Learning the lingo: PTCs and APTCs
The premium tax credit is a subsidy which is available to those purchasing health insurance from the health insurance marketplace (exchange). The credit provides financial assistance to pay the premiums for the qualified health plan offered through a Marketplace by reducing the amount of tax owed, issuing a refund, or increasing refund amount.
Advance payment of the premium tax credit (APTC) is a payment during the year to your insurance provider that pays for part or all of the premiums for a qualified health plan covering you or an individual in your tax family. APTC eligibility is based on the Marketplace’s estimate of the premium tax credit an employee will be able to take on your tax return.
Tax time checklist for employees
Here's a quick checklist so they can prepare your taxes correctly.
Form 1095-A (Health Insurance Marketplace Statement) will be provided to you from the Marketplace if you enrolled in health insurance coverage for 2017 through the Marketplace. Form 1095-A shows the months of coverage purchased through the Marketplace and any APTC paid to your insurance company to help cover your monthly premium.
Form 8962 If APTC was paid on your behalf or, if APTC was not paid on your behalf but you wish to take the PTC, you must file Form 8962 and attach it to your tax return (Form 1040, 1040A, or 1040NR). At enrollment, the Marketplace may have referred to APTC as your “subsidy” or “tax credit” or “advance payment.”
W-2 If you were covered under a QSEHRA, your employer should have reported the annual permitted benefit in box 12 of your Form W-2 with code FF. [see below]
Calculate your Premium Tax Credit by following the instructions in IRS publication 8962.
Decoding Form 8962
If you purchased health insurance through the Marketplace, Form 8962 is necessary to complete your taxes and determine if you owe tax or if the government owes them a refund.