Unemployment, severance, and ACA household income
Estimate taxable unemployment and severance, exclude workers' compensation where appropriate, and update after job loss.
Taxable unemployment compensation and severance generally enter ACA household income through AGI. Workers' compensation and some other benefits may be excluded. Job loss also changes employer-coverage eligibility and the annual forecast.
Rebuild the annual estimate after job loss
Combine wages earned before termination, severance, expected unemployment, spouse income, investment income, and expected income from new work. Do not project the reduced monthly amount across the entire year.
Report both income and coverage changes
Losing job-based coverage can create a special enrollment opportunity, while a new offer can later block PTC. Update the Marketplace when benefits begin, end, or differ materially from the original estimate.
Decision example and mistake
A worker loses a job midyear and enters only unemployment as annual income, omitting months of wages and severance. APTC becomes too high. The mistake is replacing the annual estimate with the current monthly cash flow.
Include taxable benefits in the running estimate
Track gross unemployment compensation expected on Form 1099-G and any withholding. Current law generally includes taxable unemployment in AGI; a prior temporary exclusion should not be projected into 2026. A job loss can also change employer-coverage eligibility, Marketplace enrollment, and annual income at the same time.
A new employer offer can block PTC before the first paycheck materially changes annual income, so test coverage and income on separate timelines.
Filing and enrollment checks
- Report both the coverage loss and revised annual income.
- Use gross taxable benefits rather than the bank deposit after withholding.
- Update the estimate again when work resumes or benefits expire.
Continue with
Authorities used for this guide
- CMS / HealthCare.gov: What's included as income
Marketplace MAGI additions, included income, excluded receipts, and dependent income - CMS / HealthCare.gov: Reporting income, household, and other changes
Prospective APTC updates after income, family, address, or coverage changes - IRS: Questions and answers on the Premium Tax Credit
Current 2026 eligibility, household income, change reporting, reconciliation, and full repayment