Health Insurance: Premium Tax Credit

If you purchase health insurance through the Health Insurance Marketplace, then you may be eligible to claim the premium tax credit on your tax return. This is a refundable tax credit and is meant to make purchasing health insurance more affordable for people with moderate incomes.

You can choose to have a part of or all of the credit paid to your insurance company to lower your monthly premiums, or you can choose to claim the entire credit on your tax return, lowering your tax liability and possibly increasing or creating a refund. If you choose to have the credit paid to the insurance companies in advance, you will have to reconcile the amount of the credit paid to the insurance company with the amount of credit you are actually due.

When you enroll in the Marketplace, the Marketplace will estimate the amount of your premium tax credit based upon the information you provide about your income and family situation. If there are changes in your circumstances, then you need to report those changes so that the Marketplace can correctly estimate your credit.

If changes are not reported, it could result in a tax liability or a smaller refund when you file your tax return. The important changes that you must report include:

        Marriage or divorce
            Birth or adoption
        Moving to a different state
        Changes in household income
        Incarceration or release from incarceration
        Gaining or losing health care coverage or eligibility
        Other changes affecting income and household size

In order to claim the Premium Tax Credit you must first meet certain eligibility requirements which include an income limit, ability to receive affordable coverage though an employer plan, eligibility for coverage through a government program, and filing status.

Labels: , , ,