Qualifying for Healthcare Marketplace PTC with only nontaxable LTD income (AL)
So I’m trying to figure out how my premium tax credit (PTC) on my marketplace health insurance plan is going to affect my taxes next year and if there are any changes I should make now or ways I can prepare. I recently saw something that said if someone’s income turns out to be too low to qualify for the plan and the PTC, they may have to pay all of it back when they file their taxes.
As of last year, I’m on Long Term Disability (LTD) and that income is completely nontaxable, as I paid for the premiums with after-tax dollars through payroll deductions. This year, 2026, will be my first full year on LTD (unless something changes) with it being my only source of income and I expect it to come out to about $36,620 for the year. So when I signed up for my health insurance plan last December, I didn’t know exactly how it would work with my taxes yet. I thought I might still get some sort of form to file with my tax return for the portion of 2025 that I was on LTD, but I didn’t. I also didn’t know at the time if I would still be on LTD this whole year, so my income estimate on the marketplace was a wild guess and I put it just over the FPL, which was close to last year’s taxable income. I definitely didn’t want to overestimate things, because my premium was already more than doubling due to the changes last year, so it was already more than I could afford.
So my concern is, if none of my income is going to be reported to the IRS, will I have to pay all of the PTC back??? That would be around $6k and I cannot pay that! Is there a way to report it or a different way around this? If there is a way to report my income, would it be worth going back to the marketplace application and increasing my estimated income to what I think it will be now? Or would I be significantly increasing my premium for no reason if I’m just gonna have to pay everything back anyway?
I do not qualify for Medicaid because of my LTD income and I also have a small amount of money saved in case the LTD insurance company decides not to extend my claim at any time.
I hate the state of healthcare in this country, it should not be this way at all. I could go on a whole rant about that, but I won’t. I just really need some advice. I HAVE to have good health insurance to pay for my continuous doctors visits, tests, medications, treatments, etc. I am already struggling to get by as is, I can’t afford anything else. If I can’t use the PTC because my income is nontaxable, I don’t know what I’m supposed to do. Not having health insurance isn’t an option for me and I cannot pay any more than I’ve already been paying. Please help!