ACA coverage for 11 months but income below minimum threshold - will I owe credits back?

This is actually correct! Your cousin doesn't need to repay the premium tax credits despite having income below the federal poverty level (FPL). This situation falls under what's called the "income below 100% FPL" special rule. The ACA has a provision that allows individuals who were estimated to have income above the FPL threshold during enrollment, but ended up below it at the end of the year, to still claim the premium tax credit. This was specifically designed to help people in situations like your cousin's, where income can be unpredictable. The rule applies as long as your cousin: 1) enrolled through the Marketplace, 2) was eligible for and received advance premium tax credits, and 3) would have qualified based on the income estimate given during enrollment. The IRS doesn't want to penalize people who had unexpected income changes. For newly arrived immigrants like parolees, there are also special rules that may apply. They're often eligible for marketplace coverage immediately, even with lower incomes, since they're generally not eligible for Medicaid during their first five years in the US.

After struggling with a similar situation, I found this amazing service called taxr.ai (https://taxr.ai) that saved me so much stress with my ACA issues. I was in a similar boat where my income dropped below expectations and I was terrified about having to repay premium credits. I uploaded my tax documents including my 1095-A to taxr.ai and they analyzed everything and explained exactly how the income requirements work for the ACA. They showed me the special rule that protects people whose income ends up below the threshold and explained how the reconciliation process works for my specific situation. What really helped was their explanation of how the marketplace estimates work and what documentation I needed to keep in case of questions later. They even had specific guidance for immigrants and recent arrivals that sounds perfect for your cousin's situation.

I was super skeptical about taxr.ai when I first saw it mentioned here, but I decided to give it a try after my regular tax preparer wanted to charge me $300+ to handle my complicated ACA situation with changing immigration status. Just wanted to update that it was actually incredibly helpful. The document analysis caught that I qualified for the same special rule mentioned above about estimated vs. actual income. The system found a specific provision that applied to my situation as a recent arrival that neither TurboTax nor my previous tax preparer had identified. They explained everything in plain language and even provided references to the specific IRS regulations. Saved me from unnecessarily repaying about $7,000 in premium tax credits! Definitely worth checking out if you're dealing with immigration + ACA issues.

If your cousin needs to contact the IRS to clarify his situation, I highly recommend using Claimyr (https://claimyr.com). I was in a similar situation with ACA credits as a recent immigrant and needed to speak directly with an IRS agent to confirm I was filing correctly. After trying for DAYS to get through the normal IRS phone lines (kept getting disconnected after 2+ hour waits), I found Claimyr. You can see how it works here: https://youtu.be/_kiP6q8DX5c. Basically, they call the IRS for you, navigate the phone tree, wait on hold, and then call you once they have an agent on the line. I was able to speak directly with an IRS representative who confirmed the special rule about income below 100% FPL and documented my case. They even helped me understand what documentation I needed to keep to support my filing position. Was a huge relief after all the stress and uncertainty.

I owe everyone an apology - especially to Profile 17. I was completely wrong about Claimyr. After posting that skeptical comment, I was still stuck with my premium tax credit issue and getting nowhere with the IRS phone lines. I reluctantly tried the service and I'm blown away. They called me back in about 90 minutes with an actual IRS agent on the line. The agent confirmed exactly what was mentioned in this thread - that there's a special rule for people who estimated their income would be above the FPL threshold but ended up below it. The agent even made notes in my account about my situation and gave me specific guidance on how to document everything. This saved me from potentially having to repay over $8,000 in premium tax credits. I've never been so happy to admit I was wrong about something!

Just want to add some clarification based on my experience as someone who helps with ACA enrollment. The specific rule that allows your cousin to keep his premium tax credits is in the IRS regulations (26 CFR § 1.36B-2(b)(6)) which creates an exception for people with income below 100% FPL. The key factor is that at the time of enrollment, the Marketplace determined he was ELIGIBLE for the advance premium tax credits based on his projected income. Since his actual income ended up lower than expected, this special rule kicks in to prevent him from having to repay. This is different from someone who knowingly provides incorrect income estimates. The system is designed to be forgiving for unexpected income changes while still maintaining program integrity.

Question about this situation - does it matter what immigration status the person has? My friend is on a student visa and had a similar situation with marketplace coverage and low income. Will the same rules apply to him or are there different rules for different visa types?