If I get an Obamacare subsidy in the exchange, is the subsidy amount considered income?

  • By
  • healthinsurance.org contributor
  • March 16, 2016

Q. If I get an Obamacare subsidy in the exchange, is the subsidy amount considered income?

A.  No. The subsidies (both premium assistance tax credits and cost-sharing) are not considered income and are not taxed.

For premium subsidies, the exchange will keep track of the amount that is paid to your health insurance carrier; it will be reported to you and to the IRS (using form 1095-A) early in the following year. This is for reconciliation purposes though, not taxation: If your income ends up significantly different than you anticipated, you may have to pay back a portion of the subsidy, or you may receive an additional subsidy when you file your taxes.

Although most people have premium subsidies sent directly to the insurer each month, you can also choose to pay full price for your coverage and receive your subsidy as a lump sum when you file your taxes. Either way, the subsidy is not considered income.

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