37.   Premium Tax Credit (PTC)


Report changes in circumstances. If advance payments of the premium tax credit (APTC) are made during the year for you or another individual in your tax family (described later) and you have certain changes in circumstances (see the examples below), it is important that you promptly report them to the Marketplace where you enrolled in the qualified health plan (described later). Reporting changes in circumstances promptly will allow the Marketplace to adjust your APTC to more accurately reflect the premium tax credit (PTC) you are estimated to be able to take on your tax return. Adjusting your APTC during the year can help you avoid owing tax when you file your tax return. Changes that you should report to the Marketplace include the following.

  • Changes in household income.

  • Moving to a different address.

  • Gaining or losing eligibility for other health care coverage.

  • Gaining, losing, or other changes to employment.

  • Birth or adoption.

  • Marriage or divorce.

  • Other changes affecting the composition of your tax family.


You may be able to take the PTC for health insurance coverage in a qualified health plan purchased through a Health Insurance Marketplace (also known as an Exchange). This includes a qualified health plan purchased on healthcare.gov.

This chapter provides an overview of the following.

  • What is the PTC.

  • Who can take the PTC.

  • Terms you may need to know.

  • How to claim the credit.

Useful Items - You may want to see:


  • 974 Premium Tax Credit (PTC)

Form (and Instructions)

  • 1095-A Health Insurance Marketplace Statement

  • 8962 Premium Tax Credit (PTC)

What is the Premium Tax Credit (PTC)?

Premium tax credit (PTC).   The PTC is a tax credit for certain people who enroll, or whose family member enrolls, in a qualified health plan offered through a Marketplace. The credit provides financial assistance to pay the premiums by reducing the amount of tax you owe, giving you a refund, or increasing your refund amount. You must file Form 8962 to compute and take the PTC on your tax return.

Advance payments of the premium tax credit (APTC).   APTC is a payment made to your insurance provider for coverage during the year that pays for part or all of the premiums for the coverage of you or another individual in your tax family. Your APTC eligibility is based on the Marketplace’s estimate of the PTC you will be able to take on your tax return. If APTC was paid for you or another individual in your tax family, you must file Form 8962 to reconcile (compare) the APTC with your PTC. If the APTC is more than your PTC, you have excess APTC and you must repay the excess, subject to certain limitations (provided in Table 5 in the Instructions for Form 8962). See Alternative calculation for year of marriage next for a special rule that may reduce your excess APTC if you got married in 2014. If your PTC is more than the APTC, the difference will reduce your tax payment or increase your refund.

  The amount of APTC paid may be different from the amount of PTC you can take on your tax return. This difference may occur if the information provided to the Marketplace when you enrolled in a qualified health plan changed and you did not promptly report the change to the Marketplace. See Report changes in circumstances , earlier, for changes that can affect the amount of your PTC.

Alternative calculation for year of marriage.   If you got married in 2014 and owe excess APTC using the general rules for calculating your PTC, you may be able to reduce your excess APTC repayment using an alternative calculation for your pre-marriage months. You will determine your eligibility using the Instructions for Form 8962 and compute the alternative calculation using Pub. 974.

Who Can Take the PTC?

You can take the PTC for 2014 if you meet all the conditions under (1) and (2) below.

  1. For at least one month of the year, all of the following were true.

    1. An individual in your tax family was enrolled in a qualified health plan offered through the Marketplace;

    2. The individual was not eligible for minimum essential coverage, other than coverage in the individual market (see Minimum essential coverage , later); and

    3. The portion of the enrollment premiums (discussed under Terms You May Need to Know in the Instructions for Form 8962) for the month for which you are responsible was paid by the due date of your tax return (not including extensions).

  2. You are an applicable taxpayer. To be an applicable taxpayer, you must meet all of the following requirements.

    1. For 2014, your household income is at least 100% but no more than 400% of the Federal poverty line for your family size (provided in Tables 1-1, 1-2, and 1-3, in the Instructions for Form 8962). See the Instructions for Form 8962 for exceptions when household income is below 100% of the Federal poverty line.

    2. No one can claim you as a dependent on their tax return for 2014.

    3. If you were married at the end of 2014, generally you must file a joint return. However, filing a separate return from your spouse will not disqualify you from being an applicable taxpayer if you meet certain requirements described under Married taxpayers in the Instructions for Form 8962.

For more information on taking the PTC and the requirements to be an applicable taxpayer, see the Instructions for Form 8962.

Terms You May Need to Know

Tax family.   For purposes of the PTC, your tax family consists of the individuals for whom you claim a personal exemption on your tax return (generally you, your spouse with whom you are filing a joint return, and your dependents). Your personal exemptions are reported on your Form 1040 or Form 1040A, line 6d. Your family size equals the number of individuals in your tax family.

Household income.   For purposes of the PTC, household income is the modified adjusted gross income (modified AGI) of you and your spouse (if filing a joint return) plus the modified AGI of each individual in your tax family whom you claim as a dependent and who is required to file a tax return because his or her income meets the income tax return filing threshold. Household income does not include the modified AGI for those individuals whom you claim as dependents and who are filing a 2014 return only to claim a refund of withheld income tax or estimated tax. See the Instructions for Form 8962 to determine your household income.

Qualified health plan.   For purposes of the PTC, a qualified health plan is a health insurance plan or policy purchased through a Marketplace at the Bronze, Silver, Gold, or Platinum level. Plans sold as “catastrophic” coverage and plans purchased through the Small Business Health Options Program (SHOP) do not qualify a taxpayer to take the PTC. A qualified health plan is also referred to as a policy.

Minimum essential coverage.   Under the health care law, certain health coverage is called minimum essential coverage. Even if you have coverage purchased through the Marketplace, you cannot take the PTC for any individual in your tax family for any month when that individual is eligible for minimum essential coverage, other than coverage in the individual market. Other types of minimum essential coverage include:
  • Most government-sponsored programs (including most Medicaid coverage, Medicare parts A or C, and the Children’s Health Insurance Program (CHIP)).

  • Employer-sponsored coverage (if the premiums are affordable and the deductibles and co-pays are no more than a certain amount, or if you enroll).

  • Other health coverage the Department of Health and Human Services designates as minimum essential coverage.

  Coverage purchased in the individual market outside the Marketplace is minimum essential coverage. Eligibility for this type of coverage does not prevent you from being eligible for PTC for Marketplace coverage, but it does not qualify for PTC.

  For more details on minimum essential coverage, see Minimum Essential Coverage in Pub. 974. You can also check www.irs.gov/uac/Individual-Shared-Responsibility-Provision for future updates about types of coverage that are recognized as minimum essential coverage.

How To Take the PTC?

You must file Form 8962 with your income tax return if any of the following apply to you.

  • You are taking the PTC.

  • APTC was paid for you or another individual in your tax family.

  • APTC was paid for an individual for whom you told the Marketplace you would claim a personal exemption, if no one else claims a personal exemption for that individual. See Individual you enrolled for whom no taxpayer will claim a personal exemption under Lines 12 through 23—Monthly Calculation in the Instructions for Form 8962.

If any of the circumstances above apply to you, you must file an income tax return and attach Form 8962 even if you are not otherwise required to file. You must file Form 1040 or Form 1040A.

Form 1095-A.   You will need Form 1095-A, Health Insurance Marketplace Statement, to complete Form 8962. The Marketplace is required to provide or send Form 1095-A to the tax filer(s) identified in the enrollment application no later than January 31, 2015. If you are the tax filer expecting to receive Form 1095-A for a qualified health plan and you do not receive it by early February, contact the Marketplace. Under certain circumstances, the Marketplace will provide Form 1095-A to one taxpayer, but another taxpayer will also need the information from that form to complete Form 8962. The recipient of Form 1095-A should provide a copy to other taxpayers as needed.

Shared policy allocation.   You may have to allocate amounts from one Form 1095-A among two or more tax families. This allocation may be necessary when members of more than one tax family are enrolled in the same qualified health plan, for example, in the year of a divorce. Using this allocation, each tax family separately determines the PTC and APTC to report on their tax returns. For example, if you got divorced in 2014, and you and your former spouse had coverage under the same qualified health plan, you must allocate to each of you certain amounts from the Form 1095-A issued by the Marketplace for that qualified health plan. You use the amounts allocated to you to compute your PTC and the APTC you are responsible for on your tax return. See Line 9 and Part 4—Shared Policy Allocation in the Instructions for Form 8962 for details.

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