When you apply for Marketplace coverage and receive help paying your monthly premium through an Advance Premium Tax Credit (APTC), your eligibility and savings are based on your estimated household income for the year.
Keeping this information accurate and up to date is essential to avoid surprise bills, maintain eligibility for savings, and ensure you stay in good standing with the IRS.
1. Estimate Your Income Accurately
Your initial Marketplace application asks for your expected household income for the year. This estimate determines how much financial help (APTC and cost-sharing reductions) you’ll receive.
Why it matters:
If your income estimate is too low, you could receive more APTC than you qualify for and may have to pay some or all of it back when you file your taxes.
If your estimate is too high, you might miss out on valuable savings you’re eligible for.
Tip: Review past tax returns, pay stubs, and other income sources to make the most accurate estimate possible when you apply.
2. Update Your Income During the Year
Life and income can change—so should your Marketplace application.
When to update:
If your income or household size changes (for example, a raise, new job, loss of income, marriage, or birth of a child), log in to your Marketplace account or HealthSherpa account and update your application.Why it matters:
Prevent repayment of excess APTC if your income increases.
Unlock additional savings if your income decreases or your household size grows.
Ensure you’re enrolled in a plan that still fits your needs and budget.
3. Actively Renew Each Year
Even if you’re automatically re-enrolled in your plan, it’s strongly recommended to review and renew your coverage during Open Enrollment each year.
Why it matters:
Plans and prices change annually, so last year’s best fit may no longer be the most affordable or suitable.
Updating your income and household information helps ensure your APTC is accurate for the new year.
Active renewal helps you avoid incorrect financial assistance and keeps your coverage up to date.
4. Reconciling Your Tax Credits Each Year
Every year, you must reconcile your APTC on your federal tax return using IRS Form 8962. This compares the amount of APTC you received during the year with the amount you were actually eligible for based on your final income.
If you don’t reconcile:
You’ll lose eligibility for future APTC and cost-sharing reductions (CSRs) until you reconcile.
You’ll have to pay the full cost of your premiums until you reconcile.
You may have to repay excess credits if your income was higher than expected.
The IRS may delay your refund or reject your tax return if Form 8962 is missing.
You must file a return even if your income is below the normal filing threshold if you received APTC.
5. Key Takeaways
Step | Why It Matters |
Estimate accurately | Ensures you receive the right amount of financial help. |
Update during the year | Avoids overpayment or missed savings. |
Renew each Open Enrollment | Keeps coverage and APTC aligned with current info. |
Reconcile with Form 8962 | Keeps you eligible for future tax credits and avoids IRS issues. |
Need Help?
If you need assistance understanding or updating your information, our Consumer Advocate team can help. Call 855-772-2663, Monday–Friday, 6 a.m.–4 p.m. PT, or visit www.healthsherpa.com to log into your account and make updates.