The help you get with premiums is an advance on a tax credit. In 2026 the rules for settling up got harder.
If you buy health insurance through Connect for Health Colorado and get help paying the premium, that help is the premium tax credit, paid in advance to the insurance company every month based on the income you estimated. When you file your return, the credit is recalculated on Form 8962 using what you actually earned. Earn less than you guessed and you get more credit as a refund. Earn more and you pay some of it back. For 2026, three things changed about the “pay it back” part, and together they can turn a raise or an IRA withdrawal into a four- or five-figure bill.
Current as of October 2026 · Figures are for 2026 coverage, reconciled on the return you file in 2027
From 2021 through 2025 a temporary law made the credit larger at every income level and extended it above 400% of the poverty line. That expired December 31, 2025. For 2026 the credit is back to the original formula: smaller at most incomes, and nothing at all above 400% of poverty. Most people with marketplace coverage saw their monthly share of the premium go up in January even if nothing else changed.
Above 400% of the federal poverty line for your household size, you qualify for no credit. Not a smaller one — none. If your income ends the year one dollar over the line, every dollar of advance credit paid on your behalf during the year is repaid with your return.
Through 2025, if you had to repay excess credit, the repayment was capped on a sliding scale (at most $3,500 or so for a family with income under 400%). Starting with 2026 coverage there is no cap. You repay the full difference between what was advanced and what you actually qualified for.
Coverage bought during a special enrollment period based on income alone no longer qualifies for the credit, and some lawfully present immigrants who qualified before no longer do. If either might apply to you, ask before you rely on the credit.
Form 8962, line by line, in plain English.
It shows, month by month, the premium for your plan, the premium for the “benchmark” silver plan in your area, and the advance credit paid to the insurer. We can’t finish your return without it. It arrives in late January or early February; download it from your Connect for Health account if it doesn’t come in the mail.
The credit is the benchmark premium minus the share you’re expected to pay yourself, and that share is a percentage of income that rises as income rises — from about 2% of income at the bottom of the range to about 10% near 400% of poverty. The income that counts is household modified AGI: everyone on the return, including a dependent child who has to file.
If you were entitled to more than was paid, the difference is added to your refund. If less, the difference is added to your tax. For 2026, that second number has no ceiling.
An example. A couple in their late 50s in Douglas County estimated $70,000 of income and received about $1,100 a month in advance credit, $13,200 for the year. In November one of them took a $20,000 IRA withdrawal for a new furnace. Household income finished at $90,000, above 400% of poverty for two ($84,600). On the 2025 return the repayment would have been capped at about $3,500. On the 2026 return they repay $13,200.
The cliff is figured on modified AGI, which adds back tax-exempt interest, untaxed Social Security, and foreign income. A retiree whose Social Security is mostly untaxed can be well under the line on the return and well over it for the credit. We run the marketplace numbers on every return with a 1095-A before we ask about anything else, because once the year is over there’s only one lever left — and it’s a small one.
400% of the federal poverty line, by household size, for 2026 coverage.
| Household size | 100% of poverty | 400% — the cliff |
|---|---|---|
| 1 | $15,650 | $62,600 |
| 2 | $21,150 | $84,600 |
| 3 | $26,650 | $106,600 |
| 4 | $32,150 | $128,600 |
| 5 | $37,650 | $150,600 |
2025 federal poverty guidelines (the ones used for 2026 coverage), 48 contiguous states. Household size is the number of people on your tax return, not the number on the policy.
The cliff is a cliff: the credit doesn’t taper near the line, it stops. For a couple over 60 in Colorado, where the benchmark premium can run $1,800 to $2,500 a month, the credit at 399% of poverty can be worth $15,000 or more a year. At 401% it’s zero.
A raise, a new job, a spouse going back to work, a bonus, an IRA withdrawal, selling a rental, a capital gain. Update your income with Connect for Health Colorado the month it happens and the advance credit adjusts for the rest of the year, which shrinks what you owe in April.
If you’re within $10,000 of the line, call us in the fall. A traditional IRA or HSA contribution lowers modified AGI; a Roth conversion or an IRA withdrawal raises it. December is when the choice can still be made.
An employer plan that costs you less than 9.96% of household income for self-only coverage (2026) is “affordable,” and the month it’s offered you generally stop qualifying for the credit, whether or not you take the employer plan. Tell the marketplace.
If you received advance credit and don’t reconcile it on a return, the marketplace can cut off advance credit for the following year. This happens to people who didn’t think they needed to file. Bring the 1095-A even if you expect no tax.
You can tell the marketplace to advance only part of the credit, or none, and collect the rest as a refund when you file. It costs you cash flow during the year and buys you a smaller surprise in April.
Married filing separately generally disqualifies you from the credit entirely, except in limited cases involving domestic abuse or abandonment. A couple that files separately for another reason repays all of it.
Call us in October or November with your pay stubs and statements and we’ll estimate the year. It’s a short appointment, and it’s the only time the answer can still be changed. 303-734-1040. (See also The Box 2 Bermuda Triangle.)
Not if you had marketplace coverage. The IRS has a copy and will reject or hold a return that leaves out Form 8962. Download the 1095-A from your Connect for Health Colorado account or call them.
Usually, yes. If you qualified for more credit than was advanced, the difference is added to your refund. The same reconciliation that creates surprise bills also creates surprise refunds.
If he isn’t your dependent, the policy is shared between two tax households and the 1095-A amounts are split between the returns. It’s one of the more tangled parts of Form 8962; bring both returns’ information.
It’s part of your tax bill, so the normal options apply: an installment agreement with the return, or a short extension to pay. Interest runs until it’s paid. If you’re behind.
As of October 2026 it hasn’t. Bills have been introduced. If that changes, we’ll update this page and the pending-changes list.
Bring your 1095-A and we’ll reconcile it correctly; call us in the fall and we’ll help you avoid the surprise in the first place. In person in Lone Tree or remotely, year round.
This page is general information, current as of October 2026, and is not advice about your situation. Tax law changes every year. Confirm anything that matters to you with us or at the sources below.