2017 ObamaCare Premium Tax Credit (PTC) to Offset Impact of Health Insurance Premiums

0 comments

[Updated for 2016 and 2017 qualifying income ranges] Under new health care laws (a.k.a ObamaCare or the Affordable Health Care Act) a new tax credit has been made available to millions of Americans who purchase insurance via  health insurance exchanges or marketplaces. You have to purchase the insurance via these official exchanges or marketplaces to get the credit. Buying health insurance privately or getting it through your employer will disqualify you from getting this credit or subsidy.

This tax credit is officially called the Premium Tax Credit (PTC) and allows you offset the monthly premium costs of health care if your income is below certain thresholds. With rising health insurance premiums this credit is becoming even more important to millions of families who purchase health insurance under ObamaCare 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 can be used right away (via qualified 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 household size and income must fall within the falling thresholds to qualify for health care tax credit. If your income changes, or if you add or lose members of your household, your premium tax credit will likely change.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. So in general the lower your income within these ranges, the more of a credit you get. To get an exact credit number you will have to submit a health insurance marketplace.

  • $11,880 (100%) up to $47,520 (400%) for one individual
  • $16,020 (100%) up to $64,080 (400%) for a family of two
  • $24,300 (100%) up to $97,200 (400%) for a family of four

The above limits are for the latest tax year. They are  indexed to inflation and adjusted annually. I will post updated numbers when available and encourage you to subscribe (free) via Email, Facebook, Twitter to get the latest figures.

Applying for the Premium 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

Premium Tax Credit Qualification

If at the end of the year you’ve taken more advance payments of the premium tax credit than you’re eligible for, you may have to pay money back when you file your federal income tax return. This is called “reconciling” the advance payments of the premium tax credit and the actual premium tax credit you qualify for based on your final annual income for the year. You can also refer to the IRS site for more details on this credit and how to account for it in your tax return.

 

Leave a Reply

Be the First to Comment!

wpDiscuz

Previous post:

Next post: