Everything you need to know about the Advanced Premium Tax Credit (APTC)

If you buy your own health insurance, this one’s for you! Learn how to save with the Advanced Premium Tax Credit (APTC).

As part of the Patient Protection and Affordable Care Act (ACA), you may be eligible for subsidies through premium tax credits and cost-sharing reductions to make insurance more affordable.  If you’re interested in applying for the APTC, here’s what you need to know:

What is the APTC?

The Advanced Premium Tax Credit is a credit you can take in advance to lower your monthly health insurance payment, known as your premium.

Am I Eligible?
You may be eligible of APTC if:

• You have an annual household income between 100 and 400 percent of the Federal Poverty Line
• You are not claimed as a dependent by another person
• You are enrolled in coverage (excluding Catastrophic coverage) through a health Exchange
• Your employer does not offer insurance that costs less than 9.5 percent of your income and pays at least 60 percent of covered benefits.
• You are not eligible for coverage through a government program like Medicaid, Medicare, or CHIP
• You do not file a Married Filing Separately tax return

How does it work?
When you apply for Marketplace coverage, the Marketplace will estimate the amount of APTC you may be able to claim in advance for the tax year using:

• Information you provide about your family size and projected household income
• Your eligibility for other non-Marketplace coverage options

Based upon that estimate, you can decide if you want all, some, or none of your APTC paid directly to your insurance company to lower your monthly premiums.

You can also wait to claim your credit when you file your tax return for the year you were covered by your plan. If you only applied part of the credit to your premium, you could claim the rest when you file as well.

How the credit is used is up to you! It’s really the difference between receiving the credit as a lump sum or paying a reduced premium each month.

What happens if I experience a change in circumstances?
When you notify the Marketplace about a life change right away, the Marketplace will redetermine your eligibility for APTC for the following plan year and allows you to adjust the amount of APTC you apply to your premium.
Life changes that can affect the final amount of PTC you’re eligible for include:

• Increases or decreases in your household income
• Marriage
• Divorce
• Birth/adoption of a child
• Moving to a new address
• Gaining or losing eligibility for government-sponsored or employer-sponsored health coverage

What happens when it’s time to file my taxes?
You will receive a 1095-A Health Insurance Marketplace Statement from your Marketplace by early February. This form is prepopulated and provides you with information about your health coverage so you can:

• File your taxes
• Reconcile advance payments of the APTC
• Claim the PTC
You need this information in order to complete Form 8962 and file it with your tax return if you want to claim the PTC or if you received premium assistance through the APTC.
You must file a tax return in order to reconcile the APTC or claim the PTC for the first time. You may also have to pay a fee if you didn’t maintain minimum coverage, or you may qualify for an exemption from the fee.

Sources:

https://marketplace.cms.gov/technical-assistance-resources/aptc-csr-basics.pdf

https://marketplace.cms.gov/technical-assistance-resources/1095a-and-exemptions-processing-overview.pdf

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