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Individuals Don't Have to Repay Advanced Premium Tax Credits for 2020

Posted on April 20th, 2021

The Affordable Care Act (ACA) created premium tax credits in the individual health insurance market which first became available as of January 1, 2014. The amount of the premium tax credit available to a person is largely based on their household income. Most eligible individuals receive the premium tax credit in advance by estimating their household income for the year. This information is then reconciled when a person files their federal tax return, and a portion of the advanced premium tax credit may have to be repaid if the household income was underestimated.

The American Rescue Plan Act of 2021 (ARPA), which was signed into law last month, suspends the requirement to repay any excess advanced premium tax credit for the 2020 tax year. The Internal Revenue Service (IRS) announced on April 9, 2021 that Form 8962 does not need to be filed by those individuals who received more of a premium tax credit than they should’ve been entitled to in 2020. Form 8962 is the document used to reconcile the premium tax credit, and it is normally submitted alongside other federal tax return documents.

Form 8962 still does need to be submitted by those individuals who believe they are owed a premium tax credit. This would generally be those individuals who did not take a premium tax credit in advance or who overestimated their household income in 2020. The process for claiming the premium tax credit remains unchanged for these individuals.

As a reminder, the deadline to submit 2020 federal tax returns has been extended to May 17, 2021. For instructions on completing Form 8962, click here. To view a copy of Form 8962 to be submitted with applicable 2020 federal tax returns, click here.


Have a question about the Affordable Care Act or the American Resue Plan Act of 2021?


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