Didn’t Update Income Change

Greetings,

Someone I know just realized they screwed up….

They’ve had marketplace insurance the last few years on a low income, so had a decent tax credit. They then made a very significant amount of money in 2021 from crypto currency, but didn’t think to update their income. They literally never used their insurance in 2021, and had also never had capital gains, so they genuinely didn’t know how to think about this unexpected pleasant surprise. They got an extension and then didn’t complete their taxes for 2021 until the fall of 2022. Incorporating crypto into taxes for the first time can be a nightmare. They found help and got it done, but their total income ended up being way higher than what they had originally projected on their application

Their job then offered to cover the cost of a better individual plan for 2022, so they upgraded plans but used roughly the same base income amount for 2022 as they had for previous years. They again made a large some of additional income from crypto in 2022, but didn’t update the household income. They then had to use the insurance several times over a few months for what ended up being some hefty bills, roughly half of which was covered by insurance. They quit their job in 2022.

Finally, in 2023 their plan auto renewed, but the premium went down quite a bit for some reason without having made any changes to the application.

They are now looking at possibly having a very expensive surgery done and in getting organized all of this dawned on them. As absent minded or naive as this might seem, absolutely none of it was intentional. That obviously doesn’t change the reality or potential consequences, but this is a good and honest person who would never try and game the system. In the many years that they have had market insurance they never once used it, and their income never changed enough to require updating. It was just another monthly bill that they paid.

In summary:

2021 – Ended up with way higher income that wasn’t updated (taxes not finalized until fall of 2022). Didn’t didn’t actually use insurance (other than the tax credit they received from the initial projected income)

2022 – New plan but with same base amount (kept the same job so that income stream was similar). Made a lot from crypto again but didn’t update income. Used insurance several times including some pretty large amounts billed.

2023 – Plan was auto updated but the premium went down significantly for some reason. Was on autopay and they didn’t notice the price drop until recently.

It’s pretty messy to think of trying to resolve it all, but they feel they need to do something to get up to date for this possible surgery. They don’t want to go through with it until they feel right about it.

Does anyone have advice on how to approach this? They are kind of freaking out. How would the insurance move on this? What are some possible outcomes?

Any info would be much appreciated for my nervous but good natured pal…