IRS Health Care Tax Tip 2014-07, March 25, 2014
If you receive advance payment of the premium tax credit in 2014 it is important that you report changes in circumstances, such as changes in your income or family size, to your Health Insurance Marketplace.
Most people already have insurance and they won’t have to do anything new. If you are looking for health insurance, you may be able to get it through the Health Insurance Marketplace and you may qualify for the premium tax credit. You can “get it now” as an advance payment or you can “get it later” when you file your tax return.
Advance payments of the premium tax credit provide financial assistance to help you pay for the insurance you buy through the Health Insurance Marketplace. Having at least some of your credit paid in advance directly to your insurance company will reduce the out-of-pocket cost of the health insurance premiums you’ll pay each month.
If you decide to get the credit in advance, it’s important to report any changes in your income or family size to the Marketplace throughout the year. Reporting these changes, will help you get the proper type and amount of financial assistance so you can avoid getting too much or too little in advance.
The government makes advance payments of the credit based on an estimate of the credit that you will claim on your tax return when you file in 2015. If you report changes in your income or family size to the Marketplace when they happen in 2014, the advance payments will more closely match the credit amount on your 2014 federal tax return. This will help you avoid getting a smaller refund than you expected or even owing money that you did not expect to owe.
Find out more about the premium tax credit, as well as other tax-related provisions of the health care law at www.irs.gov/aca