- The Affordable Care Act
- The Premium Tax Credit
- Other Health Insurance Tax Credits
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The Affordable Care Act
The Affordable Care Act (ACA) created the Premium Tax Credit (PTC), which helps eligible individuals and families with low or moderate incomes afford health insurance purchased through the Health Insurance Marketplace. The PTC is refundable, which means that if you have a tax liability, you can still receive the PTC. You can claim the PTC when you file your taxes for the year.
What is the Affordable Care Act?
The Patient Protection and Affordable Care Act, also known as Obamacare, is a health insurance reform law that was passed in 2010. The law’s main goal is to make health insurance more affordable and accessible for everyone. One way the law does this is by offering a premium tax credit, which helps eligible individuals and families pay for health insurance.
To be eligible for the premium tax credit, you must:
-Have a household income that falls within certain limits (this changes every year)
-Not be eligible for other types of health coverage (like Medicare or Medicaid)
-Purchase health insurance through the Health Insurance Marketplace
If you’re eligible for the premium tax credit, you can choose how much of the credit you want to apply to your monthly insurance premiums. You can also have the credit paid in advance to your insurer, which can lower your monthly premiums even more.
What are the benefits of the Affordable Care Act?
The Affordable Care Act (ACA) is a law that was passed in 2010 to reform the US healthcare system. The ACA has helped millions of Americans get health insurance, including young adults who can now stay on their parents’ plans until they turn 26, and people with pre-existing conditions who can no longer be denied coverage. The ACA also provides subsidies to help people pay for their premiums, and expanded Medicaid coverage in some states.
The Premium Tax Credit
The Premium Tax Credit (PTC) is a refundable tax credit that helps eligible individuals and families with low or moderate income afford health insurance purchased through the Health Insurance Marketplace, also known as the Exchange. If you qualify for the PTC, you can choose how much of the credit to apply to your premium each month. You don’t have to pay the credit back, even if your circumstances change and you no longer qualify for the credit. However, if you receive advance payments of the PTC and your final premium tax credit is less than the amount of advance payments, you’ll have to repay the difference when you file your taxes.
What is the Premium Tax Credit?
The premium tax credit is a refundable tax credit available to eligible low- and moderate-income individuals and families who purchase health insurance through the Health Insurance Marketplace.
The amount of the premium tax credit is based on the household’s income and the cost of the health insurance plan. The health insurance plans available through the Marketplace must cover a minimum set of essential health benefits and meet certain requirements for actuarial value.
If you are eligible for the premium tax credit, you can choose to have all, some, or none of the credit paid in advance to your insurance company to lower your monthly premium payments. If you choose to have advance payments made, you will need to file a federal tax return at the end of the year to reconcile any advance payments made on your behalf with the premium tax credit you actually qualify for based on your final annual income.
How much is the Premium Tax Credit?
The premium tax credit is based on the cost of the plan and the number of people in your family who will be covered. To estimate the credit, you will need to know:
– The cost of the premium for the 2nd lowest silver plan offered in your area (known as the benchmark plan)
– The number of people who will be covered by the plan
– Your family’s modified adjusted gross income (MAGI)
If your MAGI is below 400% of the federal poverty level, you may be eligible for a premium tax credit. The table below shows the income levels for 2017.
Federal Poverty Level Premium Tax Credit Income Limit
1 person $12,060 $48,240
2 people $16,240 $64,960
3 people $20,420 $81,680
How do I claim the Premium Tax Credit?
To claim the credit, you must file a tax return, even if you do not owe any tax. You will complete Form 8962, Premium Tax Credit, and attach it to your return.
You (or your spouse) must have been enrolled in a qualified health plan offered through the Marketplace in order to claim the credit. You will need to provide information from your Marketplace application when you file your tax return. This includes your:
-date of birth
-Social Security number (or individual taxpayer identification number)
-the amount of any advance payment of the premium tax credit that was paid directly to your insurance company
If you would like to have advance payments of the premium tax credit made directly to your insurance company on a monthly basis, you (or your spouse) must be enrolled in a qualified health plan offered through the Marketplace. You will need to provide information from your Marketplace application when you file for this advance payment.
Other Health Insurance Tax Credits
The Affordable Care Act created a new premium tax credit that helps eligible individuals and families afford health insurance purchased through the Health Insurance Marketplace. If you qualify, you can receive the premium tax credit in advance to help pay for your Marketplace insurance premiums, or you can claim the credit when you file your taxes.
What is the Small Business Health Care Tax Credit?
The Small Business Health Care Tax Credit is a tax credit for small businesses and tax-exempt organizations that helps them afford the cost of health insurance for their workers.
The credit is designed to encourage these employers to offer health insurance coverage to their workers. To be eligible, employers must pay premiums for a qualifying health insurance plan for their workers.
The credit is worth up to 50% of the employer’s premium contributions (up to 35% for tax-exempt organizations). The credit is available to employers with fewer than 25 full-time equivalent employees (FTEs) and average annual wages of less than $50,000 per FTE.
Employers can claim the credit for two consecutive taxable years. Claiming the credit may also make an employer eligible for Medicaid benefits.
What is the Health Coverage Tax Credit?
The Health Coverage Tax Credit (HCTC) is a federal tax credit that helps eligible people pay a portion of their health insurance premiums. The HCTC can be used to pay premiums for qualifying health plans, including COBRA continuation coverage and certain other group health plans.
To be eligible for the HCTC, you must meet all three of the following requirements:
1. You must have a trade certification or license from a qualified state agency or an apprenticeship certificate issued by the Department of Labor.
2. You must have lost your job due to tradeadjustment assistance (TAA)-eligible employment loss, alternative TAA, reemployment TAA-eligible employment loss, or pending TAA petition.
3. You must enroll in a qualifying health insurance plan.