Your 2027 income: how to report it so you don’t have to pay back the subsidy in spring

A number you filled in and forgot

If you have a plan with a subsidy, your premium is probably well below the plan’s full price. The difference looks like a discount, and it’s pleasant not to think about it. Somewhere in the application there was a question about income: you put in a rough number and moved on.

But it isn’t a discount — it’s an advance. Each month the subsidy is paid to the insurance company based on the amount you reported. The final calculation comes later, in spring 2028, when you file your 2027 tax return and the IRS sees your actual income.

If your estimate was lower than reality, you’ll have to pay back part of the subsidy. That’s why the number you enter now matters more than it seems.

How reconciliation works

An ACA subsidy is a tax credit you receive in advance, in installments. When you file your taxes, you attach a special form that compares two amounts: how much was paid in advance and how much you’re entitled to based on your actual income for the year.

If more was paid than you’re entitled to, the difference is added to your tax bill. If less, you get it back as a refund. The number on the application isn’t a formality — it’s a promise that will be checked later.

Starting in 2026, the rules got stricter. Before, most families had a cap on how much they had to repay, so even a big mistake cost no more than a set limit. Those caps are gone now: you have to repay the entire excess.

How to estimate your income correctly

If you’re an employee and get a W-2, use your annual pay before taxes, not what lands in your bank account. Include what you already know about: a raise in January, a bonus, a second job or side work.

If you’re self-employed or work on a 1099, what counts isn’t your total revenue but your net profit after business expenses. This kind of income is usually uneven, so it makes sense to start from last year and adjust it for what you already know about the next one: new contracts, lost clients, rising expenses.

And remember that what counts is the income of your whole tax household, not just yours. That includes your spouse’s earnings, sometimes your children’s income, and things people often forget: unemployment benefits, pensions, Social Security payments, rental income.

If you’re not sure which number to use, it’s better to report slightly more than you expect: a subsidy you were underpaid will come back to you when you file taxes, while an overpayment is something you’ll have to repay.

The line where you lose everything

A mistake of a few thousand dollars can cost far more than the mistake itself. The main danger is the line at 400% of the federal poverty level. For 2027 coverage, that’s $63,840 a year for one person; for a family the amount is higher.

As long as your household income stays below this line, the subsidy changes gradually. But if your actual income crosses it by even a dollar, you lose eligibility for the whole year. You’ll have to repay everything paid in advance over twelve months, and for a family that can mean several thousand dollars in a single payment.

There’s a lower line too — 100% of the poverty level. Below it, no subsidy is available at all, and for some immigrants this matters a lot. We covered this trap in detail in a separate article.

You can estimate your income yourself

Doing it on your own is realistic. Take last year’s tax return, adjust it for known changes and add a small cushion. If your income changes noticeably during the year, you can and should update it: the subsidy will be recalculated for the remaining months, and the gap by spring will be smaller.

There’s a second honest option too. If your income is truly unpredictable, you can deliberately take less of the subsidy in advance and get the rest when you file taxes. Your monthly premium will be higher, but there won’t be any unpleasant surprises in spring.

How we can help

Averon Insurance is a licensed insurance broker. We enroll you in plans through the official system and only with your consent. You keep a personal account where you can see your policy status, and you get notifications if anything changes.

Together we’ll work out what makes up your household income, show you where your thresholds are, and let you know when it’s worth updating your information during the year. We don’t replace a tax professional, but we’ll help you get the application itself right.

It’s free for clients. The insurance company pays our commission, and the plan price is the same as if you enrolled on your own.

Two scenarios, both without surprises

If your income is stable, it’s enough to calculate it together once, and you can use the subsidy with peace of mind all year.

If your income is irregular, we’ll choose a strategy with a cushion and agree on when to check the numbers again. That way the IRS won’t send you a bill for your coverage in spring 2028.

Legal information

This article is for informational purposes only and is not legal, immigration, tax or financial advice. The deadlines are given for states that use the federal exchange; states with their own exchanges may have different dates. Subsidy eligibility, the premium amount and available plans depend on your income, state of residence and immigration status. ACA Marketplace rules changed several times in 2026–2027. The date of the last update is shown at the top of the page.

Averon Insurance (Sergei Nesterov, LLC) is a licensed insurance broker. Texas resident license, NPN: 22255483. Full list of licenses.