Advance Payments of the Premium Tax Credit APTC

#COVID19 Bill

The American Rescue Plan Act  ARPA

2021 Federal Stimulus Package
March 2021

VIDEO Introduction to ARPA  by Steve 

The Coronavirus bill represents the biggest expansion of Federal Help – Subsidies, since ACA/Health Reform/Obamacare started in 2010!

Use our Quote Subsidy Calculator  Engine, to see how ARPA works for you.

As part of the new law, increased premium assistance is available through exchanges and removes the “cliff” that makes people ineligible for subsidies if their income exceeds 400% of the Federal Poverty Level (FPL) for 2021 and 2022. The American Rescue Plan Act includes:

• Clients enrolled in Covered California health plans will not have to pay more than 8.5% of their household income for the second lowest cost silver plan – Get Quotes
• Clients who are below 400% of the FPL can get additional government financial assistance to nearly 0% (the 8.5% cap still applies for household income)
• Any person in 2021 who received unemployment insurance for one week or more, and their total income qualifies for coverage through Covered California, will receive federal premium tax credit available for 138% of FPL  Silver 94? for the duration of the Public Health Emergency in 2021.
•  In California, individuals making between 138 percent and 150 percent of the federal poverty level — between $17,776 and $19,140 per year — will see their already-low premiums eliminated. ^{San Diego Union} *  ^{Covered CA FAQ for Brokers} *
• 100% federal premium subsidy for COBRA coverage ^{Blue Shield} *

Here’s some sample scenarios from Modern Health Care

A hypothetical 45-year-old making $58,000 now gets no aid under the ACA. With the bill, they’d be entitled to a $1,250 tax credit, or 20% off their premiums, according to the Congressional Budget Office.

A 64-year-old making $19,300 already gets generous subsidies that reduce premiums to $800 a year. But with the bill, that person would pay no premiums for a standard plan.

The bill spends $34 Billion for only two years and would change the formulas for health insurance tax credits to make them more generous for most people, and also allow a wider number of individuals to qualify. That makes coverage more attractive for people who are considering whether to buy and more affordable for those who already have it, mainly low-to-moderate income working people.  See the button below to get a quote.

This bill follows President Biden’s strategy of getting all Americans covered.  ^{Modern Health Care 3.8.2021} * ^NPR *

Covered CA will automatically check if clients get more subsidies.  BUT! your consent to allow Covered CA to check your finances in the Federal Hub, etc.  must be up to date.  Here’s their quick guide on how to do that.

The bill is comprehensive and there are several provisions that we are watching closely that would affect how people pay for their health insurance coverage:

• Removing the cap on subsidies for people earning more than 400% of the Federal Poverty Level (FPL) –Currently those with a Modified Adjusted Gross Income (MAGI) of more than 400% of the FPL are not generally eligible for Advance Premium Tax Credits (APTC). The bill, if passed, would temporarily remove that 400% cap.¹ Additionally, there is legislation that would make the removal of the 400% cap permanent.²
• Lower the maximum a person has to pay for the Benchmark Plan from 9.83% of MAGI to 8.5% of MAGI – This provision would drop the amount the insured person has to pay for insurance from 9.83% of his MAGI to 8.5%. Currently, a 63-year-old person with a MAGI of $65,000 in Indianapolis (zip code 46220) would pay $830.37 for the least expensive Bronze plan. Under the new plan, she would receive a subsidy of almost $590, dropping her portion of the premium to $240 per month.* ³
• Provide no-cost Silver Plans for people receiving unemployment insurance – Americans on unemployment insurance during 2021 would receive the Benchmark Silver Plan in their market for a $0 premium contribution while they are receiving unemployment insurance.⁴
• APRA COVID Stimulus bill will also pay your COBRA and  Cal COBRA  premium.

Other notable legislation is the Medicare for All Bill that is pending a Committee hearing in the Senate. This bill closely aligns with President Biden’s Health Care Plan. If passed, it will create a public option on the individual exchange for areas that face a shortage of insurers.⁵

All ages will be affected, but this bill will have the greatest impact on near-seniors, or those aged 55-64 because of the cost of their ACA coverage. ^{Stephens Mathews Email 3.11.2021} *

Resources & Links

• HR 1319 on Congress.Gov 
  • Congressional Budget Report – Premium Tax Credit
  • 242 page pdf of HR 1319
    • Section 9661 Part 7 Premium Tax Credit
• Insure Me Kevin.com
• Kaiser Foundation Analysis & Summary 3.15.2021
• Cal Matters.org
• Affordability
• HHS Fact Sheet
• Covered CA Website on ARPA
• CC March 18th 22 page slide show
• Federal Data Services Hub
• Covered CA FAQ’s for Brokers
• Apr
• Target Strategies
• Covered CA Broker Briefing April 
• Covered CA says subsidies are too big to ignore  
• Blue Shield tools & explanation
• Sample – Messaging for on-exchange members with a subsidy
• Sample – Messaging for on-exchange members without a subsidy
• Sample – Messaging for switching to an identical plan on-exchange
• Blue Cross Power Point Presentation
• Word & Brown Insurance Wholesaler Summary
• Unemployment Compensation Enhancements Silver 94

The Basics 

We’ve compiled some basic facts and information about the premium tax credit – subsidies when purchasing health insurance.

To make this all “simple” just use the button above and get a quote, subsidy calculation – proposal and you’ll see what your subsidy is.  Hardly anyone in the past few years has visited this page or asked about the “basics.”  The questions are more like, what is MAGI Income or does this or that count as income.

Table of Contents – Details of Income, Deductions  & Expenses for MAGI

How do I get the premium tax credit?

When you apply for coverage, Covered CA or you can use our quote engine, no extra charge for our services, see the button on this page will estimate the amount of the premium tax credit that you may be able to claim for the tax year, using information you provide about your family composition and projected household income.   You will be required to reconcile on your income tax return the amount of advance payments that the government sent on your behalf with the premium tax credit that you may claim based on your actual household income and family size. You must file an income tax return for this purpose even if you are otherwise not required to file a return. You’ll file Form 8962, Premium Tax Credit, with your tax return to claim or reconcile the credit.

Failing to file your tax return will prevent you from receiving advance credit payments in future years and can cause MAJOR PROBLEMS and coverage CANCELLATION!

The premium tax credit is refundable so taxpayers who have little or no income tax liability can still benefit. The credit also can be paid in advance to a taxpayer’s insurance company to help cover the cost of premiums.

IRS Website on “The Basics” 

Things to know about advance payments of the premium tax credit:

When you enroll in coverage through Covered CA – no charge to use an agent,  during Open Enrollment – Season,  you can choose to have monthly advance credit payments sent directly to your insurer.

If you get the benefit of advance credit payments in any amount, or if you plan to claim the premium tax credit, you must file a federal income tax return and use a Form 8962, Premium Tax Credit (PTC) to reconcile the amount of advance credit payments made on your behalf with the amount of your actual premium tax credit.  You must file an income tax return for this purpose even if you are otherwise not required to file a return.

• If the premium tax credit computed on your return is more than the advance credit payments made on your behalf during the year, the difference will increase your refund or lower the amount of tax you owe. This will be reported in the ‘Payments’ section of Form 1040.
• If the advance credit payments are more than the amount of the premium tax credit you are allowed, you will add all or a portion of the excess advance credit payments made on your behalf to your tax liability by entering it in the ‘Tax and Credits’ section of your tax return.  This will result in either a smaller refund or a larger balance due.
• If advance credit payments are made on behalf of you or an individual in your family, and you do not file a tax return, you will not be eligible for advance credit payments or cost-sharing reductions to help pay for your Marketplace health insurance coverage in future years.   • The amount of excess advance credit payments that you are required to repay may be limited based on your household income and filing status.  If your household income is 400 percent or more of the applicable federal poverty line, you will have to repay all of the advance credit payments.

Health Insurance Premium Tax Credit

Starting in 2014, individuals and families can take a new premium tax credit to help them afford health insurance coverage purchased through an Affordable Insurance Exchange. The premium tax credit is refundable so taxpayers who have little or no income tax liability can still benefit. The credit also can be paid in advance to a taxpayer’s insurance company to help cover the cost of premiums. On May 18, 2012, the Department of the Treasury and the IRS issued final regulations which provide guidance for individuals who enroll in qualified health plans through Exchanges and claim the premium tax credit, and for Exchanges that make qualified health plans available to individuals and employers. On Jan. 30, 2013, the Department of the Treasury and IRS released final regulations on the premium tax credit affordability test for related individuals. On April 30, 2013, the Department of the Treasury and the IRS issued proposed regulations relating to minimum value of eligible employer-sponsored plans and other rules regarding the premium tax credit. The proposed regulations solicit public comments. Additionally, Notice 2013-41, issued on June 26, 2013, provides information for determining whether or when individuals are considered eligible for coverage under certain Medicaid, Medicare, CHIP, TRICARE, student health or state high risk pool programs. This determination will affect whether the individual is eligible for the premium tax credit. Comments may be submitted electronically, mailed or hand delivered to the IRS. On June 28, 2013, the Department of the Treasury and IRS issued proposed regulations on the new reporting requirements for Exchanges. Comments may be submitted electronically, mailed or hand delivered to the IRS. For more information on the credit, see our questions and answers.

The portion of the law that will allow eligible individuals to use tax credits to purchase health coverage through an Exchange is not effective until 2014.

Exchanges will offer individuals a choice of health plans that meet certain benefit and cost standards. The Department of Health and Human Services (HHS) administers the requirements for the Exchanges and the health plans they offer. Additional information about the Exchange can be found at www.healthcare.gov and in IRS REG-131491-10 issued on Aug. 12, 2011.  irs.gov/

IRS Site on Tax Credit

Health Insurance Premium Tax Credit

IRS Version

Individuals and families can take a new premium tax credit to help them afford health insurance coverage purchased through Covered CA.  There is no extra charge for agent support.

The premium tax credit is refundable so taxpayers who have little or no income tax liability can still benefit. The credit also can be paid in advance to a taxpayer’s insurance company to help cover the cost of premiums.

On May 18, 2012, the Department of the Treasury and the IRS issued final regulations, which provide guidance for individuals who enroll in qualified health plans through Marketplaces and claim the premium tax credit, and for Marketplaces that make qualified health plans available to individuals and employers.

On Jan. 30, 2013, the Department of the Treasury and IRS released final regulations on the premium tax credit affordability test for related individuals. On April 30, 2013, the Department of the Treasury and the IRS issued proposed regulations relating to minimum value of eligible sponsored plans and other rules regarding the premium tax credit.

Additionally, Notice 2013-41, issued on June 26, 2013, provides information for determining whether or when individuals are considered eligible for coverage under certain Medicaid, Medicare, CHIP, TRICARE, student health or state high-risk pool programs MR. Mip. This determination will affect whether the individual is eligible for the premium tax credit. On May 2, 2014, the Department of the Treasury and IRS issued final regulations on the reporting requirements for Marketplaces. Notice 2014-23 was issued on March 26, 2014, and allows certain victims of domestic abuse to claim the premium tax credit while filing a return using the Married Filing Separately filing status for the 2014 calendar year.

For more information on the credit, see our premium tax credit page and our questions and answers.  ^IRS

How Your Income Affects Your Premium Tax Credit

You are allowed a premium tax credit only for health insurance coverage you purchase through the Marketplace for yourself or other members of your tax family. However, to be eligible for the premium tax credit, your household income must be at least 100, but no more than 400 percent of the federal poverty line for your family size. An individual who meets these income requirements must also meet other eligibility criteria.

The amount of the premium tax credit is based on a sliding scale, with greater credit amounts available to those with lower incomes.  Based on the estimate from the Marketplace, you can choose to have all, some, or none of your estimated credit paid in advance directly to your insurance company on your behalf to lower what you pay out-of-pocket for your monthly premiums.  These payments are called advance payments of the premium tax credit.  If you do not get advance credit payments, you will be responsible for paying the full monthly premium.

If the advance credit payments are more than the allowed premium tax credit, you will have to repay some or all the excess.  If your projected household income is close to the 400 percent upper limit, be sure to consider the amount of advance credit payments you choose to have paid on your behalf.  You want to consider this carefully because if your household income on your tax return is 400 percent or more of the federal poverty line for your family size, you will have to repay all of the advance credit payments made on behalf of you and your family members.

For purposes of claiming the premium tax credit for 2014 for residents of the 48 contiguous states or Washington, D.C., the following table outlines household income that is at least 100 percent but no more than 400 percent of the federal poverty line:

The Department of Health and Human Services provides three federal poverty guidelines: one for residents of the 48 contiguous states and Washington D.C., one for Alaska residents and one for Hawaii residents. For purposes of the premium tax credit, eligibility for a certain year is based on the most recently published set of poverty guidelines at the time of the first day of the annual open enrollment period for coverage for that year. As a result, the premium tax credit for 2014 is based on the guidelines published in 2013. The premium tax credit for coverage in 2015 is based on the 2014 guidelines. You can find all of this information on the HHS website.

Use our Interactive Tax Assistant tool to find out if you are eligible for the premium tax credit. For more information, see the instructions to Form 8962 and the Questions and Answers on the Premium Tax Credit on IRS.gov/aca.