If you or anyone in your family enrolled in an Affordable Care Act health insurance plan through the federal Healthcare.gov health insurance marketplace or a state exchange, you may be eligible for the premium tax credit.
The premium tax credit helps eligible individuals and families with low or moderate income afford health insurance purchased through the Health Insurance Marketplace. Receiving the credit requires filing a federal income tax return.
An IRS memo provides some basic facts about the tax credit and how to get it.
The Health Insurance Marketplace includes Healthcare.gov and the 13 state online insurance exchanges. They all provide consumers with information about private health insurance options and enable them to purchase health insurance.
Many Americans qualify for subsidies and other help available on the exchanges to cover part or all of the cost of premiums and out-of-pocket expenses.
When you apply for coverage, the Marketplace will estimate the amount of the premium tax credit that you may be able to claim for the tax year. It does this using information you provide about the household income you expect to earn in the coming year, and the number people in your family.
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 so it can be applied to your monthly premiums.
If you choose to have all or some of your credit paid in advance, you will have to report that on your income tax return. You will report two items: the payments made by the government to your insurance company, and the premium tax credit for which you are eligible based on your family size and your actual income for the year.
If you receive a premium tax credit, you must file an income tax return even if you would otherwise not have to file one. Along with your tax return you will file Form 8962, Premium Tax Credit, to claim or reconcile the credit.
If you fail to file your tax return along with Form 8962 you will not be allowed to receive advance credit payments in future years.
Filing electronically is generally the easiest way to file a complete an accurate tax return.
What happens if your income or family size changes during the year? If the income you actually earn during the year is different from the estimate you provided, or your family size changes, you will report this when you file your tax return and Form 8962.
The greater the difference in your household income or family size from the estimates used by the Marketplace to calculate your advance credit payments, the more your actual credit will differ from your advance credit payments.
You can visit the Premium Tax Credit Eligibility page on IRS.gov or use the agency’s online interactive tool to see if you are eligible to claim the Premium Tax Credit. For more information about the Affordable Care Act and your income tax return, visit IRS.gov/aca.