Can you owe back your marketplace health insurance discount?

The discount is based on a guess

If you buy health insurance through the marketplace, the discount on your monthly premium is a tax credit, called the premium tax credit. It’s based on the income you estimated when you signed up. When you file your tax return, the credit is recalculated using your actual income for the year.

When your income comes in higher

If your income came in higher than you estimated, you got more discount than you qualified for. That can happen with:

• A raise
• A good business year
• A Roth conversion in December

If your income came in high enough, you didn’t qualify for any of the discount at all. Either way, the difference gets settled on your tax return.

Starting with 2026, there’s no cap

Starting with 2026, there’s no longer a cap on what you pay back. You’d repay every extra dollar of discount with your tax return, which can shrink a refund or turn it into a balance due.

Updating the marketplace as soon as your income changes keeps that bill smaller, because the discount on your remaining monthly premiums is adjusted going forward. It also helps to look at income you control, like a Roth conversion, with the health insurance credit in mind before you act, not after the year is over.

How we handle it

At Sansone CPA & Financial, we coordinate your tax, investment, and retirement decisions so you can see how a raise, a strong business year, or a Roth conversion affects your health insurance credit before tax time. That is part of our tax preparation and tax planning in Crystal Lake, IL.