If you’ve gone through the Health Insurance Marketplace to find yourself health insurance in the past four years, chances are you’ve seen notices regarding the health care tax credit. Officially called the premium tax credit, this is money supplied from the federal government to lower an individual’s monthly premium cost. If you are eligible, you can choose to have the government pay a percentage of your premium to the insurance company directly (advance payments of the premium tax credit, or APTC) or you can choose to receive the percentage as a whole in your tax return. Here’s what you need to know about the health care tax credit:
Premium Tax Credit
First, three main factors affect one’s chances of receiving help from the government to offset insurance premiums:
Your household income must be lower than $47,520 for a single taxpayer and $97,200 for a family of four to benefit from the health care tax credit. In order to get help with your monthly health insurance payments, you also cannot have the option of insurance through your workplace or be eligible for Medicaid, Medicare, CHIP, or TRICARE.
While there are strict requirements in order to benefit from the health care tax credit, it certainly helps to have a percentage of your premium paid for by the government. But there is one more catch: you may have to pay it back.
When you apply for health care coverage through the exchange, you will input information that will affect your taxes. If you don’t claim the correct income or if there are changes to your income or family size, you will have to pay the difference in taxes if you don’t notify the Marketplace.
Additionally, if you choose to use advance credit payments rather than receiving the credit percentage included in your tax return, the difference between the amount that was paid and your tax credit will result in either payment to you or from you.
C&D | Health Care Tax Credit
While the premium tax credit has been around since 2014, taxpayers often do a double-take when they owe the IRS at the end of the year for health insurance. To avoid any confusion or surprises when you get your tax return, it’s best to do your research on the latest healthcare news.
While you will already have gone through the Health Insurance Marketplace and chosen your option for health care tax credit (open enrollment ends Jan.1), we here at C&D can help you with the extra forms and what you can expect come April 15.