Tax Credits can be paid in advance to the health insurance company you choose!
Starting January 1, 2014, if you enroll in a qualified health insurance plan through your state health insurance marketplace, you may be eligible for what is called a, "Premium Tax Credit". This tax credit can help make purchasing health insurance coverage more affordable for people with moderate incomes.
Eligibility
In general, you may be eligible for the credit if you meet all of the following criteria:
If you are eligible for the tax credit you can choose to:
Getting the credit
To qualify for the credit you must get insurance through the federal marketplace or through this website.
During enrollment you will use information you provide about your projected income and family situation for the year, we will estimate the amount of the premium tax credit you will be able to claim for the tax year that you will file the following year.
You will then decide whether you want to have all, some, or none of your estimated credit paid in advance directly to your insurance company.
Change in circumstances
You should report income and family size changes to the marketplace throughout the year. Reporting changes will help make sure you get the proper type and amount of financial assistance and will help you avoid getting too much or too little in advance. Receiving too much or too little in advance can affect your refund or balance due when you file your tax return.
Claiming the credit on your federal tax return
For any tax year, if you receive advance credit payments and any amounts or if you plan to claim the premium tax credit, you must file a federal income tax return for that year.
If you choose to get it now: when you file your tax return you will subtract the total advance payments you received during the year from the amount of the premium tax credit calculated on your tax return. If the premium tax credit calculated on the return is more than the advance payments made on your behalf during the year, the difference will increase your refund or lower the amount of tax you owe. If the advance credit payments are more than the premium tax credit, the difference will increase the amount you owe and result in either a smaller refund or a balance due.
If you choose to get it later: you will claim the full amount of the premium tax credit when you file your return. This will either increase or your refund or lower your balance due .
Who is eligible for the premium tax credit?
You are eligible for the premium tax credit if you meet all of the following requirements:
Common questions related to the premium tax credit
Can I get a tax credit if I am on an employer provided health insurance plan? Not Usually. In some cases you may be able to go ahead and purchase an individual plan and get a tax credit if your employer provided plan does not meet the new ACA (Affordable Care Act) compliance requirements or you end up having to pay more than 9.5% of your income for the employer provided plan.
What are the income limits to be able to get a tax credit? In general, individuals and families whose household income for the year is between 100 percent and 400 percent of the federal poverty line for their family size may be eligible for the premium tax credit. An individual who meets these income requirements must also meet the other eligibility criteria described above. Thus, if you have household income between 100 percent and 400 percent of the federal poverty line, but are eligible for coverage through your state’s Medicaid program (for example, because your state provides Medicaid to individuals with household income up to 133 percent of the federal poverty line), you are not eligible for the premium tax credit.
For 2015, for residents of one of the 48 contiguous states or Washington, D.C., the following illustrates when household income would be between 100 percent and 400 percent of the federal poverty line:
What is considered household income? For purposes of the premium tax credit, your household income is your modified adjusted gross income plus that of every other individual in your family for whom you can properly claim a personal exemption deduction and who is required to file a federal income tax return. Modified adjusted gross income is the adjusted gross income on your federal income tax return plus any excluded foreign income, nontaxable Social Security benefits (including tier 1 railroad retirement benefits), and tax-exempt interest received or accrued during the taxable year. It does not include Supplemental Security Income (SSI).
Will I be eligible for the premium tax credit if I’m married but I file my tax return using the filing status Married Filing Separately? If you are married and you file your tax return using the filing status Married Filing Separately, you will not be eligible for the premium tax credit unless you meet certain criteria set by the IRS, which allows certain victims of domestic abuse and spousal abandonment to claim the premium tax credit using the Married Filing Separately filing status. Taxpayers may claim this relief from the joint filing requirement for no more than three consecutive years.
If I get insurance through the Marketplace, how will I know what to report on my federal tax return? The Marketplace will send you an information statement showing the amount of your premiums and advance credit payments by January 31 of the year following the year of coverage. For example, you will receive the 2014 information statement by Jan. 31, 2015, and can use this information to compute your premium tax credit on your 2014 tax return and to reconcile the advance credit payments made on your behalf with the amount of the actual premium tax credit.
How is the amount of the premium tax credit determined? The law bases the size of your premium tax credit on a sliding scale. Those who have a lower income get a larger credit to help cover the cost of their insurance. In other words, the higher your income, the lower the amount of your credit.
Additionally, the premium tax credit is a refundable tax credit. This means that if the amount of the credit is more than the amount of your tax liability, you will receive the difference as a refund. If you owe no tax, you can get the full amount of the credit as a refund. However, if you receive advance payments of the credit, you will reconcile the advance payments with the amount of the actual premium tax credit that you calculate on your tax return. If your actual allowable credit on your return is less than your advance credit payments, the difference, subject to certain caps, will be subtracted from your refund or added to your balance due. If your actual allowable credit is more than your advance credit payments, the difference will be added to your refund or subtracted from your balance due.
Eligibility
In general, you may be eligible for the credit if you meet all of the following criteria:
- You buy health insurance through your state health insurance marketplace (or a broker that has created a site that interfaces to the federal tax database like this site)
- You are ineligible for coverage through an employer or government plan
- You are within certain income limits
- You file a joint return if married
- You cannot be claimed as a dependent by another person
If you are eligible for the tax credit you can choose to:
- Receive it now: you can have some or all of the estimated credit paid in advance directly to your insurance company to lower what you pay out of pocket for your monthly premiums for the year; or
- Receive it later: you can wait to get all of the credit when you file your tax return.
Getting the credit
To qualify for the credit you must get insurance through the federal marketplace or through this website.
During enrollment you will use information you provide about your projected income and family situation for the year, we will estimate the amount of the premium tax credit you will be able to claim for the tax year that you will file the following year.
You will then decide whether you want to have all, some, or none of your estimated credit paid in advance directly to your insurance company.
Change in circumstances
You should report income and family size changes to the marketplace throughout the year. Reporting changes will help make sure you get the proper type and amount of financial assistance and will help you avoid getting too much or too little in advance. Receiving too much or too little in advance can affect your refund or balance due when you file your tax return.
Claiming the credit on your federal tax return
For any tax year, if you receive advance credit payments and any amounts or if you plan to claim the premium tax credit, you must file a federal income tax return for that year.
If you choose to get it now: when you file your tax return you will subtract the total advance payments you received during the year from the amount of the premium tax credit calculated on your tax return. If the premium tax credit calculated on the return is more than the advance payments made on your behalf during the year, the difference will increase your refund or lower the amount of tax you owe. If the advance credit payments are more than the premium tax credit, the difference will increase the amount you owe and result in either a smaller refund or a balance due.
If you choose to get it later: you will claim the full amount of the premium tax credit when you file your return. This will either increase or your refund or lower your balance due .
Who is eligible for the premium tax credit?
You are eligible for the premium tax credit if you meet all of the following requirements:
- If you purchase coverage through the marketplace or through this website.
- If you have a household income that falls within a certain range.
- If you are not able to get affordable coverage through an eligible employer plan that provides minimum value. Minimum value means a plan that is compliance with new health insurance requirements and that does not exceed 9.5% of your income.
- You are not eligible for coverage through a government program, like Medicare, Medicaid, Oregon Health Plan, Oregon healthy kids, chip, or TRICARE.
- You file a joint return, if married.
- You cannot be claimed as a dependent by another person.
Common questions related to the premium tax credit
Can I get a tax credit if I am on an employer provided health insurance plan? Not Usually. In some cases you may be able to go ahead and purchase an individual plan and get a tax credit if your employer provided plan does not meet the new ACA (Affordable Care Act) compliance requirements or you end up having to pay more than 9.5% of your income for the employer provided plan.
What are the income limits to be able to get a tax credit? In general, individuals and families whose household income for the year is between 100 percent and 400 percent of the federal poverty line for their family size may be eligible for the premium tax credit. An individual who meets these income requirements must also meet the other eligibility criteria described above. Thus, if you have household income between 100 percent and 400 percent of the federal poverty line, but are eligible for coverage through your state’s Medicaid program (for example, because your state provides Medicaid to individuals with household income up to 133 percent of the federal poverty line), you are not eligible for the premium tax credit.
For 2015, for residents of one of the 48 contiguous states or Washington, D.C., the following illustrates when household income would be between 100 percent and 400 percent of the federal poverty line:
- $11,770 (100%) up to $46,680 (400%) for one individual.
- $15,730 (100%) up to $62,920 (400%) for a family of two.
- $23,850 (100%) up to $95,400 (400%) for a family of four.
What is considered household income? For purposes of the premium tax credit, your household income is your modified adjusted gross income plus that of every other individual in your family for whom you can properly claim a personal exemption deduction and who is required to file a federal income tax return. Modified adjusted gross income is the adjusted gross income on your federal income tax return plus any excluded foreign income, nontaxable Social Security benefits (including tier 1 railroad retirement benefits), and tax-exempt interest received or accrued during the taxable year. It does not include Supplemental Security Income (SSI).
Will I be eligible for the premium tax credit if I’m married but I file my tax return using the filing status Married Filing Separately? If you are married and you file your tax return using the filing status Married Filing Separately, you will not be eligible for the premium tax credit unless you meet certain criteria set by the IRS, which allows certain victims of domestic abuse and spousal abandonment to claim the premium tax credit using the Married Filing Separately filing status. Taxpayers may claim this relief from the joint filing requirement for no more than three consecutive years.
If I get insurance through the Marketplace, how will I know what to report on my federal tax return? The Marketplace will send you an information statement showing the amount of your premiums and advance credit payments by January 31 of the year following the year of coverage. For example, you will receive the 2014 information statement by Jan. 31, 2015, and can use this information to compute your premium tax credit on your 2014 tax return and to reconcile the advance credit payments made on your behalf with the amount of the actual premium tax credit.
How is the amount of the premium tax credit determined? The law bases the size of your premium tax credit on a sliding scale. Those who have a lower income get a larger credit to help cover the cost of their insurance. In other words, the higher your income, the lower the amount of your credit.
Additionally, the premium tax credit is a refundable tax credit. This means that if the amount of the credit is more than the amount of your tax liability, you will receive the difference as a refund. If you owe no tax, you can get the full amount of the credit as a refund. However, if you receive advance payments of the credit, you will reconcile the advance payments with the amount of the actual premium tax credit that you calculate on your tax return. If your actual allowable credit on your return is less than your advance credit payments, the difference, subject to certain caps, will be subtracted from your refund or added to your balance due. If your actual allowable credit is more than your advance credit payments, the difference will be added to your refund or subtracted from your balance due.
