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 certain criteria, which allows victims of domestic abuse to claim the premium tax credit); and
- cannot be claimed as a dependent by another person.
Getting the Credit
If 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.
The Marketplace will estimate the amount of the premium tax credit you will be able to claim on your tax return using information you provide about your projected income and family composition for the year.
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.
Claiming the Credit on Your Federal Tax Return
For any tax year, if you receive advance credit payments in any amount or if you plan to claim the premium tax credit, you must file a federal income tax return for that year.
If you choose to get it now: When you file your tax return, the total advance payments you received during the year will be subtracted from the amount of the premium tax credit calculated on your tax return. If the premium tax credit computed on the return is more than the advance payments made on your behalf during the year, the difference will increase your refund or lower the amount of tax you owe. If the advance credit payments are more than the premium tax credit, the difference will increase the amount you owe and result in either a smaller refund or a balance due.
If you choose to get it later: You will claim the full amount of the premium tax credit when you file your tax return. This will either increase your refund or lower your balance due.
If you have any questions related to the premium tax credit, or health care reform in general, we will be happy to help. Please call our office for more information.