Julie Appleby, KFF Health News and Andrew Jones
Tax time can include large surprises for some individuals who have Affordable Care Act protection, together with owing a reimbursement to the federal government for premium subsidies acquired through the earlier 12 months.
More adjustments lie forward that make it necessary for these getting subsidies in 2026 to trace their revenue and take steps to guard in opposition to that sort of monetary hit.
First, the fundamentals of how the subsidies work.
Enrollees pay a share of their family revenue towards their medical health insurance premiums based mostly on a sliding scale, ranging in 2025 from nothing for very low-income folks to eight.5% at larger revenue ranges. Subsidies, often paid on to insurers, cowl the remainder.
The revenue calculation accomplished throughout open enrollment is an estimate of what a family thinks it’ll earn within the coming 12 months. At tax time, ACA enrollees should reconcile what they acquired in subsidies with what they really earned. If their revenue rose, they could owe a few of the subsidies again.
But don’t skip submitting! People who get ACA subsidies should file tax returns irrespective of their revenue, and that’s changing into much more necessary: The Trump administration is already removing folks from subsidy eligibility if they’ve gone two consecutive years with out submitting, and it’s proposing decreasing that to 1 12 months.
Beware Surprise Tax Bills
All enrollees who acquired subsidies for ACA protection in 2025 — and more than 90% got at least some help — want to incorporate a particular kind, the 8962, with their tax filings. That kind is used to reconcile an individual’s precise revenue with the quantity of subsidies they acquired, info the IRS mails them on a separate, 1095-A form. Subsidy quantities are based mostly partially on the revenue projections they made once they enrolled of their ACA plans.
And that may result in surprises. Some might discover they get a reimbursement if their revenue was lower than they estimated. But, if their revenue went above their preliminary or up to date estimates, they in all probability qualify for much less in help and must pay a reimbursement.
Groups that assist folks file their taxes say it’s not all the time straightforward for folks to precisely estimate their revenue for the 12 months forward, particularly those that run their very own companies, work a number of jobs, or have work that comes with various hours.
Clients will say, “I can make anywhere between $20,000 and $45,000 next year. I just don’t know,” mentioned Katie Alexander, director of coaching and volunteers for the well being and financial alternative program at Pisgah Legal Services, a western North Carolina nonprofit that gives free tax and medical health insurance assist to folks with low incomes.
Still, for taxes being filed now for the 2025 tax 12 months, there is a cap on what many individuals should repay.
That cap is $375 for a single particular person who earned lower than $31,300 in 2025, or two times the federal poverty level. The most owed underneath that sliding scale for folks whose revenue is on the upper finish of the vary is $1,625 for a person and $3,250 for a household.
There isn’t any reimbursement cap for folks incomes greater than 4 occasions the federal poverty degree — totaling $62,600 in 2025 for a person or $106,600 for a household of three — so they may owe again all quantities that exceeded their eligibility.
“The amount is just so staggering for folks,” Alexander mentioned.
One girl whom Pisgah employees helped with pulling collectively her taxes for 2025 made simply above $50,000, which was greater than she initially estimated. Her reimbursement was capped at $1,625, Alexander mentioned. Without that cap, she would have owed $4,000, a considerable chunk of her annual revenue.
Plan Ahead: The Rules Will Be Tougher Next Tax Season
Congressional Republicans’ One Big Beautiful Bill Act, signed into legislation by President Donald Trump final summer season, removed those repayment caps. That means come subsequent 12 months’s tax season, there might be no sliding-scale restrict to how a lot folks may owe again in subsidies for 2026 if their revenue exceeds their projections.
“That’s just going to be absolutely devastating,” Alexander mentioned.
There are at the very least two different issues to bear in mind, each stemming from covid-era enhanced tax credit, which expired on the finish of final 12 months as a result of Congress didn’t lengthen them. One is that the quantity of family revenue folks should pay towards their premiums this 12 months earlier than subsidies kick in has risen to only over 2% on the low finish of the revenue scale and as much as practically 10% for higher-income earners.
The second is that households incomes over 4 occasions the federal poverty degree not qualify for ACA subsidies.
The greatest monetary hit might be felt by enrollees whose revenue rises sufficient through the 12 months to exceed 4 occasions the poverty degree. In that case, they might owe again all of the subsidies they obtain in 2026.
And that might be so much.
In 2025, for instance, the common month-to-month premium for ACA protection was $619, however the common enrollee acquired subsidies price sufficient to offset all however $74 of that, based on the Peterson-KFF Health System Tracker.
There’s one other twist for some. Because the improved credit weren’t prolonged, persons are paying, on common, double the quantity towards their premiums this 12 months, so they might be wanting so as to add to their incomes to cowl the fee. A recent poll by KFF discovered that 43% of people that remained enrolled in protection this 12 months are planning to work extra hours or get further work to cowl these prices.
“That makes sense, but it can also present a risk of being eligible for less subsidy money than they thought, or even mean they would have to repay the entire tax credit,” mentioned Cynthia Cox, senior vice chairman and director of the Program on the ACA at KFF, a well being info nonprofit that features KFF Health News.
People can replace their projected revenue on the market web site because it adjustments through the 12 months.
Pisgah employees are calling folks they’ve labored with and saying, “Please, please, please, if your income changes, call us so we can adjust your income through the marketplace,” Alexander mentioned.
As a lot as doable, hold monitor of revenue through the 12 months. This isn’t straightforward, particularly for staff who don’t have a job with common paychecks.
“If you’re meeting with a CPA to talk about taxes, have a conversation to make sure you’re making enough money to afford your costs, but not too much to lose eligibility for a subsidy,” Cox mentioned. “Contributing toward a retirement plan or a health savings account can lower part of your income that counts toward subsidy eligibility.”
Others would possibly select to dial again their work hours or forgo a brand new shopper contract.
“If taking that extra shift means putting you over the line of 400% of the federal poverty level and that’s going to cost you $10,000 in repayments, maybe don’t take that shift,” mentioned Jason Levitis, a senior fellow on the Urban Institute who follows ACA and tax coverage points.
Are you struggling to afford your medical health insurance? Have you determined to forgo protection? Click here to contact KFF Health News and share your story.