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Health Insurance Subsidy Repayment




You Received a Health Insurance Subsidy in 2014 and Now the IRS Wants it Back.

Tax returnsSo you prepared your tax return and it says that you must repay a portion of the subsidy. Can this be correct?  I just might be.  Some taxpayer’s who purchased health insurance were eligible for a subsidy.  Individuals were given the option of receiving the subsidy as a reduction to their monthly premium or they could choose to receive it in the form of a refundable tax credit on their individual income tax return. The subsidy was based on the amount of income that they disclosed to the insurance agent or on the Marketplace website.


What Would Cause a Subsidy Repayment?

Individuals who took the subsidy as a premium reduction could be in for a shock when they file their 2014 income tax return. There are likely two types of issues that may arise.

1. You provided a lower income amount so you could receive a higher premium.

2. You based your income on 2013 numbers and you received an pay increase during 2014.


How do I Make Sure That I do not Have a Subsidy Repayment Next Year?

Form 1095It does not appear that there will be any coordination between the income reported on your tax return and any adjustments to future subsidy’s.  Those who purchased income off of the Marketplace website will have to log in and report a “life changing event”.  In this case your annual income will have to be adjusted on the website. Do not delay this process and make it an annual part of filing your income tax return.


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Tax Preparation


Tax advice contained in this communication, including attachments and enclosures, is not intended or written to be used, and may not be used for the purpose of (i) avoiding tax related penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any tax-related matters addressed herein.

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