Advance Payments of the Premium Tax Credit APTC

Subsidies

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

IRS Publication 974 

Premium Tax Credit
IRS Publication 974

VIDEO What is APTC Advance Premium Tax Credit 

 

aptc interactive assistant

Interactive Tax Assistant (ITA)

Am I eligible to claim the Premium Tax Credit? 

IRS FAQ on Premium Tax Credit

 

Tax Estimators

 

 

ACA What You Need To Know  #5187 ACA What you need to know # 5187

Health Net VIDEO
How to get subsidies – pay less for coverage 

 
 
Kaiser Foundation reports that 27% of uninsured individuals are eligible to purchase a bronze plan with $0 premiums after subsidies in 2019.  Silver plans with cost-sharing reductions (CSR) for single individuals with incomes below 200% of the poverty level can be purchased for roughly $20 to $130 per month after subsidies, depending on an enrollees’ income. KFF *

Steve Shorr on subsidies – Health Care Reform

How Subsidy is calculated

 

 

Subsidy Cliff 400%  —  600%?

If you earn $1 more, you might have to give back ALL subsidies

Motley Fool

Explanation of Advance Premium Tax

Take Subsidy now or later?

FAQ’s about the Premium Tax Credit

The premium tax credit is a refundable credit that helps eligible individuals and families with low or moderate income afford health insurance purchased through Covered CA.   To get this credit, you must meet certain eligibility requirements and file a tax return.

What is included in household income?

For purposes of the PTC, household income is the modified adjusted gross income of you and your spouse if filing a joint return, plus the modified AGI of each individual in your tax family whom you claim as a dependent and who is required to file a tax return because their income meets the income tax return filing threshold.  Household income does not include the modified AGI of those individuals you claim as dependents and who are filing a return only to claim a refund of withheld income tax or estimated tax.  For this and other detailed premium tax credit questions and answers visit IRS.gov/aca.

 

Brochures – Answers

Kaiser Foundation – Subsidies and Enhanced Silver  FAQ’s
Center on Budget and Policy Priorities  FAQ’s
Covered CA Application See Bookmarks for Income and Other Income
Explanation of how tax credit works and when to take it
2014 & 2015 Tax Forms
Video Individual Financial Assistance – Sample Scenarios
The premium tax credit is refundable so taxpayers who have little or no income tax liability can still benefit. irs.gov  FAQ’s
Turbo Tax Calculator   Tax Policy Center.org

LA Times 9.9.2013 Subsidy might have to be paid back at tax time, if new income not reported.

 ♦   Kaiser Foundation FAQ’s

FAQ’s 

Brochure our webpage on taking the credit now or at tax time

Is there a maximum amount I have to pay back, if I took too much tax credit?

If I’m under 26, pay my own taxes and could go on my parents plan, can I still qualify for subsidies?

Covered CA PAPER Application See Bookmarks for Income and Other Income

Explanation Brochure of how tax credit works and when to take it

Video Individual Financial Assistance – Sample Scenarios 1 minute video The premium tax credit is refundable so taxpayers who have little or no income tax liability can still benefit. irs.gov

Tax Policy Center.org

Premium and Tax Credit Calculators

How the Credit gets calculated CFR 1.36 B or just use our

quote engine

and enter your expected Household Income for 2015 – Modified Adjusted Gross Income – Line 37 MAGI .

What happens if my income or family size changes during the year?   

 

The actual premium tax credit for the year will differ from the advance credit amount estimated by Covered CA  if your family size and household income as estimated at the time of enrollment are different from the family size and household income you report on your return. The more your family size or household income differs from Covered CA  estimates used to compute your advance credit payments, the more significant the difference will be between your advance credit payments and your actual credit.

Article about subsidy shrinking mid year and why Covered CA shop & compare doesn’t properly show it – by Insure Me Kevin 

Here’s how to report changes.

For more detail see IRS publication 974 

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 MedicaidMedicare, 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:

 

 Federal Poverty Line for 2014 Returns
  100% of FPL . 400% of FPL
One Individual $11,490 up to $45,960
Family of two $15,510 up to $62,040
Family of four $23,550 up to $94,200

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.

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Repayment Limitation Table

The repayment limits are listed in the table below.

Household Income Percentage of Federal Poverty Line Limitation Amount for Single Limitation Amount for all other filing statuses
Less than 200% $300 $600
At least 200%, but less than 300% $750 $1,500
At least 300%, but less than 400% $1,250 $2,500
400% or more No limit No limit

For more information, see the Premium Tax Credit Questions and Answers at IRS.gov/aca. You can also use our Interactive Tax Assistant tool to find out if you are eligible for the premium tax credit.

IRS Webinar 10.2014 on Tax Act Provisions

How to Determine if You Can Claim the Premium Tax Credit

The premium tax credit is a credit for certain people who enroll, or whose family member enrolls, in a qualified health plan offered through Covered CA.  No charge for FREE agent support!   Claiming the premium tax credit may increase your refund or lower the amount of tax that you would otherwise owe.

If you did not get advance credit payments, you can claim the full benefit of the premium tax credit that you are allowed when you file your tax return. You must file Form 8962 to claim the PTC on your tax return.

Check out our

Calculators and Quote Engines

which we believe are easier to use, save your results and better than Covered CA’s for your subsidy and tax calculations to help pay your premiums.

You can take the PTC  if you meet all of these conditions.

For at least one month of the year, all of the following were true:

  • An individual in your tax family was enrolled in a qualified health plan offered through the Covered CA.
  • The individual was not eligible for affordable * minimum essential coverage, other than coverage in the individual market.
  • The portion of the enrollment premiums for the month for which you are responsible was paid by the due date of your tax return.

To be an applicable taxpayer, you must meet all of the following requirements:

  • Your household income is at least 100 percent but no more than 400 percent of the Federal poverty line for your family size.
  • No one can claim you as a dependent on a tax return.
  • If you were married at the end of of the year, you must generally file a joint return. However, filing a separate return from your spouse will not disqualify you from being an applicable taxpayer if you meet certain requirements.

Individuals can use the Premium Tax Credit Flow Chart or  IRS Interactive Tax Assistant   to determine if they are eligible for the credit.

For more information instructions for Form 8962, Premium Tax Credit on IRS.gov/aca.

If you received the benefit of advance credit payments, you must file a tax return 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. You’ll file Form 8962, Premium Tax Credit, with your tax return to reconcile the credit.

Remember, that filing electronically is the easiest way to file a complete and accurate tax return as the software does the math and guides you through the filing process. Electronic filing options include: free Volunteer AssistanceIRS Free Filecommercial software, and professional assistance.

Technical Links for Premium Tax Credits

This is a technical, legal page.

Please view the Introduction and Covered CA Calculator first.   Don’t forget, you are entitled to use a agent at  NO Additional Cost

Consumer Links

Coverage through Employer is NOT taxable income

Technical & Research Links

Health Reform Summary Chart as it affects each type of Health Line

Footnote 1 The rules and regulations are quite complex.  Final ACCURATE calculators should be available by 10.1.2013 when Covered CA will start enrollment. – Top

Fact Sheet 36 B (US Treasury?)

26 USC 36 B Refundable Credit under a Qualified Health Plan

26 USC 36 B Refundable Credit for Coverage under a qualified Health Plan pdf

CFR 155.305  Eligibility Standards

26 CFR 1 & 602

final regulations final regulations

§1.36b-0Table of contents

§1.36b-1 Premium tax credit definitions

http://www.law.cornell.edu/uscode/text/42/1396a

law.cornell.edu

Technical Links

final regulations,

final regulations on the premium tax credit affordability test

proposed regulations relating to minimum value of eligible sponsored plans

 Notice 2013-41, 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.

final regulations on the reporting requirements for Marketplaces.

 

Citation for 9.5 %


HR 3590   Section 1001 HR 4872
Code of Federal Regulations §1.36b-2Eligibility for premium tax credit.

Report on saving $$$

report by Milliman, commissioned by Covered California and released today, shows that those individuals with incomes less than 400% of the federal poverty level purchasing an individual plan next year are likely to pay about 47 to 84 percent less in monthly premiums compared to 2013. These consumers will benefit directly from the federal tax credits that will be available through Covered California. The study also concludes that those earning above 400 percent of the federal poverty level may see a cost increase that would average 20 percent due to increases in their monthly premiums but would be partially offset by reduced out-of-pocket cost. For many individuals facing increased premiums, they could potentially avoid some or all of the potential price increase by shopping for lower priced plans either in Covered California or on the individual market. A press release, frequently asked question document and key data points chart are linked here and available on our website: www.hbex.ca.gov.

 

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