Looking for private health insurance is enough to give anyone a nasty case of sticker shock. Don’t let high monthly premiums stop you from getting quality health insurance — instead, find out whether a premium tax credit (PTC) can put plans with a pricy monthly fee back within your reach.
What Is a Premium Tax Credit?
A PTC is a tax credit that the government offers based on income and need. It’s meant to alleviate the financial stress of trying to afford high monthly health insurance premiums on Marketplace plans.
Eligibility depends on a variety of factors, but you have a good case for receiving a premium tax credit if you:
- Make between 100% and 400% of the federal poverty level.
- Do not qualify for government-offered health care options.
- Are not a dependent on another household’s tax returns.
How Do I Use My Premium Tax Credit?
To take advantage of a PTC, you’ll need to fill out IRS Form 8962 when you file your taxes. Once your eligibility is confirmed and the size of your credit has been calculated, you can choose to receive it as either a monthly savings off of your Marketplace plan premiums or all at once, during tax season.
Bear in mind that if your circumstances change, your taxes the following year will reflect the difference between the originally calculated tax credit and what you were actually due. Report life changes to the Marketplace as they happen to avoid any unexpected costs — or to plan for an extra refund.
The Marketplace is a versatile system, and it has measures in place to help with affording health insurance premiums. You only need to know how to take advantage of your options. The next time open enrollment comes around, remember to check your PTC eligibility. Filling out the extra form might be well worth your time.