Your ACA plan's advance premium tax credit may affect your refund or how much you owe.

If you had an insurance policy from the Affordable Care Act marketplace in 2023, you must file a federal tax return if for nothing else, to square away your advance premium tax credit, analysts warn.

The advance premium tax credit (APTC), or premium subsidy, is the portion of the monthly premium the government pays in advance to the insurer to help lower your insurance costs. You don’t have to claim the credit on your taxes at the end of the year, but you must file to reconcile what the government paid and what you’re entitled to. APTC is based on your projected income at the time you enrolled.

If your actual income for the year didn’t match that estimate, you may end up owing money or getting a refund for the difference.

“If the advanced amount was more than what you should have received, you have to pay back the difference,” said Louise Norris, health policy analyst with healthinsurance.org, which provides consumer health information. “If it was not as much as what you should have gotten, the IRS will return the difference to you.”

How do I know if I qualify for a premium tax credit?

If you sign up for a Marketplace health plan and your household income for the year is at least 100% of the federal poverty line for your family size, you may qualify. You also cannot be married and filing separately or claimed as a dependent, among other requirements, the IRS said.

How many Americans receive the advance premium tax credit?

Nearly 16.4 million Americans selected a Marketplace plan during 2023’s open enrollment period, and 90% received APTC, according to CMS data.

Do I have to pay back the advance tax credit?

Generally, if at the end of the year you've taken a larger premium tax credit in advance than you're due based on your final income, you'll have to pay back the excess when you file your federal tax return.

In 2021, nearly 7.8 million Americans received APTC, IRS data show. More than 2.6 million had to write the IRS a check for the difference while over 4.3 million people either overpaid and were owed a refund or came out even.

If your household income is less than 400% of the federal poverty level, the amount you’ll need to repay will be limited. If your income rises above 400% of the poverty level, there’s no cap on what you have to repay, Norris said.

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What is 1095-A and form 8692?

Each year, the Marketplace generates a “Health Insurance Marketplace Statement," or 1095-A, for you to use when you file your tax return. The Marketplace also sends a copy to the IRS.

Using information on the 1095-A, you complete IRS Form 8962 to determine if you may owe or are due a refund. You must attach this form to your tax return.

How do I avoid paying back my premium tax credit?

Keep your income updated throughout the year in your Marketplace account.

“The Marketplace can fix your payments in real time,” Norris said. “If you projected you’d earn $40,000 for the year, but you’re getting more hours and realize you’ll earn $60,000, it’s a good idea to log into your Marketplace account and change your income so the rest of the year, it’ll adjust your subsidy, so you don’t have to pay back as much.”

The reverse also works. Report an income drop so your monthly subsidy increases and you pay less out of pocket instead of waiting to file your taxes to get the money refunded.

Also make sure to report any life changes like having a baby or getting a divorce because these can influence your estimated household income, your family size, and your credit amount.

Medora Lee is a money, markets, and personal finance reporter at USA TODAY. You can reach her at [email protected] and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday.