How Individual Insurance Subsidies Will Be Reconciled

The Affordable Care Act enacts that individuals under a certain income threshold will be eligible to receive Advanced Premium Tax Credits to help offset the cost of health insurance coverage, starting January 2014. They will be paid from the federal government directly to insurance companies. At the end of each year, reconciliation between an individual’s stated and actual income will occur through the filing of income taxes. To learn more about Advanced Premium Tax Credits, and if you may be eligible to receive a subsidy, click here.

Most likely there will be some variation in one’s estimated yearly income when applying for a subsidy within an exchange, and one’s actual income reported when filing taxes. The reconciliation process will take place in order to verify stated income versus actual income. If an over or under-payment of subsidy occurred, the individual may either be obliged to repay the over-payment, or receive a refund if under-paid, on a given year’s tax return.

There is a maximum amount that will be required to be repaid, depending on one’s Federal Poverty Level (FPL). The following table shows maximum allowable repayment amounts based on FPL.


In order to estimate the amount of subsidy you may be eligible to receive, try Connect for Health Colorado’s Cost Calculator for Individuals and Families.