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The Premium Tax Credit

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Facts about the Premium Tax Credit

 

Publication 5120: Your Credit, Your Choice – Get it Now or Get it Later   English | Spanish

 

Publication 5121: Need help paying for health insurance premiums?   English | Spanish

 

Publication 5152: Report changes to the Marketplace as they happen  English | Spanish

 


Premium Tax Credit


Premium Tax Credit (ASL)

 

This year, there are some changes to tax forms related to the Affordable Care Act. For the first time, you will report health care coverage on your tax return. Most taxpayers will simply check a box to indicate that each member of their family had qualifying health coverage for the whole year. And for taxpayers who received advance payments of the premium tax credit or are claiming the premium tax credit, there is also a new form they will have to complete.

To help navigate these changes, taxpayers and their tax professionals should consider filing their return electronically. Using tax preparation software is the best and simplest way to file a complete and accurate tax return as it guides individuals and tax preparers through the process and does all the math. There are a variety of electronic filing options, including free volunteer assistance, IRS Free File for taxpayers who qualify, commercial software, and professional assistance.

Basic Information

If you get your health insurance coverage through the Health Insurance Marketplace, you may be eligible for the premium tax credit. This tax credit can help make purchasing health insurance coverage more affordable for people with moderate incomes. Each year the Health Insurance Marketplace has an open enrollment period.  The open enrollment period to purchase health care insurance for 2015 runs from Nov. 15, 2014, through Feb. 15, 2015. Contact the Marketplace at HealthCare.gov to enroll.

Information regarding the July 22, 2014 federal appeals courts premium tax credit rulings.

Information on the Nov. 7, 2014 announcement of the Supreme Court of the United States that it will hear arguments in King v. Burwell

The Department of Health and Human Services administers the requirements for the Marketplace and the health plans they offer. For more information about your coverage options, financial assistance and the Marketplace, visit HealthCare.gov.

Eligibility

In general, you may be eligible for the credit if you meet all of the following:

  • buy health insurance through the Marketplace;
  • are ineligible for coverage through an employer or government plan;
  • are within certain income limits;
  • do not file a Married Filing Separately tax return (unless you meet criteria which allows certain victims of domestic abuse and spousal abandonment to claim the premium tax credit using the Married Filing Separately filing status); and
  • cannot be claimed as a dependent by another person.

If during enrollment, you are eligible for the credit, you can choose to:

  • Get It Now: have some or all of the estimated credit paid in advance directly to your insurance company to lower what you pay out-of-pocket for your monthly premiums; or
  • Get It Later: wait to get all of the credit when you file your tax return.

During enrollment the Marketplace will use information you provide about your projected income and family composition for the year to estimate the amount of the premium tax credit you will be able to claim on your tax return.

You will then decide whether you want to have all, some or none of your estimated credit paid in advance directly to your insurance company.

Claiming the Credit on Your Federal Tax Return

If you chose to have advance credit payments sent to your insurer, you must file a federal income tax return, even if otherwise not required to file.  You must complete Form 8962, Premium Tax Credit (PTC) to claim the premium tax credit and reconcile your advance credit payments with the premium tax credit you are eligible to claim on your return. If the amount is less than the actual premium tax credit, you will get the difference as a higher refund or lower tax due. If the advance credit payments that were paid to your health care provider were more than the actual credit, you may need to pay the difference with your tax return. The completed Form 8962 must be filed with your federal income tax return.

If you enrolled in coverage through the Marketplace but didn’t get the benefit of advance credit payments during 2014, if eligible, you may claim the premium tax credit when you file your return. You can complete Form 8962 to find out if you are eligible for the credit. You can also use our interactive tool, Am I eligible to claim the Premium Tax Credit?, to find out if you are eligible.

If you purchased coverage through the Health Insurance Marketplace you should receive Form 1095-A, Health Insurance Marketplace Statement from your Marketplace by early February. This form provides information you will need when completing Form 8962. If you have questions about the information on Form 1095-A for 2014, or about receiving Form 1095-A for 2014, you should contact your Marketplace directly.  The IRS will not be able to answers questions about the information on your Form 1095-A or about missing or lost forms.

Filing electronically is the easiest way to file a complete and accurate tax return. Electronic Filing options include free Volunteer Assistance, IRS Free File, commercial software and professional assistance.

Change in Circumstances

Report income and family size changes to the Marketplace throughout the year. Reporting changes will help make sure you get the proper type and amount of financial assistance and will help you avoid getting too much or too little in advance. Receiving too much or too little in advance can affect your refund or balance due when you file your tax return.

For example, if you do not report income or family size changes to the Marketplace when they happen, the advance payments may not match your actual qualified credit amount on your federal tax return. This might result in a smaller refund or a balance due.

More Information

More detailed information about the credit is available in our Questions and Answers.
The Department of the Treasury and the IRS issued the following legal guidance related to the premium tax credit:

  • Final regulations on the rules for individuals who enroll in qualified health plans through Marketplaces and claim the premium tax credit.
  • Final regulations on the premium tax credit affordability test for related individuals.
  • Proposed regulations on determining minimum value of eligible employer-sponsored plans and other rules regarding the premium tax credit.
  • Notice 2013-41 on determining whether or when individuals are considered eligible for coverage under certain Medicaid, Medicare, CHIP, TRICARE, student health or state high risk pool programs.

An electronic flyer (Publication 5120 English | Spanish ) and trifold (Publication 5121 English | Spanish ) entitled Facts about the Premium Tax Credit are available for public use and distribution.

 

Page Last Reviewed or Updated: 23-Jan-2015