Tax Time Surprises for Affordable Care Act Enrollees in 2026

As tax season approaches, individuals enrolled in the Affordable Care Act (ACA) are facing potential financial surprises related to premium subsidies. These subsidies, which help lower-income individuals afford health insurance, are calculated based on estimated household income. For 2025, enrollees contributed between 0% and 8.5% of their income toward premiums, with the remainder covered by subsidies. However, discrepancies between estimated and actual income can lead to unexpected tax liabilities when reconciling these subsidies at tax time.

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For the 2025 tax year, there are specific caps on repayment amounts for individuals who received subsidies. Those earning less than $31,300 face a maximum repayment of $375, while individuals earning up to $62,600 could owe as much as $1,625. However, individuals earning above four times the federal poverty level have no cap on repayments, meaning they could owe back all excess subsidies. This situation is expected to worsen in 2026 due to the enactment of the One Big Beautiful Bill Act, signed by President Donald Trump, which eliminates these repayment caps entirely.

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Katie Alexander, director of training and volunteers at Pisgah Legal Services, highlighted the potential impact of these changes, stating, “The amount is just so staggering for folks.” She noted a case where a woman earning just above $50,000 faced a repayment of $1,625 instead of a potential $4,000 without the cap.

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The expiration of enhanced tax credits at the end of 2025 has further complicated the financial landscape for ACA enrollees. The percentage of income required to be paid toward premiums has increased, with low-income individuals now paying over 2% and higher-income earners approaching 10%. This shift has prompted many enrollees to seek additional work to cover rising costs, with a recent KFF poll indicating that 43% of those remaining enrolled plan to increase their work hours.

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Cynthia Cox, senior vice president at KFF, cautioned that while working more hours may seem beneficial, it could lead to reduced subsidy eligibility or necessitate repayment of credits. “If your income changes, call us so we can adjust your income through the marketplace,” Alexander advised, emphasizing the importance of tracking income throughout the year.

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As the 2026 tax season approaches, ACA enrollees must be vigilant about their income projections to avoid significant financial repercussions. Experts recommend consulting with tax professionals to ensure that individuals do not exceed income thresholds that would result in losing subsidy eligibility. Jason Levitis from the Urban Institute suggested that individuals consider adjusting their work hours or contributions to retirement plans to manage their reported income effectively.

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In summary, the upcoming tax season presents challenges for ACA enrollees, with changes to repayment caps and increased premium costs potentially leading to substantial financial liabilities. Awareness and proactive management of income projections will be crucial for those relying on ACA subsidies.

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• “The amount is just so staggering for folks,” — Katie Alexander, Director of Training and Volunteers, Pisgah Legal Services

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• “Please, please, please, if your income changes, call us so we can adjust your income through the marketplace,” — Katie Alexander, Director of Training and Volunteers, Pisgah Legal Services

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• “Contributing toward a retirement plan or a health savings account can lower part of your income that counts toward subsidy eligibility.” — Cynthia Cox, Senior Vice President, KFF

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• “If taking that extra shift means putting you over the line of 400% of the federal poverty level and that’s going to cost you $10,000 in repayments, maybe don’t take that shift,” — Jason Levitis, Senior Fellow, Urban Institute

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