Topic 612 - The Premium Tax Credit

Individuals and families who purchase health insurance coverage through a Health Insurance Marketplace may be eligible for the premium tax credit. This tax credit helps 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. Eligible taxpayers 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.

Advance Credit Payments

If you receive the benefit of advance payments of the premium tax credit to help pay your insurance premiums, it is important that you notify the Marketplace of any changes in the information the Marketplace used to compute the amount of your advance credit payments. You should promptly report any changes in your household income, your family size, and your address, as well as changes to who in your tax family (you, your spouse, if married, and your dependents) is eligible to enroll in health insurance through an employer or a government program such as Medicare, to the Health Insurance Marketplace when they happen. Reporting changes will help reduce the possibility that you will have to repay a significant amount of the advance payments of the credit made on your behalf, which may create an unexpected balance due when you file your federal tax return. Promptly reporting a change could also allow you to get the benefit of more advance credit payments to help with the cost of your premiums.

Filing a Tax Return

You must file a tax return to claim the premium tax credit. Also, for any year in which you received the benefit of advance credit payments, you must file a federal income tax return for that year to reconcile, or compare, the amount of your advance credit payments with the amount of the premium tax credit you are allowed. You must file Form 8962 (PDF), Premium Tax Credit (PTC), to claim the premium tax credit and reconcile the advance credit payments with the amount of allowed premium tax credit. Attach your Form 8962 to Form 1040 (PDF), Form 1040A (PDF), U.S. Individual Income Tax Return, or Form 1040NR (PDF), U.S. Nonresident Alien Income Tax Return.

Enrollment

Each year there is an open enrollment period to purchase health insurance for coverage in the following year. Under certain circumstances, eligible individuals may qualify for a Special Enrollment Period to enroll in a health plan through the Marketplace. The Department of Health and Human Services administers the requirements for the Marketplaces and the health plans they offer. For more information about your coverage options, financial assistance and the Marketplace, visit HealthCare.gov.

Additional Information

For additional information on this topic, refer to The Premium Tax Credit page and Am I Eligible to Claim the Premium Tax Credit? See Publication 974 (PDF), Premium Tax Credit (PTC), Publication 5120 - Flyer – Facts about the Premium Tax Credit (English and Spanish), Publication 5121 - Brochure - Need help paying for health insurance premiums? (English and Spanish), and Publication 5152 - Flyer - Report changes to the Marketplace as they happen (English).

For more information about these and other tax provisions included in the Affordable Care Act, see our Affordable Care Act (ACA) Tax Provisions page. Additional information about exemptions is available on the Individual Shared Responsibility Provision Web page. 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: February 05, 2016