The ‘rescue’ in the American Rescue Plan Act includes lower monthly premiums and saves you from repayment of excess premium subsidies for the 2020 tax year!
But your lower premiums are not automatic!
To update your account and get your premiums lowered use our quick form below.
Are you stressed about having to pay back some or all of the premium subsidy that was paid on your behalf last year?
You’re in luck! Under the American Rescue Plan Act (H.R. 1319) – passed by Congress on March 10 and signed into law on March 11 – excess premium subsidies for 2020 do not have to be repaid to the Internal Revenue Service.
Recent IRS guidance relative to this provision instructs taxpayers who have an amount on line 29 of Form 8962 to not include Form 8962 with their return. Although filing Form 8962 is required of taxpayers receiving this subsidy, the IRS intends to make internal changes that will prevent these taxpayers from receiving correspondence regarding Form 8962 not being filed.
The IRS has not yet released guidance on returns that were previously filed with an advanced premium tax credit repayment included on line 29 of Form 8962. We will continue to update this page as this information becomes available or click here to get the latest information.
This is a one-time provision that’s being granted as part of the federal government’s massive 2 Trillion COVID relief measure – which is also significantly increasing premiums subsidies for 2021 and 2022 – and it will come as a great relief to many of the Americans who enrolled in individual and family health plans through the health insurance marketplace /exchange last year.
This only applies only to the 2020 tax year!
But thanks to the American Rescue Plan Act, no marketplace plan buyer will have to worry about repaying excess premium subsidies for 2020. If your subsidy amount was too small, you can still claim the additional amount that you’re owed when you file your taxes. But if your subsidy ended up being too large – even if your income ended up exceeding 400% of the poverty level – you won’t owe any of it back to the IRS.
This is a one-time provision for the 2020 tax year only. So it’s still important to project your income for this year as accurately as possible, and keep the exchange updated if your income changes later this year.
How will the provision apply if you’ve already filed your taxes?
It’s not yet clear exactly how the IRS will handle excess premium tax credits for people who filed their 2020 tax returns earlier this year and already repaid some or all of their premium tax credit for 2020. Amended tax returns can always be used to make a change, but the IRS may provide other ways of recouping this money in guidance or FAQs issued in the near future. (We’ll update this if and when the IRS issues guidance and clarification.)
It’s also not yet clear how quickly tax software will reflect the fact that excess premium subsidies for 2020 do not have to be repaid. Karen Pollitz, a Senior Fellow at Kaiser Family Foundation, notes that “the forms and tax software already provide for repayment, so it will take a while to straighten all this out. And it will probably be very confusing for people who file their tax returns over the next four to five weeks.”
You’ll want to check with your tax preparer or call your tax software company to see if they have any guidance for you. The tax filing deadline has been pushed out to May 15, 2021, but it’s also possible to request an extension if you need it, giving you until October 15 to file your return.