 percent of the federal poverty level (FPL). Using this amount, you estimate that your 2014 MAGI is going to be $47,105 and calculate your premium subsidy amount to be $200 per month, or $2,400 annually.

When you file your taxes for the year, however, you find out that you really made $48,987, which means that your premium subsidy amount should have only been $75. To make up for the additional subsidy amount you received, you will be required to repay the government the extra $125 per month you received, which adds up to $1,500.

As a second example, take a family earning $35,000 at the time they apply for an advance subsidy arrangement.  One spouse, who was unemployed at the time they applied for a subsidy, gets a job and the family’s annual income rises to $65,000.

Although this second income allowed the family to leave the exchange after six months on the exchange plan in favor of the second spouse’s employer-based insurance, they still collected $5,371 in advance payments for premium subsidies—well above what they are now eligible for with their new income level.

But You May Not Have to Pay It All Back

If you receive a subsidy over payment, the amount you have to pay back will be capped with a limit based on your income level. For example, if you were overpaid for your subsidy amount due to incorrect income estimates, and your income is at 200 percent of the federal poverty level, the cap on the subsidy amount you have to repay is only $600. If it falls between 200 and 300 percent, the cap is $1,500; 300 and 400 percent, the cap is $2,500. You can even earn up to 500 percent of the federal poverty level and have to pay back no more than $3,500. This could be thousands of dollars less than the value of the subsidies you received.

Dollar limits for repayment of excess subsidy advances are routinely half these amounts for single filers. More information about these repayment limits can be found on the Kaiser Family Foundation site. Learn more about the various subsidy scenarios here.

Share Your Stories!

Are you concerned about correctly estimating your income? I’d love to hear your stories or questions.


145 thoughts on “Estimating Income for Obamacare Subsidies—And What Happens If You Get It Wrong”

  1. dennis says:

    capping want people have to pay back , gives people incentive to under estimate income.

  2. Wiley Long says:

    Indeed it does. Those who are more “aggressive” in their income estimates will definitely benefit.

  3. andy johnson says:

    What happens if you overestimate your income for 2014? I just graduated college with a teaching degree and assume that I will have a job by this September. But what happens if I don’t get a regular job and my income is too small to qualify for health insurance subsidies?

  4. admin says:

    Hi Andy,

    Very good question!

    If you overestimate your income AND you purchase your health insurance on the federal exchange (or state marketplace, depending on where you live), then you will receive all of your qualify subsidy as a tax credit when you file taxes at the end of the year.

    If you decide to purchase insurance off the exchange/marketplace, then you are disqualified for a subsidy no matter what your income might be.

    If you don’t get a regular job and your income is too small, then you will likely get approved for Medicaid. In fact, if you apply for insurance on the exchange/marketplace they automatically check to see if you qualify for Medicaid.

    Do let us know if that brings up more questions!

    1. Amy says:

      I have a follow-up question to piggy back on Andy’s question. If i overestimate my income, AND purchase it on the exchange, then I will receive extra in the form of a tax refund for the additional subsidy amount I would have qualified for.
      Does this also apply to cost-sharing measures? For example, if I estimate my income to be a certain (lower) amount, I would receive a greater subsidy AND a lower deductible and out of pocket maximum. But if I estimate my income to be a little higher just to be safe, I get a little less in subsidy AND a higher deductible than the first way.
      So let’s say I do overestimate my income. When it comes to tax time and I receive the extra, say $30/month in subsidies that i qualified for, will I also receive a refund of, say, the extra $1000 in “out of pocket” money since I would have had an out of pocket max that was much lower due to ‘cost saving’? (Assuming that I met my out of pocket max for the year.)

      I hope my question makes sense!

      1. Wiley Long says:

        Hi Amy,

        Same with my response on the other blog, you will receive any additional premium tax credit in the form of a tax refund (less any taxes you might owe) but that cost-sharing amounts are not re-calculated, repaid, or refunded.

    2. Sam Combs says:

      For 2014 I overestimated my income by over $10,000 and the IRS still wants to penalize us $2,500. I am currently in the appeal process with the IRS, but I doubt if they will remove the $2,500 tax penalty. Also, they want to charge me over $2,400 for the 2015 Tax year even though with that penalty and the amount I paid in actual premiums amounts to $77 more than if I would have just paid the premiums (which I wouldn’t have since I wouldn’t have selected a premium plan). I’ve looked everywhere, spoken with and the IRS, my Senator Lisa Murkowski and no one can actually give me an answer as to why I should have to pay either tax penalty. Is there a regulation or law that addresses this?

      1. Wiley Long says:

        Unfortunately, we do not have an answer for you. That would be something would have to answer, but we agree with you.

        1. Sam Combs says:

          Wiley, Thank you for your response. Senator Murkowski’s office was able to get my original 2014 application by my deadline of November 4 to submit to the IRS in the appeal process. I also submitted a 1040X Amended Return which removed the $2500 Tax Penalty and the Premium Tax Credit Form 8962 which is an erroneous form. The 8962 doesn’t take into account for the fact of overestimating one’s income, only underestimating. The IRS has misconstrued the meaning of the ACA because they didn’t wish to enforce it and have no understanding of its intent. I may have to fight this to the Supreme Court if the IRS doesn’t rule correctly, so it is an interesting issue that I am pursuing on moral grounds and will continue to pursue.

  5. Jen says:

    Not all states have expanded Medicaid… I am in a bad situation like Andy but my state didn’t expand Medicaid… I think we’re just screwed and have to pay for all of it.

  6. Wiley Long says:

    Jen, indeed you are correct – unfortunately. You may be one of many who will fall through the cracks of Obamacare. However, if your income is over 100% of the federal poverty level, you will be able to get a private plan, and it may cost you very little. I encourage you to talk to one of our Advisors to see if they can help.

    Andy – If you are single and your income falls beneath $11,490 this year and your state DID NOT expand Medicaid, you will not qualify for premium assistance. You will be required to pay back any premium assistance you receive this year (although this amount is capped and ranges from $600 to $1,250 – and will be based upon your final 2014 adjusted gross income). Keep in mind – the IRS will not actively seek to recover this over payment, but it will be recovered from any future refunds you are due to receive.

  7. Bob Kelley says:

    Wiley, I live in NY which has expanded medicaid. If I overestimate my income to a point where I am receiving a (federal) subsidy on Obamacare…and then fall beneath that level where I should be on (state) medicaid…..what happens? Am I liable for the subsidy even though I would have received Medicaid free?

    1. Guest says:

      Hello, I am in NC. In 2004, i have purchase health insurance through Obamacare. At that time, i have estimated my income $12,000. However, after finishing my tax year, i find out that my self-employed jobs income is about 12,000, but minus the expenses, it is about $950. What should i do? Just hided all the expenses to maintain an income of $12,000

  8. Wiley Long says:

    Bob – yes, you would be liable for repaying the subsidy; however, you may not be required to repay the full amount as there is a cap on the amount required to be repaid based on your modified adjusted gross income. The most you would have to repay is $300 as an individual, or $600 as a family. Also note that the IRS will not actively seek to recover this over payment; however, this will be deducted from any future tax refund you are due.

  9. Ron Tilley says:

    When I called into the obamacare helpline they said that there is no penalty for overestimating your income. Is this correct? Also, even if it isn’t correct, if you live in one of the States that opted out of expanding Medicaid, and you are earning less than 100% FPL and make too little to qualify for Obamacare, you’re better off including in your reported income the estimates from self-employment (if you have a job where you get a w-2 then this would be a “side” self-employment venture) that brings your income up to 100% FPL. Then you (and your family possibly) will qualify for not only the premium subsidy but perhaps just as important the cost sharing allocation which lowers your deductibles and max out of pocket costs. If I understand that the cap on the penalties is 300/individual and 600/family then even if overestimating when you’re in reality under 100%, then the $300 or $600 is well worth it. Also, ministers have a weird dynamic in that our housing allowances make our modified adjusted gross incomes artificially low because our housing allowance isn’t included in this figure. It will be interesting to see how the feds handle things when ministers find out that a good deal of them fall under 100% FPL in one of the States that opted out of Medicaid expansion and therefore being under 100% locks you out of qualifying for obamacare.
    But like I said at the beginning of my post, I was told that overestimating doesn’t carry with it a penalty…but perhaps the representative on the phone was incorrect. Even if they were incorrect, it’s still worth it to put together a self-employment forecast to make sure you reach the 100% FPL because the premium subsidies and cost sharing allocation are HUGE at that level. I ended up paying $8/month for a fantastic PPO plan with a major blue for my family of 3, and the max out of pocket for the year is $1000 if someone in my family were to need a huge amount of medical care. The out of pocket limit is hard to reach because you’re only paying a low percentage of the bills for in-network coverage, and the co-pays are real small. Not to mention the great preventative care and prescription coverage I get with the plan as well.

  10. Ron Tilley says:

    Recently has required income verification of most people within a couple of months of their approval for a premium subsidy. Ministers and clergy will have a modified adjusted gross income that is much lower than their paystub shows. Also, I’d be stunned if the systems in place were sophisticated enough to analyze the paystubs of ministers in such a way as to not count their housing allowance toward their income. Therefore, ministers and clergy might consider using the tax provision which treats them as self-employed and able to file a Schedule C as a self-employed person with their 1040 (even if they only receive a w-2 as an employee); and submit for their income verification to a self-employed ledger which leaves out their estimated spent housing allowance (which won’t be included in their modified adjusted gross) and shows their “business expenses” and portrays their income at a level that is close to what their modified adjusted gross income will appear on their 1040. The one caveat is that if their modified adjusted gross income will be less than 100% of the federal poverty level for a family of their size, and they live in a State that has opted out of the Medicaid expansion for those under 100% of FPL; they’ll want to interpret their earnings on the self-employed ledger so that they are reporting a level that reaches at least 100% of the federal poverty level and lines up with what they reported on as their estimated earnings (which should be no lower than 100% of FPL if they want to qualify for obamacare AND they live in a State that has opted out of Medicaid expansion). A phone call today with the obamacare 800 number again confirmed that having your modified adjusted gross income (MAGI) come in under their estimate they provided on will not result in a penalty. If anything, they might get a greater subsidy (in the form of a refund from the IRS) if their MAGI falls within a range that qualified for a greater subsidy than the income they reported when they first signed up for Obamacare.

  11. Wiley Long says:

    Ron–yes, the information you were provided is correct. If you over estimate your income, there is no penalty and you will likely receive a credit in the form of a tax refund. The caps on penalties for those who under estimate their income is also correct, and I agree, this may certainly be “worth it,” or an appealing alternative to many; however, I should also warn individuals using this technique that when you complete your subsidy application, you must confirm that the information you provided was accurate to the best of your knowledge, so there is the possibility you could be penalized for providing false information. I am not a tax advisor, so please consult with the appropriate consultants.

    Thanks for posting the tips for ministers and clergy.

  12. Dave says:


    I was employed last year but lost my job in December. I’m currently unemployed, but I expect to find a job sometime this year and expect my total gross income for 2014 to fall within the 100%-400% guidelines. Can I go ahead and sign up for a plan even though I’m currently unemployed? And what happens if I fall just below the 100% fpl? I was told by one of the marketplace agents not sign up if I’m currently unemployed. But if I wait past the open enrollment period I’m out of luck, even though my total gross income will most likely fall within the 100%-400% range. It’s frustrating because my state chose not to expand medicaid, so I don’t qualify for that. Do you have any advice for me?

  13. Wiley Long says:


    Yes, you can currently sign up for a plan. You will be asked to estimate your 2014 income, and that’s what your subsidy will be based on. However, when you apply for coverage they will do their own check to see if you qualify for Medicaid now. If they do determine that you do, you will not be able to get coverage. If you do sign up for coverage and are later found to qualify for Medicaid, you may have to pay back some of the subsidies you received, but it will capped, probably at $600. You may want to contact one of our Advisors this week, and we can see what we can find for you.

  14. Kristin says:

    My husband has 2 jobs. He’s a pastor and has a job on the side. For the church position, he receives a housing allowance that makes up his entire pay from the church. This can be deducted on income taxes as “housing.” When applying for coverage in the exchange, would I include the housing allowance in the income or no?

  15. Wiley Long says:

    Kristin, Great question! Because “housing allowance” is not included in your modified adjusted gross income (MAGI), no, you would not include it.

  16. Bess says:

    1) If I did not file a tax return last year because I had no income, but started a new self-employed business this year and am projecting an income of $12,000, how can I prove I am entitled to the subsidies that I am entitled to?? I live in Texas, so I won’t qualify for Medicaid even if my business doesn’t make as much as I expect it will…

    2) I have a lot of credit card debt. If some of it is forgiven in 2014 and they file a 1099-C, does that count as part of my MAGI?? Because it isn’t actually income, even though I have to pay taxes on it, I obviously didn’t earn that money in 2014 and won’t be able to use it to pay for my premiums…

    Thank you so much for all the info and any help you can provide!!!

  17. Wiley Long says:

    Bess, these are very good questions. First, as far as proving you are entitled to a subsidy, your proof will be your 2014 tax return once it is filed next year. If you make less than the required amount to qualify for a subsidy (or more than initially predicted), you will be required to repay any subsidy amounts you were overpaid (Up to a maximum of $600 if you make less than 200% of the federal poverty level). The IRS will not actively pursue collecting this over payment; however, it will be withheld from any tax refund you are due. As far as the credit card debt, if you receive a 1099-C, according to IRS guidelines, this must be included on your tax return as “income”. Although it is not earned income, it is considered income in the eyes of the IRS. I hope this helps and I wish you luck in your new business venture!

  18. Jerry says:

    At the beginning of 2014 I was unemployed, did not have any employer sponsored heath care insurance and my family was eligible for a monthly $800 subsidy/tax credit. I anticipated eventually getting a job which I knew would reduce the subsidy so I elected to get the tax credit at the end of the year. if I get a job that offers qualified employee sponsored health care insurance in the middle of the year how does that affect my tax credit at the end of the year. Do I still qualify for the tax credit for the first part of they year when I didn’t have a job that offered healthcare insurance? Or do I not get any tax credit just because I was offered employee sponsored health care during a portion of the year? I understand that the higher income will impact my tax credit but my confusion is how getting employee sponsored health insurance in the middle of the year impacts the tax credit.

  19. Wiley Long says:

    Hi Jerry,

    Yes, you would qualify for the tax credit for the months in which you had individual coverage, based as you realize on your 2014 annual income, and pro-rated so that you would get credit just for those months.

  20. Shelby says:

    I am a recent college grad and am very uncertain about what my income will be for 2014. I signed up for health insurance through the marketplace estimating my 2014 income to be $13,500. With this I was eligible for a monthly $212 subsidy. I chose not to apply it because I didn’t want to owe any large sum of money at the end of the year. I am starting to realize that I am probably the only person in the US who did this… Am I guaranteed to receive this money back on my tax return?

  21. Wiley Long says:


    Great question. And you’re correct-many are choosing to apply their subsidy immediately but I’m sure you’re not alone in your decision. Yes, you will receive your subsidy back in the form of a tax refund. Your subsidy will be based upon your modified adjusted gross income for 2014 – less any taxes you may owe for 2014.

  22. k says:

    Hi. Thanks for this forum and answering all of our questions.

    What happens if we move out of state for a job?

    Currently in Washington state, on Apple Health/medicaid – no premium because our income is so low. We are hoping to move to Idaho for employment.

    Will we have to pay something back at tax time? Or because we would be out of state, and on a private plan through the employer, does that help us out?

  23. Wiley Long says:

    K-Great question! Because you were on Medicaid and did not receive an advanced tax credit, you will not have to pay anything back. You are in the clear! Hopefully your new employer offers coverage at a reasonable cost to you. (As long as the cost to you is not more than 9.5% of your income, you can’t apply for a tax credit or apply for a plan on the federal exchange or state marketplace-so take this into consideration when deciding whether or not to sign up for coverage through your employer. Failure to have health insurance coverage could result in you owing a tax penalty). Best of luck with your move and your new employment opportunity!

  24. Todd A says:

    Hello, My question is I have been receiving the Subsidy since I first signed up. Im self-employed and estimated my Income. My application 12-2013 listed Income information needed to verify. I scanned and uploaded a copy of all tax work W2 & company taxes and personal yearly payroll check copy after filling 2013 taxes around 4/2014, I just received a letter for needing documents that they received information but needed more…
    I have 30 days to supply a list of items or It says lose my coverage…. really If I do nothing they will stop my Insurance, I overestimated some for caution of not paying back.
    What is a Self-Employment Ledger??? there is No definition on H.Gov of it and Internet is trying to sell something of the sort which H.Gov need to define so people don’t spend money.
    There is on final page of documents needed to prove citizenship?? Question is do I scan in B.Certs and send that?? I’ve gotten little help from call center as they help with filling line by line application and not Questions about application which is frustrating with no one to ask for answers or help explain what is need. So If I just ignored this letter 6/2013 do you think they will cancel Or what should I scan them a Hand written note on My Co. stationary since I’m a employ of my Co. for Liability purpose stating expected 2014 income do the trick.
    Wish they had a level 2 call center other than minimum wage script reading help line.

  25. Reg Astor says:

    I am in the same situation as Todd. Got a letter stating I would lose my health insurance coverage unless I provided documents proving my estimated 2014 income estimate. I am self employed, get no w-2s and do not have any documents listed that would be able to establish that I will earn 100% of the federal poverty limit. I think that I will by the time the year is over, but who knows. I am an attorney who was laid off during the recession and I’ve been living off of savings, which is about to run out, since about 2011. The only legal work I’ve been able to get has been on contingent fee cases that may or may not generate sufficient income to “achieve” the federal poverty limit. AND, unfortunately I live in the not so great state of Texas. Rick Perry, our compassionate governor chose to keep his government paid for health plan, but chose to make sure down and out Texans, like me, don’t get health insurance by rejecting the federal money offered to Texas. From what I’ve read here and elsewhere, my only hope of avoiding this absurd catch-22 is by producing something called a self-employed Job ledger. Please direct me to some free site or information that will help me prepare such a meaningless piece of fiction. My life may very well depend on it. That may sound overly dramatic, but as I understand this whole mess, if the federal government finds out that I am really poorer than the poor (<100% FPL), they will not only impose monetary fines I have not chance of paying, but I will be disqualified from buying, WITH MY OWN SAVINGS, the only health insurance available to a 50+ year old man with prior health issues. Who needs debtor's prisons. With heartless hypocrites like Texas brilliant governor Rick Perry on one side, and the inept, unrealistic, pin headed geniuses who designed the the Affordable Care Act on the other, it will not take too long for the unfortunate poor (and I never thought I would have to include myself in that category) to inevitably and eventually just get sick and die without medical care. Problem solved.

    Anyway, I would appreciate some specific practical guidance on preparing a self-employed job ledger. Thank you.

  26. Wiley Long says:

    Todd and Reg, I have recently become very aware of the letters you have received. It is imperative that you reply as soon as possible. I would not doubt the possibility that the government would cancel your health insurance and/or premium subsidy. Todd, I’m surprised they are requesting even more information based on what you have already sent, but yes, it’s an absolute must that you respond and certainly include your birth certificate. I understand you have the option to upload the information through or mail it in. I guess that would be a matter of personal choice, but definitely keep copies of all documentation you receive and what you send. As far as the self-employment ledger, it is simply a document (Excel spreadsheet might be best) documenting income received in each given month (list each payment received, from whom it was received, and the date it was received-or as close as possible) and then total of gross receipts. You would document to the best of your ability your “business expenses” for that month. Subtract that from the gross income and your left with the balance. Do this for each month. You may need to look through bank statements to get this as close to accurate as possible. Here is a link to one example (although I would add your business expenses and subtract that from your gross receipts).

    Reg-you are unfortunately in the catch-22. If you make too little money, not only do you not qualify for premium assistance but you also can’t get Medicaid since Texas did not expand. Therefore to avoid having to repay your subsidy, you would have to make above $11,490 to qualify for premium assistance. Remember-the maximum you should be required to pay back based on your income level is $300; however, keep in mind there may be a fine line between what the government considers unintentionally underestimating your income and “fraud” so be sure to report as accurately as possible.

    Keep in mind that I am not a lawyer or a CPA, and I am not providing legal or accounting advice, just general information based on commonly known information.

  27. Joe B says:

    Hello, I have been trying to find out how to calculate the obamacare subsidy for a couple when one spouse goes on medicare half way through the year.

    The first 6 months we are a two person family with both getting insurance through the government exchange. The last six months we are a two person family with only one getting insurance through the government exchange.

    If we are at close to 400% on the income limit for two people we will be over the limit eligible for a subsidy when only one is getting insurance for the second half of the year. How do you calculate the subsidy for the year?

    Joe B

  28. Rob says:

    Same boat as Todd and Reg… I am guessing that I get a bill from my insurance provider if i do not suppy a self employment ledger??? I am too busy to creat a ridiculous leger carefully crafted according to guidelines. I mean really, anybody can send in an xcel sheet…. and that is proof?

    Is there a documented penalty or fee for not suppying a ledger? Seems like the proof will be in the pudding come April 2015.

  29. roger rigby says:

    I am in the same boat of uncertainty. 2 hours on the phone with 800-obamacare (including wait times) and hours of internet research has revealed nothing reliable regarding how to safely guesstimate with a self-employment ledger, avoid troubles later or blatant cancellations of subsidy by unfeeling computer algorithms and agents who have no power of appeal or assistance that is reliable or helpful.

    So, it is the lousy ObamaCare which provides healthcare I consider sloppy and insufficient and painful forced upon me now with a system in place to manage it lacking fairness, logic, or anything except scary threat letters. Shame shame shame!!!!!!!!!!!!1

    1. Wiley Long says:


      I agree this is a tremendous hassle for many individuals! I wrote about this and included additional information about the self-employment ledger in a recent HSA for America newsletter – I’ve added the link below. The ACA has unfortunately put higher demands on the self-employed to document their income – and of course the ball is in their court. If you fail to provide the documents requested by, not only do you lose your subsidy- you lose your plan! See if this helps:

      I also have another blog coming up next week notifying our readers that the deadline to submit this information is September 5th. has stated if the information is not received by the deadline, insurance coverage will end September 30th.

  30. Wiley Long says:

    Rob, unfortunately it’s not as simple as them just sending you a bill. If you do not respond to the request for additional information, your policy can be cancelled altogether. Unfortunately if you are self-employed, the time has come where proper business records must be kept or you risk not only losing your subsidy, but also losing your policy.

  31. Tom harney says:

    My current income is too much for Medicaid but low enough for subsidies. In early 2015 I may be unemployed for a few months but rest of year will have income that again will that will be too much for Medicaid but low enough for subsidies. My question is –will being unemployed in January and February 2015 cause the healthcare exchange connected IRS computer system to put me on Medicaid automatically? My state has a Medicaid estate recovery program and I don’t want to be on Medicaid.

    1. Wiley Long says:


      You will not be automatically switched to Medicaid. Subsidy determination is based on your annual income. Yes – you do have the option to sign up for Medicaid if you choose once you don’t have any income, but you don’t have to. If you know your annual income will meet subsidy requirements, you should be able to keep your plan and will not be switched.

  32. Renee B says:

    I signed up for health insurance on the marketplace when my husband was unemployed the first 6 months of the year and received a subsidy. I notified the Marketplace in June when he went back to work, that I would no longer require the subsidy. I found out a month later that not only was I now responsible for the full premium,(which I knew) but me health plan was actually changed to a new plan with higher deductibles and copayments. I went from a $250 individual deductible to a $2,000 individual deductible no one informed me of this, I found out when a received a benefit statement for a Dr’s visit. My health plan NSLIJ care connect also made this new policy retroactive to March and is telling me I am responsible for the $2000 deductible even though I had the “subsidized” plan from March to July. I am appealing this. My understanding is the bills should be covered at the Subsidized plan rates from March to July and July and August should be paid out at the Normal policy rate. Knowing what I know now I would have not informed them of any changes and just repaid the subsidy at tax time, instead i try to do the right thing and my health insurance plan is changed and backdated. Be aware that you are not only receiving a premium Subsidy but also a subsidy in copayments, deductibles etc…No one ever made me aware of this at the time of purchase or when I notified them of my change in income, Again, I only was made aware of the when I received a benefits statement from a Dr’s visit indicating I now had a $2,000 deductible instead of $250. Is there any law that states the insurance co has to process my claims for March through July at the “subsidized ” plan rates and can’t backdate my new “regular” plan to March and change my coverage? My husbands co based insurance starts in September so this will all be behind me. However, I don’t think I should be responsible to pay claims that were process during the subsidized period (March-July) at the regular rate, they should not be allowed to go back and reprocess claims that where paid at lower rate.

    1. Wiley Long says:

      Hi Renee,

      From what I have researched, it is understandable for your carrier to switch you to a plan without cost-sharing, and obviously your subsidy would be decreased (or even null if you make over 400% of the FPL); However, you should not have to repay any previous payments that were made based on cost-sharing during that time. If you’re unable to get any satisfaction through your insurance carrier, I recommend calling or your state exchange (wherever your plan was purchased from) and see if they are able to assist you.

  33. Elwood Suggins says:

    I have been receiving Obamacare subsidies since May based upon my good estimate that my income would be in excess of the Federal Poverty limit. I do free lance contact legal work, and although I had as a matter of choice not been working the first half of the year, I believed I would easily make enough to exceed the limit in the remaining months of the year. However, due to some family emergencies, and the fact that some potential work fell through, I now doubt that I will exceed the Federal Poverty limit. As I am in a state that does not provide Medicaid for those making less than the Federal Poverty limit, do I have to repay the entire amount of the subsidies paid to my insurer? Or, as my income falls below the Federal Poverty limit of $11,490, will my repayment amount be subject to the cap of $300.

    1. Wiley Long says:

      Hi Elwood,

      Your situation may affect many Americans and I appreciate your question. In your particular case, your responsibility would be capped at $300.

    2. Me says:

      The ACA is clear on this point: no repayment is required if your income is below the FPL. In your case, the FPL simply serves as upper limit on the size of your tax credit.

      1. Johnathan Croxton says:

        I was hoping you could tell me where I can find an official answer to the question mentioned above. Just to reiterate, what will happen if a person projects $11,700.00 for a single individual, but does not reach the minimum and instead only makes $11,000. Will this person have to pay $300.00 as a penalty?

        Thank you for your time.

        1. Me says:

          I am not a lawyer and this message does not constitute financial or legal advice and absolutely cannot be relied on or interpreted as such advice. Also, I don’t think anyone can predict how our wacky courts will interpret any aspect of the ACA. My personal opinion, based on a wide variety of sources, including (see §1.36B-2 Eligibility for premium tax credit), is that when you apply for insurance on an exchange, the size of your subsidy depends, among other things, on your good faith estimate of your expected MAGI and whether or not your state of residence has chosen to expand Medicaid. The IRS rules regarding the subsidies are, even for IRS rules, astoundingly complex and some of the statutory and regulatory language appear to contradict each other, but my reading of this section is basically this: If your MAGI comes in higher than you expected, you may be asked to pay back some of the subsidies. If your MAGI comes in lower than you expected, you may be entitled to additional subsidies, but the FPL (or 133% of the FPL, depending on your state of residence) sets an upper limit on the size of your subsidy. As far as I can tell, making less than the FPL or 133% of the FPL does NOT subject you to some kind of Dickensian penalty. The idea that the IRS could zap poor people with a penalty because they made less money than they expected or had an additional child or got divorced is horrific, hopefully too horrific even for our most insane legislators & jurists to contemplate, but what do I know?

      2. Johnathan Croxton says:

        Hey could you please contact me. I have some questions about the ACA and could really use your help. Thank you.

    3. Jamie Coughlin says:

      This is also my problem, I got my insurance in May and thought I’d make the min. that at the time was $11,505. However I could not get arrested in the summer (I was a sub) so my income will likely end up being $9,000 to 10,000 instead. So that means I will also only have to pay $300??? I have 4,000 in self employment income and the rest in “regular” income. I had to pay $600+ for 2013 taxes so could only send $500 in for an estimated tax payment for Jan. (my contract ended when the bigwig contract ended) So I may end up owing more tax for that, just hoping my pitiful earnings and withholding since then will balance it out. Our jerk is Rick Scott. I do not understand why the people who could afford it the LEAST are left out in the cold insurance wise? WHY is there a gap at all?

      1. Wiley Long says:

        Hi Jamie,

        It is unfortunate that there are so many individuals still falling through the cracks of “Obamacare,” although I cannot explain why these gaps exist. You are correct in saying that your repayment would be capped at $300.00.

        1. JMO says:

          On the Kaiser family foundation website I found hundreds of obamacare related questions. Someone posed this exact question. “What if I estimated my income and it fell below the amount needed to apply for Obamacare and I actually should have applied for medicaid instead. Do I have to pay it back?” The answer was, “No your final premium credit amoint will be determined based on your income for the year as reported on your tax return. The fact that it ended up 130% below poverty level does not mean you will have to pay back the tax credit you received. In fact, your final credit amount will likely be larger then the amount you received.”

          So this is a bit confusing and I’m in this situation. BTW does anyone know how medicaid works. Do you have to show income in the bank and other assets? I don’t make a lot in 1 year but I also live at home so I do have some money saved away so I doubt I’d be able to get it (nor do I think I want it based on the complaints about doctors not taking it).

          1. Wiley Long says:

            Hi JMO,

            My understanding is that you would have to pay a $300 penalty. However there are still many question marks with this until April gets here. As far as Medicaid goes, you are given free coverage if you are eligible. However, the coverage varies state to state. You contact your local Medicaid office for coverage details.

        2. Oregon Beach says:

          Is this cap still $300? Or does the cap rise every year? So in 2016 or 2017 it is more now?

          1. Wiley Long says:

            The repayment limit is based on income. For Single taxpayers, those earning under 200% of the federal poverty level have a repayment limit of just $300; 200% – 300% have a $750 repayment limit; those earning between 300% and 400% of the fpl have a repayment limit of $1250; and those earning over 400% of the fpl must repay the full amount.

  34. Cathy says:

    My son signed up for Obama care in March 2014 after falling off of my current plan because he moved out of state. At that time his income was $20k and he qualified for $174/month tax credit. We took the amount of the credit and used that each month which left him paying $53/month for his health plan. He then got married in June 2014 and we entered the change of life into His income stayed the same because his new wife had no income. He had to re-enroll in the same plan and received a $201 tax credit which we used and paid 0.12 per month starting in July. Now, his wife has gotten a job and her income for the rest of the year (starting in September) will be $12,500. I reported this new income to which now left him with $55/month tax credit. He will start paying $145/month in November. What is going to happen at the end of the year. Will we now owe back tax credit money that was given to him the previous months at tax time? There was no way to estimate that he was going to have this added income. We’re not quite sure what to do about this or what will happen.

    1. Wiley Long says:


      This is one of the unfortunate pitfalls of “Obamacare” – you never know what is going to happen in any given year. The final determination of your son’s premium tax credits will be based upon his 2014 tax return including his modified adjusted gross income and household size. If the IRS determines that he received too much in the form of an advanced premium tax credit, he will owe the IRS and would have to repay all or part of his advanced premium tax credit. The amount required to be repaid varies and is capped based on income and can be withheld from any tax refund due.

  35. smlowry says:

    I wonder if there’s any chance something will happen to help those of us who live in states that did not accept federal funds to expand Medicaid. I live in Maine and lost my Medicaid coverage in Dec. 2013. I’m 62 – not a great age to have no health insurance. I moved to this state from Vermont 18 years ago to care for my disabled sister (who is 7 years younger than me) after our father suffered a stroke and had to move to a nursing home. My sister’s disablity is from a severe brain injury suffered 31 years ago. She cannot live alone. I am beside myself with worry over my/our future. We co-own our home so we just can’t pick up and move back to Vermont. I want to sell it but the market here hasn’t recovered enough such that we’d be able to afford the costs of a move after selling, paying off the mortgage and the realtor fee. So I’m stuck here. If I were to have an accident or get seriously ill, we’d lose the house anyway so a part of me thinks we should stop making mortgage payments, save the $ and then let the bank take the house so we can move. But right now we have good credit and I don’t want to ruin that. If our governor’s race puts the democrat in office, no problem. But it’s a tight race due to a 3rd party candidate so LePage could very well receive the highest percentage of votes (though it would not be a majority – the same thing happened 4 years ago). Is there any hope for me or do I just have to pray I don’t get sick until I turn 65?

    1. Wiley Long says:

      Hi smlowry,

      You and so many other Americans have fallen into this coverage gap. Unfortunately, there is no way to tell what the future will bring and which states may overturn their decision and move forward with expanding Medicaid. If your income falls below the level to qualify for premium assistance, it seems that you will continue in this coverage gap but may want to consider something as simple as an accident policy (as most health-related problems are accident related). If you are able to bring your income to the minimum required to qualify for premium assistance, ($11,670 for 2014), you could then sign up for a health plan, and this would provide coverage until you’re 65.

  36. lynn says:

    hi wiley, so glad to have found this article.

    a family member is in a similar position as many here. lives in a state that didn’t expand medicare. estimated income at what he thought was conservative–$20,000. qualified for a big subsidy and got a good policy. then got sick, 2 hospitalizations, and hasn’t been able to work at all so far this year. will likely not earn more than $11490/FPL.

    i understand from reading the article and comments that he will likely have to repay only $300, right? if so, can you direct me to the ‘law’ that says this? so far, i’ve found this 2013 article that seems to confirm…but i haven’t been able to find the law itself. i know it would ease his mind to have it.

    thank you so much!

    1. Jane Doeder says:

      In researching my own question, I found this:

      It says if you overestimate your income and your actual income falls below, that you likely won’t have to repay anything. Hoping that’s true! In my case, it looks like I might be making just $1000 under what is required for Obamacare this year for my family of 5. Obamacare DOESN’T include child support as income, but Medicaid DOES include child support as income which pushes me way over the qualifying limit for that. So stupid that these gaps exist.

    2. Wiley Long says:


      Here is a link to the most current information the IRS has posted to date regarding repayments:

  37. Jane Doeder says:

    How is annual salary calculated in a mid-year divorce situation? I was told by that even though I had separate finances and was already receiving alimony, I wouldn’t qualify for a subsidy until my divorce was final because my soon-to-be-ex made too much money. So, he let me stay on his insurance until the divorce was final in June. In June when I applied at, I estimated my annual income based on just my salary for the year. Now I’m wondering 1. Are they going to count my ex’s income from January to June as part of my annual income even though I had private insurance during those months and we are filing our taxes separately? 2. If it’s based just on my income alone and I fall below the amount to qualify for a subsidy for 12 months of insurance coverage, how does that work since I only used the subsidy for 6 months of the year?

    1. Wiley Long says:

      Hi Jane

      One determining factor here will be how you file your taxes. If you file as “married filing separately” you absolutely will not qualify for the tax credit. This is not allowed under the ACA. If you still file as married, as you said, you would not qualify due to your soon to be ex-husband’s income. If you are divorced by the end of this year and file as single, then it will only go by your income as filed on your tax return.

  38. ZV says:

    Hello. My parents are currently covered under Medicaid, but that coverage is ending at the end of the month 10/31/14. On the Marketplace application, it asks if they are covered under Medicaid or any other insurance. I answered yes because they are still covered as of the date I am doing the application. It then asks whether they will be losing coverage in next 60 days and to specify the date which I did. These were “optional” questions. Based on my answer of “yes” to them being covered under Medicaid, I was not asked if they had affordable employer-sponsored health insurance. The eligibility notification indicated they will get a tax credit.

    My dad does have “affordable” employer-sponsored health insurance. However, based on how I answered the questions, the question was not asked of me. Are they still entitled to the subsidy?

    What I want to know is– If they take the advanced tax credit and then later are deemed “not eligible for tax premium assistance” due to having employer sponsored health insurance (even though the question did not appear on the application for me), will he be responsible for paying back ALL of the subsidy, or just the $600 max for his salary level?

    The way they ask questions makes it hard to tell.

    1. Wiley Long says:

      Hi ZV,

      If your father has access to “affordable” employer-sponsored health coverage, no – they do not qualify for a subsidy. If you are under 26, you can also be added to your parents’ insurance policy. I am not sure of your age or living situation, but if you make adequate income to qualify and your parents choose not to add you to their policy, you may apply individually under your own account on for insurance and/or a subsidy. Open enrollment begins November 15 unless you qualify for a special enrollment period, then you could sign up now.

      1. ZV says:

        Since the question of whether he has access to affordable coverage never showed up for me, the eligibility notification does say they have a tax credit. If they apply the max credit (over $600/mo), will they responsible for paying the full amount back or will it be capped at the $600 for the household salary level (150-200% FPL)?

        1. Wiley Long says:


          Yes it’s true there is a recap on the amount of how much they would have to repay; however, if the government were to determine that fraud was committed when applying for coverage (as he is aware affordable coverage is available through his employer and technically would not qualify for a subsidy), there is a chance that the cap might not apply. During the application process, there is a document required to be provided from the employer stating affordable coverage IS NOT available, so that may be where he hits the snag.

  39. Amy says:

    I have a question. If i overestimate my income, AND purchase it on the exchange, then I will receive extra in the form of a tax refund for the additional subsidy amount I would have qualified for.
    Does this also apply to cost-sharing measures? For example, if I estimate my income to be a certain (lower) amount, I would receive a greater subsidy AND a lower deductible and out of pocket maximum. But if I estimate my income to be a little higher just to be safe, I get a little less in subsidy AND a higher deductible than the first way.
    So let’s say I do overestimate my income. When it comes to tax time and I receive the
    extra, say $30/month in subsidies that i qualified for, will I also receive a refund of, say, the extra $1000 in “out of pocket” money since I would have had an out of pocket max that was much lower due to ‘cost saving’? (Assuming that I met my out of pocket max for the year.)

    I hope my question makes sense! There are so many different individual situations that it is not always easy to understand how this will work.

  40. Sound Therapy says:

    I will be turning 65 in July and will only be getting health insurance for 6 months, then cancel and switch to Medicare. Can I report half a years income?

    1. Wiley Long says:


      Great question. Subsidies are determined based on your household modified adjusted gross income which is determined when you file your taxes, so no, you cannot only claim income for half a year. Be sure not to cancel your marketplace health coverage until you are positive your Medicare is effective.

  41. RChes says:

    What is a self employment ledger? Our only income is rental properties which we own and manage. I can not believe that I am out here trying to get insurance again. The plan we have currently will change in 2015 to a very high deductible and an unheard of out of pocket.

  42. Jay Smith says:


    To a post below, you responded that:

    The final determination of your son’s premium tax credits will be based upon his 2014 tax return including his modified adjusted gross income and household size. If the IRS determines that he received too much in the form of an advanced premium tax credit, he will owe the IRS and would have to repay all or part of his advanced premium tax credit.

    However, I posed the following question to a phone rep. I’m currently earning $1,400/month as a single individual with no dependents, and therefore eligible for a subsidy. Suppose I earn that amount Jan through November of 2015, and then $100,000 in December of 2015, and promptly report the change, In that case my total 2015 income is well above the subsidy threshold on an annualized basis. My question to the rep was, am I required to repay the subsidy earned in Jan through Nov?

    She specifically stated that I would not be required to repay those subsidies, because I had promptly reported the change.

    Please clarify.

    1. Wiley Long says:

      Hi Jay,

      If you promptly report the change to they will remove your tax credit in December and you will not pay a penalty — As long as you can prove that the $100K was not made all throughout the year.

  43. Jen Thomas says:

    My husband and I estimated our income correctly. What we estimated is exactly what is on our W-2. However, when we did our taxes the IRS said that we under estimated our income and therefore we were given too much of a subsidy and will have to pay back $1,000. We did not under estimate. It is exactly what we said. I think that it is very unfair that we did everything right and they gave us the subsidy and now they are saying we have to pay $1,000 back. If I had $1,000, laying around I might not need obamacare. Anything I can do?

    1. Wiley Long says:

      Hi Jen,

      I am not sure exactly how the original estimate came about, but I can tell you that it is a little more complicated that simply looking at the “bottom line” of your W-2. Subsidies are calculated based on “modified adjusted gross income.” Therefore the IRS uses a specific calculation as to what is included and what is not. Unfortunately, once your taxes are complete and your modified adjusted income is determined, that is how your subsidy is based and I fear that there is very little if anything you can do about your repayment.

  44. Harold Branahl says:

    We live in TX and in 2013 we recieved a subsidy for my wifes health care of 475.00/mo. based on an estimated income of around 23000.00. this year our income would be about the same but we got a 1099c from a credit card co. from 2014. because of thhat not only do I owe 1500.00 more for 2014 wont it also affect my 2015 subsidy

    1. Wiley Long says:

      Hi Harold,

      If your earned income is greater than your estimated income, you will have to pay a portion back. I would recommend speaking with a tax professional to assess what your tax liability as it pertains to the 1099 for the credit card.

  45. qquizz says:

    Hi, I am helping my girlfriend file her taxes. She had Marketplace Platinum plan in 2014. She only had insurance from May – December 2014. She paid the total amount with no subsidy. At the time she enrolled on the marketplace she said she had $0 income. She ended up paying her premiums and substantial medical bills by from an early withdrawal from her Traditional IRA which counts as income. She also started a small business on eBay. So she has income total around $12000 for 2014
    Should she get a credit on her taxes since she paid the full price of insurance for those 8 months. May 1st was the latest you could enroll and pay for your insurance in 2014.

  46. Blake Oelze says:

    My wife and I married in August of 2014. She received Marketplace coverage from March – September. She called Marketplace to tell them we were married and cancelled her coverage in September. I had added her to my policy at work effective in August. She was receiving a credit of $267/month. The annual credit was $1869. She made $24,000 in 2014. We are filing our taxes as Married Filing Jointly. I entered the information from her 1095-A. TurboTax asked if we married in 2014, I selected yes, then selected August as the month and my wife as the policy holder. Now comes my confusion, we are being told that we must pay back all of the $1869 credit. According to our tax software, my income is being included and our combined income requires us to pay back the credit in full. Why is my income of 81,000 being included? Especially since she was not required to include me on the application?

    1. Wiley Long says:


      Unfortunately, the tax credits are all based on annual household income, regardless of who is on the policy. That’s a cruddy wedding present.

    2. Wiley Long says:


      Unfortunately, the tax credits are all based on annual household income, regardless of who is on the policy. That’s a cruddy wedding present.

  47. DrEvil34 says:

    In 2012 I earned $12,500 dollars and so when IRS checked my income back in December 2013 I qualified for a subsidy for 2014 insurance coverage. I made a similar amount in 2013 so I qualified for another subsidy this year when renewing my health care for 2015. However, in 2014 my mother was in a car accident which totaled her car. Her injuries prevented her from driving and I had to step up and take care of the 7 year old child she has guardianship over, having to take the child to and from school, I was essentially a stay at home uncle and nurse for around 3 1/2 months and I could no longer work. I couldn’t file for unemployment as you have to be ready and able to work and you cannot refuse hours. With all that lost income I only made around 9,000-10,000 for the 2014 year. I should make the minimum to qualify for the subsidy this year in 2015, but what is going to happen when I file my 2014 taxes and the irs finds out I didn’t make enough to qualify for the subsidy in 2014? How will it affect my taxes? Will I have to pay a penalty? Will it affect my insurance and/or subsidy for this year?

    1. Wiley Long says:

      It will not have any impact on next year but you could potentially have to pay up to a $300 penalty for 2014 for being below the subsidy threshold but having had received a subsidy. When you experience a life change like that you are supposed to file a life change with the respective state or federal exchange and adjust income. However, I realize that in many situations that can be easier said than done.

      1. DrEvil34 says:

        Had I done that…and filed a life change and estimated my income lower…would they have dropped my subsidy on the spot forcing me to lose my insurance through the exchange?

        1. Wiley Long says:

          Good question. They would have increased your subsidy or would have made you eligible for benefits through Medicaid which would have been free. It would depend on the amount of the income adjustment.

          1. DrEvil34 says:

            Thanks..Just to clarify in the state of Florida where I live they didn’t pass the Medicaid expansion, would the life change I’d of filed have made me eligible anyway?

          2. Wiley Long says:

            No, you are correct. They did not extend Medicaid in FL.

  48. Elliot C. says:

    I helped my parents submit their NY State of Health application. The most frustrating thing is the lack of knowledge of the people handling the application and no escalation policy. If you apply for healthcare in NY, they will use your highest income reported, without any non-taxable deductions. I had to explain to the supervisor, the supervisor of the supervisor what gross income means. All I got in return is that “sorry this is what we’ve been doing for a year and half” – which is basically making people pay for more than they should for an entire state for 2 years. When I asked if I can raise a suggestion, the reply was sorry, this is all we can do.

    1. Wiley Long says:

      Hi Elliot,

      Your sentiments are shared by millions of Americans who have had a bad experience with their Health Care Reform experience. While the subsidy is technically supposed to be based on you “estimated household adjusted gross income” for any particular year, many states have developed their own strategies to calculate income.

  49. Lynn says:

    Hello I live in Kentucky and left my job to go back to college. We signed up for the Obama care and did our best estimate of our income. We knew we would be pulling some money from my ira to cover my school expences and asked the person that signed us up if we needed to include this as income and they said no because it was for school. Well here we are filling out our taxes and it does count as income and we are going to have to pay back all of the subsidy that was used to lower our insurance bill. Note don’t listen to the people that sign you up. Anyway my question is since we have to pay that back can we take the amount we did pay off our taxes?

    1. Wiley Long says:

      Hi Lynn,

      If you are self-employed, you can write off the cost of your health insurance on page 1 of your 1040. This should lower your adjusted gross income, and subsequently your taxes. Ironically, lowering your income may make you once again eligible for subsidies…

  50. David says:

    I am retired, and on Social Security. I have an Advantage medical plan. My wife and I divorced in June. She qualified for a subsidy through Obamacare while we were married because of my income. After the divorce she filed a change of life with Obamacare, and did not qualify for a subsidy because she was unemployed. We live in Alabama, which opted out of the Medicaid expansion. Since she shows no income for herself, how will Obamacare know she qualified for 6 months with my income while she was married?

    1. Wiley Long says:

      Hi David,

      She would have had an FFM ID under the coverage she had the first time while married under your income. They would already know about that. She would just need to remind them that she had coverage for 6 months before the divorce under your joint household income since as you said, you weren’t covered and was already in the medicare program. Do know that not having coverage for 1/2 the year could impact her penalty wise. Her CPA would just note that when she files taxes.

  51. mopar says:

    searching for a simple self employment ledger to turn into obama helath care, as they want monthly ledger from me. I own a small (just me) body shop. Any advice on a decent formatted one that would suit my needs? I’m not exactly sure what they are after.

    1. Wiley Long says:

      Hi Mopar,

      Sorry but I don’t have any advice on a monthly ledger.

    2. A friend is a self employed handyman. Here is a sample form we found that he’s using.

  52. Mr. Sykes says:

    Wiley: I work part time and earn a little more of my income during the last part of the year. I received my 1095-A and prepared form 8962 and I owe 1250.00. When I signed up I knew I was going on Medicare in September but estimated my income based on my current earnings. Am I being charged based on a full year income rather that the 8 months with Healthcare Insurance?

    1. Wiley Long says:


      It is an annual number – So when you know you are going on Medicare and if your income is changing, you need to factor that in as well. Can’t tell how much you’re actually being charged though since we won’t have your exact numbers for income and such.

  53. Jo Tran says:

    Hello, I am in NC. In 2004, i have purchase health insurance through Obamacare. At that time, i have estimated my income $12,000. However, after finishing my tax year, i find out that my self-employed jobs income is about 12,000, but minus the expenses, it is about $950. What should i do? Just hided all the expenses to maintain an income of $12,000?

    1. Wiley Long says:

      Hi Jo Tran,

      You could certainly adjust your expenses or you could pay the $300 penalty. See which route would save the most money and do that. I also encourage you to reach out to a tax professional to get some advice.

  54. Dan says:

    My wife and I have social security income and as such have subsidies for our health care. I turn 65 in August of next year and will then go off the ACA and onto Medicare. My wife will continue on Obamacare until October of 2016. When I estimate my income in December for the 2016 year – am I correct that I should estimate all of our income for the year – and not try to prorate anything for the time I will not need the ACA?

    1. Wiley Long says:

      Hi Dan,

      Correct, you will estimate your total annual household income.

  55. pablo says:

    I temporarily lost my subsidy because my projected income did not match my previous income as I had lost my job just before applying. Everything was fine for 4 months. Then the IRS suspended the subsidy when the numbers didn’t make sense. While I was explaining the situation to the Marketplace to get the subsidy back the insurance wanted the full premium. I did get it back but getting a straight answer on how to recoup the subsidy for the month I lost it has proven as timely and frustrating for me as for those at the Marketplace, my insurance company, and Ehealth who seem to genuinely want to help. Bottom line is I have to pay double for the missed month and wait for my written appeal to get processed since they can’t address the issue over the phone. An amazing scenario given that no details in my life have changed from the time I applied.

    1. Wiley Long says:

      Hi Pablo,

      This has been a common problem. Lots of flaws and problems with the ACA. I wish I had some grand advice for you but it sounds like you’ve done everything I would recommend. Good luck with it.

  56. Curtis Butler says:

    I have a client who signed up for ACA with a rep specifically for ACA. When doing so, the rep used the wrong numbers as far as income goes. After preparing the tax return for 2014, my client now owed the federal government well over $8000.00 for overpayment of subsidy. Is there a loop hole for this?

    1. Wiley Long says:

      I don’t know of a loophole here short of filing a suit against the agent which would be paid out by his E&O insurance. The subsidy is based on an income estimation. If the insureds realized they were getting more of a subsidy than they should have been given, they should have contacted the exchange and filed an income change.

  57. what about OVER ESTIMATING my income? What happens then?

    1. Wiley Long says:

      All subsidies are reconciled at tax time. If you over-estimate and make less than you thought, you could potentially get a tax credit at the end of the year.

  58. Kevin Lawrence says:

    I just lost my job (laid off) and will be receiving unemployment only for weeks/mos to come (378/wk). how do I estimate next years income with this situation. Also not young at 58 and have major health problems and need insurance (copd/asthma/poly neuropathy and hypertension along with arthritis)

    1. Wiley Long says:

      Due to the way the ACA is structured you would need to make the best estimation you can with things being what they are. Your eligibility can vary by state.

  59. DeclarationOfIndependence says:

    I live in South Carolina and signed up for Marketplace coverage in January of 2015. On February 16, 2015 I received noticed from my employer that I was eligible for health insurance coverage. However, since the deadline had passed to sign up for Obamacare and I had already signed up for Obamacare, I made no changes. Now (2016), I’ve received a 1095-A form for 2015 saying that my subsidy through the marketplace was $1,007 per month and a 1095-C form saying that I was eligible for employer health insurance coverage meeting the minimum requirements of the ACA for $175 per month for each month in 2015. Will I have to pay $1,007 in extra taxes to the government for each month I remained covered through the Marketplace in 2015? The $175 employer-offered coverage is less than 9.5% of my family income. However, it seems excessively punitive that I would be required to repay the government over $10,000 after signing up for Obama in good faith – before I had employer coverage which wasn’t offered until AFTER the signup deadline!

    1. Wiley Long says:

      Sadly, the answer is yes. If you are eligible for employer coverage, you are ineligible for a subsidy.

  60. Dee says:

    Question: I live in Maryland and am on Medicaid. I Have no income because I needed to quit my job to care for her for several years and don’t anticipate any income this year, 2016. However, my mother just passed away, leaving me a sizeable inheritance through a revocable living trust of which I am a joint trustee. I will inherit a house, several properties (lots only), cash (already on this checking account), and a tax deferred IRA of $200,000 in my mom’s name which I know with incur income tax through her estate. Will any of this cause me to lose my Medicaid health benefits? If so, how can I minimize the damage?

    1. Wiley Long says:

      Hi Dee,

      Yes, it certainly could. We are not Medicaid specialists, as the laws vary state by state. I recommend contacting a CPA and your local county Medicaid office to get state based specifics on your situation.

  61. Catherine says:

    I usually make 45,000 per year so that’s what I estimated when I signed up for 2016 health car. Turns out in 2015 I made 119,000 because of an inheritance, so I no longer qualify for the $157/month subsidy, Do I have to do anything now, or will this be determined on my 2016 tax return. I’m concerned about penalties that I may incur?

    1. Wiley Long says:

      Hi Catherine,

      You should call the marketplace as soon as you realize that you will have a substantially higher income than what was initially reported. (Typically more than 10% as a rule)

      However, if you do not report income increase, then you will have to pay back subsidy that you received when you do your taxes, but you will not be penalized.

  62. Jack Grenan says:

    Help ANYONE! i AM A CANCER SURVIVOR ON SSD i LOSY MY HOME…DUE TO 1 MILLION + IN BILLS. FOR 2015 FOR TAXES THERE IS MY WIFE AND DAUGHTER FILING AS MARRIED 1 DEPENDENT. We rec’d 560 per month Obamacare stipend. Our 215 gross incmome was 88k and after deductions 58k per H&R block we have to pay back 100% 100% of the stipend $5800.00 is this true we do not have anything what if anything can I do or is this wrong I HOPE JACKGRENAN@NETSCAPE.NET

    1. Wiley Long says:

      Hi Jack,

      Qualifications for subsidies is based on your Modified Adjusted Gross Income (MAGI). For a family of 3, your MAGI must be less than $80,360 to qualify. If your MAGI was $58,000, you would still qualify for some subsidy, so you should not have to pay the entire amount back. If, however, your MAGI was over $80,360, I’m afraid you would be required to pay that money back to the IRS.

      1. Jack Grenan says:

        THANK YOU HR block went with our $88k gross amount of $88 K 30k from my pension and SSD and my wifes PT 3 jobs and my supposed 9 month trial work period income.. Per HR block the amount is $88k and NOT out adjusted amount after deductions? The NET INCOME AFTER ADJUSTMENT WAS $58k i AM HOPING THIS IS THE ACTUAL AMOUNT USED TO DETERMINE WHAT WE OWE obamacare???Help & thanks Jack & family so they said 6k ALL MusT BE PAID BACK? is this correct? aS A CANCER SURVIVOR & 3 MONTHS IN A COMA I REALLY NEED & APPRECIATE YOUR HELP!! Thank You Jack Grenan

        1. Wiley Long says:

          Hi Jack,

          I am not sure what H&R Block is using, but I would defer to the website,

          This will likely shed more light on what the subsidies are based on and how to reconcile them.

      2. Jack Grenan says:

        I really need your help HR Block says we must pay it allllll back based on **K gross income. that included 30k from my pension and ssd from cancer. After deductions especially all the medical and dependents our net income was $58k.

  63. Kimberlie Fielding says:

    I live in Florida. We told the Market Place that our combined income would be $40,000. I enrolled in the Silver Plan and paid the amount that I was told would cover my insurance. Our income came in at $37,000 and the IRS is coming at me for another $900 for my health coverage. Why is this happening?

    1. Wiley Long says:

      Hi Kimberlie,

      The income you gave the marketplace was an estimation of your income for 2015. The subsidy is based on that estimation and is reconciled +/- at tax time. If you made less than your estimation, you should not have to pay more. More than likely you should get a small tax credit.

      I recommend calling and getting some clarity on how your income is listed on your application and see if they can give you clarity on why you are being penalized an extra $900.

      1. Kimberlie Fielding says:

        Hi Wiley,
        I spent an hour on the phone with the Marketplace. They agreed with my calculations for our income but blames the IRS. We went and saw our accountant again this week and they told us to over pay my insurance this year. It seems no one wants to give me an answer because they do not know why this has happened.
        Thanks for your time.

  64. Beth says:


    I just turned 26 and currently qualify for medicaid (called Family Care) in the state of NJ. However, I expect to earn enough by the end of 2016 to be over the 138% FPL and qualify for subsidies on the marketplace. Am I able to apply for insurance on the marketplace now and receive subsidies based on my projected ANNUAL income, or will I be required to pay full price because of my current MONTHLY income? If for some reason my annual income ends up being low enough that I did qualify for medicaid during 2016, will I have to pay the subsidies back?

    What if I do the opposite, and pay the full price for insurance on the marketplace now because I don’t qualify for subsidies due to qualifying for medicaid based on my current monthly income. If at the end of the year my annual income is high enough that I would have qualified for subsidies, will I get the subsidies back as a tax credit?

  65. Sandi Whitman says:

    Wiley I think I overestimated my income. Due to our income bracket I don’t usually get a refund so if I overestimated it by over a 1000 dollars will I get a refund?

    1. Wiley Long says:

      More than likely you will. You may have to pay back some of the subsidy, but it shouldn’t be much.

  66. Bifftex says:

    My son aged out of our healthcare. He was attending school half the year andpaid internship that only paid $6000. We had to sign him up for insurance (and paid full price ) as a requirement for his internship. He is currently looking for a job. How does he estimate his income for 2017? We live in Texas so he won’t qualify for Medicaid. He probably would not qualify for Medicaid anywhere as he has a savings in excess of $5000. Should he just estimate the minimum to get subsidy and hope for the best that he gets a job?

    1. Wiley Long says:

      There are many people caught in this void in states that did not extend Medicaid. Unfortunately, all we can advise you to do is to estimate his modified adjusted income the best you can.

  67. Sarah Van Etten says:

    Last year I made $1500/mo and qualified for free insurance on Washington Apple Health. This year my income went up to $2000/mo but I forgot to report it. In the meantime my insurance paid in full for some counseling services. I wonder, at tax time, we’ll I be required to pay back the monthly premiums I should have been paying AND pay back the cost of counseling or just pay back the premiums?

    1. Wiley Long says:

      Hi Sarah

      You may have to pay back some of the tax credit, but you will not have to repay any of the cost sharing or expenses.

  68. Dave says:

    Hello Wiley. Pretty simple question. Is my spouse’s STAGGERING health insurance premium through her employer included in the gross income number of her annual pay or is it not and ‘removed’ by the IRS because it is pre-tax as I am on the affordable care act? Thanks!

  69. bpollen8 says:

    Oh, no. I overestimated my 2016 income by several thousand dollars, and I was BELOW the amount needed to qualify for the subsidy. I also moved. I got the subsidy all year. It’s a LOT because the ACA premiums for my age bracket are high. Will I have to pay it all back? Or is there a cap on the paybacks, you think? I’m in a new state, so I don’t know if I would’ve qualified for Medicaid here or not.

    1. bpollen8 says:

      I THINK I found a POSSIBLE answer in an IRS Publication called Health Insurance Premium Tax Credit, 26 CFR Parts 1 and 602. On pg 23 is an example where 2 married people who qualify end up filing separately, and no longer qualify for the tax credits. So they are no longer “applicable taxpayers,” for the purpose of the subsidy. They must repay the advance subsidies they got, but ONLY up to the repay amounts in the table in that publication. Hubby has to repay $2,500 of the $3,440 he rec’d. Wife has to repay only $600 of the $3,440 she rec’d, because of her lower income cap in that table. It looks like a single person who ended up not qualifying (not an applicable taxpayer) will have to repay $300? That’s the cap of repayment in that table. I don’t know. I hope so.

    2. bpollen8 says:

      I finally have rec’d a definitive answer, which I’ll post for others who may be interested. I called the Healthcare help number and the IRS, neither of whom could answer this question. I then filled out a draft of a tax return in TurboTax (“TT”) to see how TT would handle it. (I use TT every year.) TT didn’t require me to pay anything back. Puzzling. So I posted this question in TT questions to TT’s tax people (about whether TT takes into acct eligibility, when actual income is less than estimated, and doesn’t meet the threshold required to qualify for the subsidy). The TT tax person responded, saying there is a rule in the ACA that because the govt “approved” me for the subsidy and verified income based on prior years, I don’t have to pay it back, even though I came up short of the threshold.

    3. Wiley Long says:

      Yes, you might be forced to pay up to a $300 penalty for reconciliation but I have had client’s in similar situations who were not penalized for the miscalculation as a result of it being below state thresholds.

      1. bpollen8 says:

        Thanks so much for responding!

  70. Shugie says:

    The government helping to subsidize healthcare costs is just as fair as subsidizing childcare. Maybe working parents should pay for their own childcare, and not ask taxpayers to pay for it.

  71. Evolved says:

    We over estimated our incomes and ended up with a higher deductibles and co-pays. We know that we will get more tax credit when we file our tax for 2017 but what about the over payments on the deductibles and co-pays?

    1. Wiley Long says:

      Hi Evolved,

      Unfortunately, there is no way to reconcile cost-sharing assistance if you overestimated income. You can only take advantage of it on the front end.

  72. Nate Smth says:

    When my home sells and I make a large taxable capital gains profit on that sale, is that considered exceeding my income reported to (which is just my regular salaried income)? I’ve currently been given a $1500/month subsidy and only need to pay about $80/month. I’m afraid I’d have to pay back that $1,500/month when I sell my home ($18,000).

    1. Wiley Long says:

      Yes, that income would be counted toward your MAGI which is used to determine subsidy eligibility. You just need to make sure you report the income change immediately if the house sells and your subsidy will be adjusted.

      1. Nate Smth says:

        If for example that happened on October 31 and I immediately notified them, does that mean I would only have to pay the adjusted subsidy amount for November and December of about $3000 (and the first 10 months would be at the lower rate $80 x 10 = $800)? Or would I have to repay the entire year of subsidy refund because my annual income was greater than reported (12 x $1500 = $18000)?

  73. Robin Smith says:

    Are the subsidy rules different than the State Medicaid coverage? My friend in Washington State qualifies for Apple Health (Medicaid) this month, but works part-time and might have income changes monthly. Do they need to report income changes each month and bounce around between eligible plans, or do they just continue the Medicaid coverage and only renew when requested at year end? Is there a penalty if they end up overestimated income and didn’t end up qualifying for Medicaid for the entire year?

    1. Wiley Long says:

      Hi Robin, the subsidy thresholds can be different in states depending on whether or not they extended Medicaid. Your subsidy is based off of your modified adjusted gross income estimation for the given coverage year. For most people that is their AGI (adjusted gross income). If your friend receives other Medicaid benefits, they might look at her monthly income but that would be something to discuss with them, as we are not Medicaid experts. I hope that helps, thanks!

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