Good News on ACA Premium Subsidy Payback

Many farmers participate in the ACA marketplace for health insurance and many also receive a premium subsidy based on their expected adjusted gross income (AGI).  However, if their final 2020 AGI is higher than expected, the farmer will face the prospect of paying back some or all of the subsidy and this payment can easily exceed $10,000.

The American Rescue Plan Act provides an one-time 2020 relief for any farmer or taxpayer who faces this situation.  The Act provides for no payment to be required for 2020.  This is only for 2020.

Example: Assume a farmer participated in the ACA premium marketplace and the normal price of the premium is $20,000 and they received a premium subsidy of $15,000 based on their AGI.  When filing the return (before the Act was passed), they would have been required to pay back $13,500 based on their AGI.  After the Act has passed, the farmer will not pay back any of this premium subsidy.

If you have already filed your return and paid part of this subsidy back, do not get in a hurry to file an amended tax return.  Just like the unemployment provision, the IRS may elect to automatically calculate the refund amount and remit the funds to you.  The IRS will provide information on this at some point.

Here is an article that provides more details.