Why Am I Getting Hit on My Taxes for Health Insurance?

Posted: April 12, 2023

If you’ve enrolled in a Covered California health plan and haven’t kept up with reporting changes in circumstances or income, you’re probably finding that you’re getting hit on your taxes.

Whether you incorrectly estimated or got a raise you didn’t report, you might have to pay back some or all of the tax credits you received on your health care in the previous year. Carefully estimating your income and reporting changes promptly ensures you’ll avoid overpaying or underpaying your monthly premiums.

Impact of Overstating Income

If you estimated you’d earn more income than what you actually earned, you could be missing out on potential savings that you qualify for now. Especially with situations like being self-employed or paid by commissions, it can be difficult to determine the exact amount you’ll make each year, which will impact your insurance subsidy amount.

This won’t hurt you at tax time. Instead, you’ll probably be eligible to get compensated for your overestimate. This difference could be either added to your tax refund or used to decrease the amount of taxes you owe.

Update your income to receive the accurate additional assistance you deserve!

Impact of Underestimating Income

If at some point during the year you received either a bonus, raise or another type of taxable increase in your income that you didn’t report, you may be underestimating your income. When this happens, you’ll need to either pay some or all of the health insurance subsidy back the next time you file taxes.

This is because your advanced premium tax credit (APTC) was based on a lower income, which means you were receiving more assistance than what you actually needed or were qualified for. The amount you have to pay back will be capped at a specific amount, which is based on your annual income.

To report any income changes to Covered California, log into your account and click on “Report a Change.” We are also here to walk you through the steps of paying back a subsidy. Call us at 1-877-752-4737 to learn more.

Get a Health Insurance Quote Today

Making accurate, prompt income changes to your California health insurance provider will help you avoid getting hit next year during tax season. Whether you have questions about your premium tax credit repayment or would like to receive a health insurance quote, we invite you to reach out to Health for California today.