Some people with Affordable Care Act coverage are facing unexpected bills during tax season, as they may have to repay premium subsidies received the previous year if their income was higher than projected. The issue is especially important in 2026, when changes to subsidy rules could lead to larger financial obligations for those who misestimate their earnings.
The reconciliation process requires enrollees to compare their actual income with estimates made during open enrollment. If income rises above projections, individuals may owe back some or all of the subsidies paid on their behalf. This can be difficult for people whose earnings fluctuate or who have multiple jobs.
Katie Alexander, director of training and volunteers at Pisgah Legal Services in North Carolina, said clients often struggle to estimate future income accurately. "Clients will say, 'I can make anywhere between $20,000 and $45,000 next year. I just don’t know,'" Alexander said.
For tax filings related to the 2025 plan year, there is a cap on how much most people must repay—$375 for a single individual earning less than twice the federal poverty level and up to $1,625 for higher earners within subsidy limits. However, those earning more than four times the poverty level face no repayment cap and could owe back all excess subsidies received.
Recent legislation has changed these protections going forward. The One Big Beautiful Bill Act eliminated repayment caps starting with subsidies received in 2026. "That's just going to be absolutely devastating," Alexander said about the impact of losing these caps.
Other changes include an increase in required household contributions toward premiums before subsidies apply and a return to previous eligibility limits that exclude households earning over four times the federal poverty level from receiving any ACA subsidy support.
Cynthia Cox of KFF Health News advised that working extra hours or taking additional jobs might push incomes over eligibility thresholds: "That makes sense, but it can also present a risk of being eligible for less subsidy money than they thought, or even mean they would have to repay the entire tax credit." She recommended updating projected incomes through marketplace websites as circumstances change during the year.
Jason Levitis from the Urban Institute suggested monitoring work hours closely: "If taking that extra shift means putting you over the line of 400% of the federal poverty level and that's going to cost you $10,000 in repayments, maybe don't take that shift." He also noted strategies like contributing toward retirement plans or health savings accounts could help manage taxable income levels affecting subsidy eligibility.
