If you got too high a subsidy or too low, it gets reconciled at tax time on form 8962. Scroll down to get the form from the IRS website. If your subsidies were too high you may have to pay penalties, if too low, you can get a tax refund or lower the amount you have to pay. In a lot of ways, IMHO subsidies are hocus pocus, jiggery pokery – smoke and mirrors as it’s all guesswork and promises. Be sure to report income and household changes within 30 days.
Form #8962 Premium Tax Credit
Reconciliation Form attaches to 1040
Subsidy is IMHO hocus pocus - smoke & mirrors
it all comes out when you file taxes!
but first you need the Proof of Coverage Form 1095 A from Covered CA
and B if applicable – like if you had Covered CA part of the year and other coverage the rest of the year, from an Insurance Company, Government – Like Medicare or Medi-Cal or your Employer.
When you are done completing # 8962, enter the calculation on line 46 and/or 69 of 1040 form.
Schedule 1 Additional Income & Adjustments to Income
Do you think this process is complicated?
- H & R Block
- Estimate the Subsidy for Health Insurance, benefits, premiums, etc.
- 8962 ONLINE Calculator
Requirement To Reconcile Advance Payments of the Premium Tax Credit
The premium tax credit helps pay premiums for health insurance purchased from the Marketplace. Eligible individuals may have advance payments of the premium tax credit made on their behalf directly to the insurance company.
If you or a family member enrolled in health insurance through Covered CA and advance payments of the premium tax credit were made to your insurance company to reduce your monthly premium payment, you must attach Form 8962 to your return to reconcile (compare) the advance payments with your premium tax credit for the year.
Covered CA is required to send Form 1095-A, listing the advance payments and other information you need to complete Form 8962.
1. You will need Form 1095-A from the Marketplace.
2. Complete Form 8962 to claim the credit and to reconcile your advance credit payments.
3. Include Form 8962 with your Form 1040, Form 1040-SR, or Form 1040-NR. (Don’t include Form 1095-A.)
For an introduction - See the general explanation of subsidies and how they work.
If you received premium assistance you MUST file taxes.
- Covered CA Statement of Subsidy & Proof of Coverage 1095 A
- Premium Tax Credit Reconciliation Form # 8962
When you file, the IRS will check to see if the amount of income you reported to Covered California is the same as the amount of income they actually made. The IRS will also check to see if their family size is the same as when they applied. The IRS will compare, or “reconcile,” the amount of premium assistance they qualify for based on their actual income and family size reported on their tax return with the premium assistance they received during the taxable year.
Enrollees who experienced a change in income or household size but have not reported this information to Covered California are at risk of having to pay more at tax time. If needed, Covered California or us as your agent, no extra can work with these enrollees to reduce their current premium assistance to minimize this consequence. Just use the button above to get a quote.
CNN 4.27.2015 reports that H & R Block reports average refund lowered by $729 due to under reporting MAGI income.
Tax Return Deadline
H & R Block advises to file a return and reconcile your credit by April 18, or request an extension so you have more time to file your taxes. An extension will give you until October 17 to file your return and reconcile any credit you received through Covered CA
Will I have to file a federal income tax return to get the premium tax credit?
Yes. For any tax year, if you have APTC in any amount or you do not have APTC but you plan to claim the premium tax credit, you must file a Form 8962, and attach it to your federal income tax return for that year. If you have any APTC, you will use Form 8962 to reconcile the difference between the APTC made on your behalf and the actual amount of the credit that you may claim on your return. This filing requirement applies whether or not you would otherwise be required to file a return.
If APTC is made on behalf of you or an individual in your family, and you do not file a tax return, you will not be eligible for APTC or cost-sharing reductions to help pay for your Marketplace health insurance coverage in future years. This means that you will be responsible for the full cost of your monthly premiums. IRS.gov
CFR 155.305 (f) (4)
Compliance with filing requirement.
(i) Covered CA may not determine a tax filer eligible for advance payments of the premium tax credit if HHS notifies the Exchange as part of the process described in § 155.320(c)(3) that advance payments of the premium tax credit were made on behalf of the tax filer or either spouse if the tax filer is a married couple for a year for which tax data would be utilized for verification of household income and family size in accordance with § 155.320(c)(1)(i), and the tax filer or his or her spouse did not comply with the requirement to file an income tax return for that year as required by 26 U.S.C. 6011, 6012, and implementing regulations and reconcile the advance payments of the premium tax credit for that period.
(ii) Notwithstanding the requirement in paragraph (f)(4)(i) of this section, the Exchange may not deny eligibility for advance payments of the premium tax credit under paragraph (f)(4)(i) of this section unless direct notification is first sent to the tax filer, consistent with thestandards set forth in § 155.230, that his or her eligibility will be discontinued as a result of the tax filer‘s failure to comply with the requirement specified under paragraph (f)(4)(i) of this section.
- Our VIDEO on how to report changes to Covered CA
- Lost your job? How to keep your Health Insurance. Shelter at Home VIDEO
- References & Links