Don’t Lose Your Marketplace Tax Credit: File Your Taxes Before It’s Too Late

As we’re nearing the end of September, I want to talk about something that affects many Marketplace health insurance members every year.

If you filed an extension on your taxes, October 15 is right around the corner.

If you haven’t filed yet, please make it a priority.

This is one of the most important things you can do if you’re receiving a Marketplace premium tax credit.

Why Filing Your Taxes Matters

Many people don’t realize that the financial assistance they receive through the Marketplace is actually an advance premium tax credit.

That means the IRS must compare:

• What you estimated your income would be
• What you actually earned during the year

This process is called reconciling your premium tax credit.

If you don’t complete that reconciliation, it can affect your eligibility for future financial assistance.

The Form You Need: Form 1095-A

If you have Marketplace health insurance, you’ll receive a Form 1095-A each year.

This form must be included when you file your federal tax return.

Whether you received a premium tax credit or paid full price for your Marketplace plan, this form is an important part of your tax filing.

What Happens If You Don’t File?

Unfortunately, I’ve seen this happen far too often.

People don’t file their taxes for one reason or another, and then they’re surprised when:

• Their premium suddenly increases
• Their tax credit disappears
• Their Marketplace plan is affected
• They have to pay the full cost of health insurance

For many families, paying the full premium simply isn’t affordable.

Why I Ask About Your Income Every Year

When we complete your Marketplace application, I ask detailed questions about your expected income.

That’s because we’re trying to estimate your annual income as accurately as possible.

The closer our estimate is, the smoother your tax reconciliation will be.

If we estimate too high, you may qualify for an additional tax credit when you file.

If we estimate too low, you could end up repaying part of the tax credit.

Our goal is to avoid surprises.

If You’re Behind on Your Taxes

If you haven’t filed for a while, don’t ignore it.

The sooner you get caught up, the sooner you can restore your eligibility for Marketplace financial assistance if you’ve lost it.

I’ve worked with clients whose premiums increased dramatically simply because their tax credits couldn’t be reconciled.

Some even lost coverage while trying to sort everything out.

It’s much easier to address the issue now than during Open Enrollment.

Filing May Be Easier Than You Think

If your income is relatively low, filing your taxes may be simpler than you expect.

Many people can file electronically using tax software such as TurboTax or another reputable online tax preparation service.

Even if you don’t owe taxes—or don’t expect a refund—you may still need to file if you’re receiving Marketplace premium tax credits.

Looking Ahead to Open Enrollment

Next month, I’ll begin sharing updates on all the upcoming Marketplace changes for the new plan year.

As soon as final plan information becomes available, I’ll be covering:

• Premium changes
• New plan options
• Network updates
• Deductible changes
• Other important Marketplace updates

Stay tuned—there will be plenty to discuss as Open Enrollment approaches! Schedule an appointment with me today!