- The American Rescue Plan Act (ARP Act) has removed the income cap on the Premium Tax Credit for 2021 and 2022.
- The total amount you pay for health insurance premiums will be, at most, 8.5% of your income in 2021 and 2022.
- You won’t have to pay back any Advanced Premium Tax Credit that you received in 2020 when you file your tax return.
- The waiver for repayment of the Advance Premium Tax Credit could impact your state return, so check your state’s revenue agency website for more information.
After you search the health insurance marketplace for your ideal health insurance plan, the Affordable Care Act may help pay your premiums via the Premium Tax Credit (PTC).
How much is the Premium Tax Credit worth?
If you have a low to moderate income, the Premium Tax Credit can help you pay your health insurance premiums. It’s calculated based on your income estimate and household information.
If your income is:
- Between 100% and 400% of the Federal Poverty Line (FPL): You qualify for premium tax credits that lower your monthly premium for a Marketplace health insurance plan.
- Above 400% of the FPL: You qualify for premium tax credits that lower your monthly premium for 2021 and 2022.
Who’s eligible for the PTC?
The Premium Tax Credit is only available if:
- You file your taxes for the year you claim the credit.
- You use government-funded health coverage, whether on the federal or state level, for at least part of the year. The PTC will only apply to Marketplace coverage.
- You are not eligible for affordable coverage through employer-sponsored insurance, Medicaid, or any other government health benefits, for at least part of the year.
- Your premiums are paid before the original due date of your tax return (usually April 15) for at least one of the months you were covered by the Marketplace.
- You don’t file as married filing separately, unless you are a victim of domestic abuse and spousal abandonment and can meet certain criteria.
- You aren’t claimed as a dependent by another person.
When can I claim the Premium Tax Credit?
You can either claim the credit when you file your taxes or when you buy the insurance on the Health Insurance Marketplace via the Advance Premium Tax Credit.
In some situations, you are allowed to apply outside of the open enrollment dates. See our page on the Marketplace for open enrollment dates and situations that allow you to buy insurance outside of that period.
What is the Advance Premium Tax Credit?
Advance Premium Tax Credit (APTC) is based on your estimated income for the year, and it’s paid directly to the insurance company every month to lower your premium payment amount.
Since it is only based on an estimate, however, the APTC may not be completely accurate in its estimation. When you file your taxes, any excess APTC received that you didn’t need to cover premium costs must be returned. If you didn’t receive enough, the remainder will be given to you as a refund or a reduction in taxes owed.