How to Report Life Changes for the Affordable Care Act

How the ACA Calculates Your Tax Credits

You can only receive tax credits on insurance purchased through the health insurance marketplace. When you purchase your health insurance, you may be eligible for a government subsidy on your premium in the form of a tax credit, based on your income level. (Note that if insurance is available through your employer but you choose to purchase your own insurance, you are not entitled to tax credits unless your job-based insurance is considered unaffordable by the ACA.)

You get this tax credit if your income falls between 100 percent and 400 percent of the federal poverty level. The closer you are to the poverty level, the more tax credit you receive. You can estimate what kind of credit you may be eligible for with the Kaiser Foundation's Health Reform Subsidy Calculator. The calculator asks you questions about your state, income, and family, and lets you know what subsidy amount is available to you.

The credit is paid directly to your insurance company, so you don't have to wait until you file taxes to receive the credit. This also means that you don't have to pay the full premium for your health insurance and then wait for reimbursement.

If you have a life change event, however, it may affect your tax credit. You should report these changes to the marketplace to ensure you don't end up paying extra taxes at the end of the year. Additionally, if you have a life change, you can typically bypass the open enrollment period and qualify for special enrollment to adjust your insurance more quickly. So, what exactly qualifies as a life change?