Health Care MandateJanuary 2022 Tax News

Health Care Mandate Subsidy Reconciliation for Tax Year 2021

Taxpayers who received a California subsidy for health coverage in 2021 may have to pay back some or all of the amount received from California. On March 11, 2021, the American Rescue Plan Act (ARPA) increased the amount of federal subsidy available to taxpayers. This additional federal subsidy, or premium tax credit, was retroactive to January 1, 2021. Due to the late passage of the ARPA, California subsidies were issued from January through April 2021, which resulted in an over-allotment of financial help.

Taxpayers must reconcile their California subsidies on Form 3849, Premium Assistance Subsidy, when filing their 2021 tax returns. In January 2022, taxpayers will receive Form FTB 3895, California Health Insurance Marketplace Statement, from Covered California which will provide additional information about the subsidy reconciliation. Taxpayers can use these forms to determine how much of the California Premium Assistance Subsidy they will need to pay back with their tax return.

Our Health Care Mandate website is currently in development for further information about the subsidy reconciliation, including information for taxpayers who need financial help. We anticipate the changes to be released before February 2022.