Topic 612 - The Premium Tax Credit

Individuals and families who purchase health insurance coverage through the Health Insurance Marketplace may be eligible for the premium tax credit. This tax credit can help make purchasing health insurance coverage more affordable for people with low to moderate incomes. The premium tax credit is refundable so even if you have little or no income tax liability you still may benefit. You may choose to have the Health Insurance Marketplace make advance payments of the premium tax credit directly to your health insurance company to help cover the cost of monthly premiums.

If you receive advance payments of the premium tax credit to help pay for your insurance premiums, you should report changes such as income or family size to the Health Insurance Marketplace when they happen. Reporting changes ensures you get the correct amount of the advance payment of the credit. Receiving too much or too little in advance can affect your expected refund or create an unexpected balance due when you file your federal tax return.

For any tax year, whether or not you receive the benefit of advance credit payments, you must file a federal income tax return for that year to claim the credit and to reconcile, or compare, the amount of the credit for the year with the amount of advance credit payments that were made. You also must file a federal income tax return if you are not eligible to claim the premium tax credit but advance credit payments were made. To claim this tax credit, use Form 8962 (PDF), Premium Tax Credit (PTC), and attach to Form 1040 (PDF) or Form 1040A (PDF), U.S. Individual Income Tax Return.

For additional information on this topic, refer to The Premium Tax Credit page on IRS.gov/aca. See Publication 5120 – Flyer - Facts about the Premium Tax Credit (English and Spanish). Publication 5121 - Brochure - Facts about the Premium Tax Credit (English and Spanish), and Publication 5152 – Flyer – Premium Tax Credit – Report changes in circumstances (English).

The open enrollment period to purchase health insurance coverage for 2015 through the Marketplace runs from November 15, 2014, through February 15, 2015. Under certain circumstances eligible individuals may qualify for a Special Enrollment Period and may enroll in a health plan through the Marketplace. 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.

Additional Information

For more information about these and other tax provisions included in the Affordable Care Act, see our Affordable Care Act (ACA) Tax Provisions page on IRS.gov/aca. Additional information about exemptions is available on the Individual Shared Responsibility Provision Web page on IRS.gov/aca. This includes Publication 5156 (PDF), Facts about the Individual Shared Responsibility Payment, a chart, IRS You Tube video – Individual Shared Responsibilities - Overview and Questions and Answers.

Visit the Department of Health and Human Services website and HealthCare.gov, for more information about your coverage options, financial assistance, and the Health Insurance Marketplace.

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Page Last Reviewed or Updated: January 16, 2015