[Updated for 2016] Under new health care laws (a.k.a Obamacare) a new tax credit has been made available to millions of Americans who purchase insurance via the new health insurance exchanges or marketplaces. The so called Premium Tax Credit (PTC) credit allows you offset the monthly premium costs of health care if your income is below certain thresholds. It was designed to help eligible individuals and families with low or moderate income afford health insurance purchased through a Health Insurance Marketplace. To get this credit, you must meet certain requirements and file a tax return. Purchasing health care, without paying a penalty, unless you qualify for exemptions is mandatory under new laws.
The PTC t can be used right away (via insurance companies) to lower your monthly premium costs and you can choose how much advance credit payments to apply to your premiums each month, up to a maximum amount. If the amount of advance credit payments you get for the year is less than the tax credit you’re due, you’ll get the difference as a refundable credit when you file your federal income tax return. If your advance payments for the year are more than the amount of your credit, you must repay the excess advance payments with your tax return.
According to the official health care site, your income must fall within the falling thresholds to qualify for health care tax credits in 2014. Generally the lower your income within these ranges, the more you’ll save.
- $11,490 to $45,960 for individuals
- $15,510 to $62,040 for a family of 2
- $19,530 to $78,120 for a family of 3
- $23,550 to $94,200 for a family of 4
- $27,570 to $110,280 for a family of 5
- $31,590 to $126,360 for a family of 6
- $35,610 to $142,440 for a family of 7
- $39,630 to $158,520 for a family of 8
The above limits are indexed to inflation are based on 2013 levels. For 2014 these may be slightly higher and I will post updated numbers when available and encourage you to subscribe (free) via Email, Facebook, Twitter or RSS to get the latest figures.
Applying for the tax credit. Because of the variables in figuring your qualification for this credit, your final PTC will be figured when you apply for coverage in the Marketplace. Based upon that estimate, you can decide if you want to have all, some, or none of your estimated credit paid in advance directly to your insurance company to be applied to your monthly premiums
IRS – FAQs on the Premium Tax Credit
Health Care.Gov PTC details