Understanding the Affordable Care Act: Exploring the Premium Tax Credit

💰The premium tax credit is a refundable tax credit that can help lower the cost of health insurance for eligible individuals based on income.

📝To receive the premium tax credit, individuals need to purchase health insurance through the federal or state marketplace and meet certain income guidelines.

💸Most people choose to have an estimate of the premium tax credit advanced to them each month to reduce their health insurance premiums.

👪The premium tax credit takes into account household size and income when determining eligibility and the amount of the credit.

📆The premium tax credit is calculated based on estimated income when applying for coverage, but is finalized based on actual income when filing the tax return.

Who is eligible for the premium tax credit?

—Those who purchase health insurance through the federal or state marketplace and meet income guidelines are eligible for the premium tax credit.

How is the premium tax credit calculated?

—The premium tax credit is calculated based on household size, income, and the cost of the second lowest-cost silver plan in the marketplace.

Can I receive the full premium tax credit when filing my tax return?

—If the premium tax credit calculated on the tax return exceeds the advance amount received, individuals can receive the difference as a refundable tax credit.

What happens if my actual income is lower or higher than estimated?

—If the actual income is lower, individuals may be entitled to a larger premium tax credit. If the actual income is higher, individuals may need to repay some or all of the excess credit received.

How can I apply for the premium tax credit?

—To apply for the premium tax credit, individuals need to purchase health insurance through the federal or state marketplace and provide information about household size and income.

00:08In this video, we take a first look at the affordable care act, specifically the premium tax credit.

01:27Most people choose to have an estimate of the premium tax credit advanced to them each month to offset their health insurance premiums.

02:18The premium tax credit is determined based on estimated income when applying for coverage, but is finalized based on actual income when filing the tax return.

03:57The second lowest-cost silver plan premium is used to calculate the premium tax credit.

05:17If the actual premium tax credit is less than the advance amount received, individuals may need to repay some or all of the excess credit.