A Form 8962 is used to figure the amount of your premium tax credit (PTC) and reconcile it with advance payment of the premium tax credit (APTC). You may take PTC (and APTC may be paid) only for health insurance coverage in a qualified health plan purchased through a Health Insurance Marketplace (or, an on-exchage plan purchased on healthcare.gov or Take Command Health). This matters for small business owners and startups that are using a QSEHRA to contribute pre-tax dollars to cover healthcare expenses for their employees.
The Form 8962 includes a section for qualified small employer health reimbursement arrangement (QSEHRA). New rules enacted under the 21st Century Cures Act of 2016 allow eligible employers with fewer than 50 employees to provide a small business QSEHRA to their employees. Under such an arrangement, an employer can reimburse employees for medical expenses and premiums for Marketplace health insurance. QSEHRA contributions made by an employer can reduce or eliminate any premium tax credits employees are eligible for. That's why we don't typically recommend QSEHRA if employees are eligible for large tax credits. Our team can model the outcomes for you so you can make the best decision for your business.
If your employees purchased health insurance through the Marketplace, Form 8962 is necessary to complete their taxes and determine if they owe tax or if the government owes them a refund.