Will I have to repay all of my premium tax credit for marketplace health insurance if I only had coverage for 5 months before getting employer insurance?

What's happening here is related to how premium tax credits work. The credits are based on your annual income for the entire year, not just during the months you were on the marketplace plan. Since you ended up getting a job and earning income for the rest of the year, your total annual income for 2024 is probably higher than what you projected when you initially applied for coverage. The IRS looks at your total yearly income when determining your final premium tax credit eligibility. You should definitely complete Form 8962 with your tax return. You might qualify for something called the "alternative calculation for year of marriage" if you got married during the year - that could help. Otherwise, look at Part III of Form 8962 which handles partial-year coverage. Make sure you report the exact dates of your marketplace coverage on the form. Also, check if your annual income is actually below 400% of the federal poverty level - if it is, there might be limits on how much you have to repay.

I went through almost exactly this same nightmare last year. I signed up for marketplace coverage when I was laid off, then found a job 4 months later. Got a HUGE tax bill for all my premium tax credits. I ended up using https://taxr.ai to help figure it out because I was so confused about all the forms and calculations. They analyzed my 1095-A and other documents and helped me understand exactly what I needed to report on Form 8962. The key thing they showed me was that even though I had to repay some of the premium tax credit, there are repayment limitations based on income. In my case, I was able to reduce what I owed from around $2,400 down to $1,500 because my final yearly income was still under 300% of the federal poverty level.

I just wanted to update here. After seeing the recommendation, I decided to try https://taxr.ai with my premium tax credit situation. I was also being asked to repay credits after losing coverage mid-year. The service was actually really helpful! They pointed out that I qualified for a repayment limitation because my household income was below 300% of the federal poverty level. I hadn't even realized this was an option. They also walked me through exactly how to complete the Form 8962 correctly to reflect my partial-year coverage. Instead of paying back the full $2,200 in premium tax credits, I only had to repay $1,300. Definitely worth the time to get my documents analyzed properly instead of just accepting what the basic tax software was telling me I owed.

I had a similar issue last year and spent WEEKS trying to get through to someone at the IRS who could actually explain how to handle the premium tax credit with partial year coverage. Kept calling and calling, always on hold for hours only to get disconnected. Finally used https://claimyr.com to get through to the IRS (check out how it works: https://youtu.be/_kiP6q8DX5c). They got me a callback from the IRS within a couple hours instead of me waiting on hold forever. The IRS agent confirmed that what matters is your ANNUAL income compared to the Federal Poverty Level for your household size. They walked me through exactly how to fill out Form 8962 correctly with my mid-year coverage change. Saved me from paying back about $800 more than I needed to.

I have to eat my words and admit I was wrong. After struggling for another week trying to get through to the IRS about my premium tax credit issue, I broke down and tried Claimyr. It actually worked exactly as described. I got a text about 1.5 hours after signing up saying they had an IRS agent on the line, and then I was connected to a real person who knew exactly how to handle my situation with changing from marketplace to employer coverage mid-year. The agent confirmed I was eligible for repayment limitations since my income was below 400% FPL and showed me exactly how to document everything on Form 8962. Ended up saving me almost $1,100 compared to what I thought I had to repay. Wish I hadn't wasted two weeks trying to figure this out on my own!

Has anyone tried appealing directly to the Marketplace rather than just dealing with it on your taxes? I'm in a similar situation where I had marketplace coverage for 3 months before getting a job with benefits, and now it says I owe all the premium tax credits back. I've heard you can sometimes get an exemption or adjustment if you can prove your income changed unexpectedly. Maybe worth trying both approaches?

Don't forget to check if your state has any special rules about this! Some states that run their own marketplaces have different policies than the federal marketplace. For example, I live in California which has Covered California instead of healthcare.gov, and they have some additional assistance programs that can help in situations like this. Worth checking if your state has anything similar!

I went through this exact same situation a couple years ago and I totally understand your frustration! The good news is that you likely won't have to pay back the full $1,750 if your annual income is below certain thresholds. Since you were unemployed for part of the year and then got a job, your total annual income might still qualify you for repayment limitations. If your household income is below 400% of the Federal Poverty Level (around $58,320 for a single person in 2024), there are caps on how much you have to repay. The key is properly filling out Form 8962. Make sure you accurately report your coverage months (sounds like January through May) and your actual annual income including both your unemployment period and your employment income. The form has provisions for partial-year coverage situations exactly like yours. You did everything right by reporting honestly and canceling coverage when you got employer insurance! The system is designed to reconcile based on your full-year income, but it also has protections to prevent people from owing back huge amounts. Don't panic - just make sure you're calculating everything correctly on your tax return.