The Premium Tax Credit

Basic Information

If you get your health insurance coverage through the Health Insurance Marketplace, you may be eligible for the premium tax credit. This tax credit can help make purchasing health insurance coverage more affordable for people with moderate incomes. Each year the Health Insurance Marketplace has an open enrollment period.  The open enrollment period to purchase health care insurance for 2015 ran from Nov. 15, 2014, through Feb. 15, 2015.

Eligibility

In general, you may be eligible for the credit if you meet all of the following:

• buy health insurance through the Marketplace;
• are ineligible for coverage through an employer or government plan;
• are within certain income limits;
• do not file a Married Filing Separately tax return (unless you meet criteria which allows certain victims of domestic abuse and spousal abandonment to claim the premium tax credit using the Married Filing Separately filing status); and
• cannot be claimed as a dependent by another person.

If during enrollment, you are eligible for the credit, you can choose to:

• Get It Now: have some or all of the estimated credit paid in advance directly to your insurance company to lower what you pay out-of-pocket for your monthly premiums; or
• Get It Later: wait to get all of the credit when you file your tax return.

During enrollment the Marketplace will use information you provide about your projected income and family composition for the year to estimate the amount of the premium tax credit you will be able to claim on your tax return.

You will then decide whether you want to have all, some or none of your estimated credit paid in advance directly to your insurance company.

Claiming the Credit on Your Federal Tax Return

If you chose to have advance credit payments sent to your insurer, you must file a federal income tax return, even if otherwise not required to file.  Form 8962 Premium Tax Credit (PTC) must be completed to claim the premium tax credit and reconcile your advance credit payments with the premium tax credit you are eligible to claim on your return. If the amount is less than the actual premium tax credit, you will get the difference as a higher refund or lower tax due. If the advance credit payments that were paid to your health care provider were more than the actual credit, you may need to pay the difference with your tax return.

If you enrolled in coverage through the Marketplace but didn’t get the benefit of advance credit payments during 2014, if eligible, you may claim the premium tax credit when you file your return.

If you purchased coverage through the Health Insurance Marketplace you should receive Form 1095-A, Health Insurance Marketplace Statement from your Marketplace by early February. This form provides information needed to complete Form 8962.

You can also use the IRS’ interactive tool, Am I eligible to claim the Premium Tax Credit?, to find out if you are eligible.