Marketplace Health Individual Health Ancillary Plans Life Insurance Dental & Vision Get A Quote Home Page

Premium Tax Credits

Individuals enrolling in a QHP through an Individual Marketplace may be eligible for premium tax credits which reduce the cost of premiums for themselves and for any tax dependents. An individual may choose to apply the tax credit towards QHP premium costs on an advance basis – with reconciliation at the end of the year – or to receive the credit on his or her federal tax return filed for the coverage year. Advance payments are paid directly to QHP issuers on a monthly basis.

Individuals eligible for a premium tax credit who do not receive an advance payment of the premium tax credit may claim the credit on their income tax return filed for the coverage year. Individuals who are married at the end of the coverage year are required to file a joint return to receive a premium tax credit.

A tax filer on whose behalf advance payments are made is required to file a tax return for the coverage year to reconcile any advance payments of the premium tax credit with the premium tax credit allowed on the return. Thus, if the premium tax credit allowed on the return is more than the amount of the advance payment of the premium tax credit, the individual may receive the excess amount as a tax return. On the other hand, if the premium tax credit allowed on the return is less than the amount of the advance payment of the premium tax credit, the individual will repay the excess amount via the tax return, subject to statutory caps. 

The Marketplaces will provide documentation to the tax filer and to the IRS that will support the reconciliation process, in the same way that an employer or bank provides a Form W-2 or Form 1099.

Eligibility for Premium Tax Credits

Eligibility for the premium tax credit is based on the household income and access to minimum essential coverage. The following summarizes the key eligibility standards for premium tax credits (tax credits that reduce the cost of insurance premiums).

Individuals must meet the following eligibility criteria to be eligible for a premium tax credit: • Not be eligible for minimum essential coverage — including employer-sponsored coverage, Medicaid, CHIP, Medicare, and other forms of coverage — other than through the individual insurance market, unless their employer-sponsored coverage is not affordable or does not provide minimum value.

  • Have an annual household income that is between 100% and 400% of the Federal Poverty Level (FPL) (or below 100% of FPL for lawfully present non-citizens who are ineligible for Medicaid by reason of immigration status)
  • Be a part of a tax household that will file a tax return for the coverage year and, if the tax household includes a married couple, that files a joint return.
  • Be eligible for coverage through a QHP


Calculating the Premium Tax Credit

Premium tax credits are based on annual household income, family size, and the cost of a silver level (AV 70%) essential health benefit (EHB) benchmark plan for that individual or family. The Individual Marketplaces will use this information to compute a maximum premium tax credit for each individual or family, which can then be applied to the purchase of one or more QHPs.

The amount of the premium tax credit depends on the plan that the individual or family selects. If the premium for the selected plan is greater than the maximum premium tax credit, the individual or family may elect to receive the maximum premium tax credit in advance, and pay the difference in a monthly premium cost. If the premium for the selected plan is less than the maximum payment, the individual or family may elect to receive the maximum premium tax credit in advance, and have no additional premium cost.

Example 1: Family A is eligible for a maximum advance payment of the premium tax credit of $800/month. Family A selects a QHP that costs $1,000/month. If they elect to receive the full amount of the premium tax credit in advance, $800/month will be paid directly to the QHP issuer, and Family A will pay the remaining $200/month premium.

Example 2: Individual B is eligible for a maximum advance payment of the premium tax credit of $400/month. Individual B selects a QHP that costs $350/month. If he or she elects to receive the full amount of the premium tax credit in advance, $350/month will be paid directly to the QHP issuer, and Individual B will have no monthly premium payment.

For More Questions and Answers on the Advanced Premium Tax Credit visit IRS.gov
Posted 11:14 AM

Share |


No Comments


Post a Comment
Name
Required
E-Mail
Required (Not Displayed)
Comment
Required


All comments are moderated and stripped of HTML.
Submission Validation
Required
CAPTCHA
Change the CAPTCHA codeSpeak the CAPTCHA code
 
Enter the Validation Code from above.
NOTICE: This blog and website are made available by the publisher for educational and informational purposes only. It is not be used as a substitute for competent insurance, legal, or tax advice from a licensed professional in your state. By using this blog site you understand that there is no broker client relationship between you and the blog and website publisher.
Blog Archive


View Mobile Version

Get Started




Home Page
About Us
Get A Quote
Our Partners
Read Our Blog
Contact Us




Marketplace Health
Individual Health
Ancillary Plans
Life Insurance
Dental & Vision
More Insurance Types




5100 NW 33 Ave.
Suite 140
Fort Lauderdale, FL 33309

888.959.3788
888.316.1913 fax
info@usbenefitsolutions.com


           
Blog RSS Feed