What is the Premium Tax Credit?
This credit is designed to make health insurance more accessible for individuals and families with low to moderate incomes. The best part? It’s refundable, meaning you can benefit even if you don’t owe a lot in taxes.
Advance Payments: A Little Help Now
To make things easier, you can choose to have the Health Insurance Provider send advance payments of the Premium Tax Credit directly to your insurance company. This lowers your monthly premiums.
Important: If you receive these advance payments, it’s crucial to keep the Health Insurance Provider updated!
Report any changes to:
Your household income
Your family size
Your address
Eligibility for other health coverage (like through an employer or government program such as Medicare) for anyone in your tax family (you, your spouse if filing jointly, and your dependents).
Why is this so important? Reporting changes helps prevent a big surprise when you file your taxes. You could end up having to repay a significant amount of the advance payments if your information isn’t accurate. On the flip side, reporting changes promptly could also mean you qualify for more help with your premiums!
Filing Your Taxes: Reconciling the Credit
To claim the Premium Tax Credit, you must file a tax return. If you received advance payments, you’ll need to reconcile those payments with the actual amount of credit you’re eligible for.
Here’s what you’ll need:
Form 1095-A, Health Insurance Provider Statement: You should receive this from the Health Insurance Provider. It contains information about your coverage and any advance payments you received.
Form 8962, Premium Tax Credit (PTC): This is the form you’ll use to calculate and claim the credit. You’ll attach this form to your Form 1040, 1040-SR, or 1040-NR.
It is important to note that if your electronically filed return is rejected for a missing Form 8962, please refer to How to correct an electronically filed return rejected for a missing Form 8962 for information about the rejection and how to correct it.
Open Enrollment and Special Enrollment Periods
Each year, the Health Insurance Providers have an open enrollment period. This is when you can avail health insurance for the following year. If you experience certain life events, you might qualify for a Special Enrollment Period outside of the regular open enrollment. The Department of Health and Human Services manages the rules for the Health Insurance Providers and the health plans they offer.
For more information, visit HealthCare.gov or contact your Health Insurance Provider directly.