If your income is trending much higher this year than you anticipated, it’s likely a welcome shift.
However, for anyone who gets their private health insurance through the public marketplace, that extra cash could mean an unexpected tax bill when they prepare their 2022 return next spring. A midyear income check could help avoid that.
Basically, if you receive premium subsidies (technically, advance tax credits) through the marketplace, having annual income that’s higher than what you estimated when you enrolled could mean you’re not entitled to as much aid as you’re receiving. And any overage would need to be paid back at tax time.
More from Personal Finance: Workers could see average raises of 4.1% in 2023 Focus on ‘personal economy,’ not possible recession How romance scams are costing victims millions
For the last two years, Syd Winlock has had a major burden lifted from his surgically repaired shoulder.
Federal subsidies passed as part of a temporary pandemic relief package have drastically cut how much he pays in healthcare premiums, allowing the Sacramento-area small-business owner to purchase an insurance plan during the last two years that provided better coverage for his shoulder and knee replacements.
Those federal subsidies, however, will expire at the end of this year if Congress does not extend the program. His “very manageable” price — about $700 a month for him and his wife — will increase to $2,300, Winlock said.
“Even if we went to a lesser-type policy, it would still be about $1,800 a month,” Winlock, 63, said. “I mean, that’s more than my mortgage.”
Roughly 150,000 lower- and middle-income Californians would be similarly priced out of coverage by the rising premiums if