What is the premium tax credit?
The premium tax credit is an advanceable, refundable tax credit designed to help eligible individuals and families with low or moderate income afford health insurance purchased through the Health Insurance Marketplace beginning in 2014. You can choose to have the credit paid in advance to your insurance company to lower what you pay for your monthly premiums, or you can claim all of the credit when you file your tax return for the year. If you choose to have the credit paid in advance, you will reconcile the amount paid in advance with the actual credit you compute when you file your tax return.
Who is eligible for the premium tax credit?
You are eligible for the premium tax credit if you meet all of the following requirements:
- Purchase coverage through the Marketplace.
- Have household income that falls within a certain range
- Are not able to get affordable coverage through an eligible employer plan that provides minimum value.
- Are not eligible for coverage through a government program, like Medicaid, Medicare, CHIP or TRICARE.
- Do not file a Married Filing Separately tax return
- Cannot be claimed as a dependent by another person.
What are the income limits?
In general, individuals and families whose household income for the year is between 100 percent and 400 percent of the federal poverty line for their family size may be eligible for the premium tax credit. An individual who meets these income requirements must also meet the other eligibility criteria described above. Thus, if you have household income between 100 percent and 400 percent of the federal poverty line, but are eligible for coverage through your state’s Medicaid program (for example, because your state provides Medicaid to individuals with household income up to 133 percent of the federal poverty line), you are not eligible for the premium tax credit.
For 2015, for residents of one of the 48 contiguous states or Washington, D.C., the following illustrates when household income would be between 100 percent and 400 percent of the federal poverty line:
- $11,670 (100%) up to $46,680(400%) for one individual.
- $15,730 (100%) up to $62,920 (400%) for a family of two.
- $23,850 (100%) up to $95,400(400%) for a family of four.