Health insurance can be pricey.
Luckily, you can get a refundable tax credit just for purchasing health insurance through the Marketplace.
Keep reading to find out how you qualify.
What is the Premium Tax Credit (PTC)?
First, individuals and families with low to moderate-income homes can receive a refundable credit (meaning you can receive a refund if it exceeds your tax) to afford their health insurance.
In order to qualify for the PTC, you must meet the following:
- Health Insurance purchased through the Marketplace
- Pay premiums not covered by advance credit payments
- You are not a dependent
- You file a joint return with your spouse (unless you qualify for a special rule that allows certain victims of domestic abuse and spousal abandonment to claim the PTC using the Married Filing Separately filing status; read more here)
- All income must meet a certain threshold
- You’re not eligible for coverage through a government program, like Medicaid, Medicare, CHIP or TRICARE or an employer-sponsored plan
To find out more if you’re eligible, click here to use the IRS premium tax credit questionnaire.
When referring to your income threshold, it means that your household income should be at least 100 to 400 percent of the federal poverty line. However, factors like family size, location, and the cost of available insurance coverage are taken into account.
In other words, you will need to be in between the threshold of $25,100 (100%) to $100,400 (400%) for a family of 4. Otherwise, you may be disqualified for this credit.
Here’s what you should remember
Above all, taxpayers who receive a 1095-A for their Marketplace Insurance are required to report it to the IRS. With this statement, you will compute your PTC using Form 8962 to claim the credit or reconcile any advance credit payments.
Let’s say you forgot to report your 1095-A. As a result, the IRS can do one of four things:
- Require you to complete and mail Form 8962 along with a copy of your 1095-A (and with page two of your 1040 if your refund or tax due changes)
- Reject your tax return for missing information
- Hold your refund until all information is present
- Adjust your return based on that missing information