Tax season is here. Are you getting a refund or paying back some of your premium tax credits? If you had health insurance through Covered California and received financial assistance, you must file Covered California Form 8962 to reconcile your tax credits.
Many Californians are surprised to learn that they may owe money if their income exceeds estimated. On the other hand, if you qualified for more premium tax credits, you could receive extra money in your refund.
At Skyline Benefit, we help individuals and families understand how their Covered California subsidies impact their taxes. Whether you need assistance with Covered California Form 8962 or want to explore your health insurance options, our team is here to guide you.
What Is Covered California Form 8962?
Form 8962 is an IRS tax form that helps determine whether you owe money or are owed a refund based on the Premium Tax Credit (PTC) you received through Covered California.
Your subsidy was based on an estimated income when you applied for health insurance. If your income differs from that estimate, you must reconcile the difference when filing your taxes.
This reconciliation determines whether:
- You owe money for receiving too much in subsidies
- You get a refund if you received too little subsidy.
Will I Owe Money or Get a Refund?
The outcome depends on your final income compared to the income estimate you provided when enrolling in Covered California.
1. If Your Income Was Higher Than Expected
If your actual income was higher than your estimate, you likely received more subsidy than you were eligible for. You may need to pay back the excess subsidy when filing your taxes.
2. If Your Income Was Lower Than Expected
If your income was lower than estimated, you likely received too little subsidy. As a result, you may qualify for an additional tax credit—which could increase your refund or reduce what you owe.
3. If Your Income Matched Your Estimate
If your final income was the same as your estimate, your subsidies were correct, and you won’t owe or receive additional money.
How to Fill Out the Covered California Form 8962
Filing Form 8962 is a step-by-step process that ensures your tax credits are properly calculated.
Step 1: Get Your Form 1095-A
Covered California will send you Form 1095-A by January 31st. This document lists your monthly premium amounts and the subsidies you received.
Step 2: Compare the Subsidy You Received vs. What You Were Eligible For
Form 8962 requires you to compare:
- The Premium Tax Credit (PTC) you received (from Form 1095-A)
- The amount you were actually eligible for, based on your final income
Step 3: Calculate If You Owe or Get a Refund
- If you received too much subsidy, you must repay the excess.
- If you received too little subsidy, you could get additional tax credits.
Step 4: File Form 8962 With Your Tax Return
If you received Advance Premium Tax Credits (APTC), you must file Form 8962 with your tax return.
How to Avoid Owing Money on Form 8962
To avoid repaying excess tax credits, follow these smart tips:
- Report Income Changes Immediately – If your income changes, update your Covered California account Immediately.
- Estimate Income Accurately – If unsure, estimate slightly higher income to avoid overpayments.
- Double-Check Your 1095-A Form – Errors can impact your tax return, so review your form carefully.
- Consult a Tax or Insurance Expert – At Skyline Benefit we can help you maximize credits and avoid IRS penalties.
Frequently Asked Questions
What Happens If I Don’t File Form 8962?
If you received Premium Tax Credits, the IRS requires you to file Form 8962. Failing to file could result in:
- Delayed tax refunds
- Loss of future subsidies
- IRS repayment demands
How Much Do I Have to Pay Back If I Owe?
If your income is below 400% of the Federal Poverty Level (FPL), there is a limit on how much you must repay. But if your income exceeds 400% FPL, you may have to repay the full amount of the subsidies you received.
Can I Get an Exemption If I Owe Too Much?
In some cases, the IRS may offer hardship exemptions if repayment causes severe financial difficulties.
Need Help With the 2025 Covered California Form 8962?
Skyline Benefit is a certified insurance agency with Covered California. We are here to make the process easier for you.
Our experts are ready to assist if you have questions about accessing your form, reconciling tax credits, or filing your return.
Schedule a consultation today. Call us at: (714) 888-5112