The Health Insurance Marketplace is managed by the federal government or individual states. It’s especially valuable for those who don’t have access to employer-sponsored insurance or other coverage options.
However, this type of insurance can have tax implications that you need to be aware of:
Premium Tax Credits (Subsidies): If your income is between 100% and 400% of the federal poverty level, you may qualify for a premium tax credit to help reduce your monthly premiums. This credit is based on your estimated annual income and family size. IMPORTANT: If your income changes during the year (e.g., a job change), it could affect your eligibility for this credit. Underestimating your income could result in a higher credit than you qualify for, and this would need to be repaid when you file your federal taxes.
To avoid surprises, it’s essential to accurately estimate your income for the Marketplace when applying for coverage. If your situation changes, update your information to avoid having to pay back subsidies when you file taxes.
If you would like to learn more about the Health Insurance Marketplace, click here.